By Kelly Roache
It is said that it is “expensive to be poor.” This is a reality faced by millions of low-to-moderate income Americans--and home energy bills are no exception. Despite beating fossil fuels on both price and growth, the potential of renewable energy to relieve this burden remains largely unrealized. Through innovative approaches to customer creditworthiness and financial inclusion, Solstice is working to expand affordable, accessible community solar for all.
Power struggle: the low-income burden
Low-to-moderate income households face severely limited access to renewable energy. While the 49 million American households earning under $40,000 annually account for 40% of homes, they comprise less than 5% of solar installations. At the same time, these individuals bear a higher energy burden, spending a disproportionate share of their earnings toward utility bills, even as energy costs decline. Low-income households pay on average three times as much for energy as their wealthier counterparts. They likewise experience the brunt of the ill effects of climate change, producing disproportionate impacts. For instance, race and income are closely correlated with proximity of one’s home to a coal plant.
For low-income households, shared solar short-circuits
Community-shared solar holds the promise to level the playing field by dramatically increasing access to and affordability of clean energy. After all, solar gardens will constitute up to half of the solar market by 2020. However, low-to-moderate income individuals still face steep obstacles to community solar participation. For instance, many don’t meet outdated FICO credit score requirements of 680 or more, which are intended - but hardly proven - to mitigate customer defaults. Half of Americans have a credit score less than 680, while one in five has no credit score. Thus, such an offering fails to serve low-to-moderate income Americans who could use solar savings the most.
Solstice aims to energize community solar’s promise
Solstice is employing financial innovations to expand low-to-moderate income community solar inclusion. Supported by an award from the Department of Energy, we are combining data science and pilot projects to challenge market assumptions about low- or no-credit households. Solstice is developing an alternative qualifying metric - or “EnergyScore” - that is both more inclusive and accurate in predicting customer defaults than FICO. This EnergyScore incorporates information on utility payment history to enhance the creditworthiness of households who make consistent, on-time bill payments. Solstice will implement the EnergyScore to qualify low-to-moderate income individuals for community solar in pilot projects, thereby continuing to build the body of evidence required to scale this inclusion.
Solstice remains committed to community solar for all. Through our work to increase access and affordability for low-to-moderate income households, we look forward to realizing a just, democratic, and bright energy future.