These California programs target solar+battery to low-income households (2023)

California's new solar policy leaves low-income families behind. Community energy providers, non-profit organizations and suppliers have come up with some creative solutions.

Read the full article by Jeff St. John at Canary Media

Solar and home batteries are already too expensive for most low-income California residents.last week's decisionby the California Public Utilities Commission to radically change theinternet measurementpolitics will put them further out of reach.

Last week, Canary Media explained how California's new rooftop solar policydrastically reducethe lucrative potential of solar panels andencourage customers to install batteriesthat they can store and change their output to the network when it's most needed. We also explore how solar and battery providers, utilities, community energy providers and state agencies are looking for ways to expand access to these technologies forpoor and low-income communities.

This won't be easy. Even after the federal tax credits, the unusual costs of residential solar in Californiabetween $15,000 and $25,000, and adding a battery can increase the total byUS$ 10.000 a US$ 20.000. Without access to finance or other structures to reduce these upfront costs, and with no clear pathways to paying these costs in less than a decade through savings on utility bills and export credits, few low-income households will be able to afford it.

CPUC's new solar roof policy does little to alleviate these cost barriers for low-income customers. However, it does open up a potential avenue that can be used to help expand access.

Under the new policy, homes with solar systems and batteries will be able to make more money than before by allowing their systems to be used to back up the grid, storing rooftop solar energy in batteries and exporting it when demand for energy is greater. High. And other California policies are encouraging the adoption of efficient electric heating systems, appliances and other equipment that can reduce energy use when the grid is overloaded or shift usage when the grid is flooded with clean, low-cost energy.

Public agencies, private companies and community organizations are pioneering limited-scale programs designed to help low-income families take advantage of these opportunities. Their tactics include finding as many channels as possible to lower the initial cost of installing solar, batteries, and efficient appliances, and then making those incentives pay off by capturing as many revenue streams as possible to use the equipment. to support the network. Another approach is to install solar power and batteries on roofs owned by others, rather than low-income homes, so that families reap some of the key benefits (lower electricity bills, backup power during grid outages) free of charge.

These types of programs are still in their infancy and it's not clear if they can scale. But models like these are necessary for California to fulfill its policy imperative to expand clean energy access and efficiency to low-income and disadvantaged communities. In this article, we'll explore some examples.

Barriers to the adoption of solar and battery energy by low-income families

First, let's look at the challenges of bringing rooftop solar power to low-income customers in California. non-profit solarnetwork alternativesknows the obstacles well, having implementednearly 10,000 solar systemsas an administrator for a number of state programs that cover the cost of facilities for low-income families.

The main state program that now finances rooftop solar energy for low-income single-family homes has a budget of$8.5 million per year. It is extremely useful for the customers it serves, but it only reaches a small fraction of eligible households. Those without service face underlying barriers that make solar energy and rooftop storage even more expensive for them than for wealthier households, said Stephen Campbell, senior policy manager at Grid Alternatives.

For one thing, "many low-income customers don't have the option to finance" a new solar or battery system, he said. Today, solar finance is largely structured for customers with higher incomes or above-average credit scores. People without these advantagesmay have difficulty obtaining finance at allNot to mention affordable financing at a time of rapidly rising interest rates.

Some low-income customers need to fix their roofs or improve theirresidential wiring and electrical panelsbefore solar power can be installed. Others live in rural areas far from where most solar installers work, complicating the sales and installation process.

Such barriers tend to increase the cost of serving these markets. The average cost of solar installations for the low-income programs that Grid Alternatives managescosts $4.28 per watt, well above the $3.30 per watt average cited by the new CPUC decision on rooftop solar.

To overcome these barriers, low-income and disadvantaged households need financial incentives and structures that can cover higher upfront costs and encourage more solar and battery companies to serve these markets, advocates say. They need to be confident that the solar and battery systems they are installing will lower their electricity bills and give them a clear path to paying back their investments within a reasonable amount of time. And they need help accessing incentives to make their homes and appliances more efficient.

Revitalize communities with solar energy, batteries and more

An example of a program that provides this type of support comes from MCE, the community choice aggregator serving Marin and Napa counties and surrounding areas. This summer, the MCEthrown awayonevirtual power plantprogram for low-income residents of the economically and environmentally challenged city of Richmond, aimed not only at providing low-cost distributed energy, but also at revitalizing its residential housing market.

Community choice aggregatorslikeMCE are city and county based entities that haveassumed the role of providing electricitymillions of California utility customers over the last decade. Many are also taking innovative approaches to implementing solar energy, batteries, appliances and efficiency improvements on the roof.

Backed by a $3 million grant from the California Energy Commission and with an array of corporate, nonprofit and community partners, including Grid Alternatives, the Richmond project targets up to 100 homes and an unknown number of commercial sites for solar power. , batteries, smart thermostats , water heat pump and space heating and electric vehicle charging.

Participants will earn interest-free loans to finance equipment and installation costs, as well as monthly credits in exchange for allowing MCE to use this equipment to reduce its need to purchase high-priced energy during the 4 pm hours. m. At 9 pm. The program is open to homes that currently do not have solar on their roof, as well as homes that have already installed solar from Grid Alternatives and want to leverage this self-generated energy to heat their homes or charge their cars, said Alexandra McGee, manager of MCE. of strategic initiatives.

MCE and its partners are also leveraging Social Impact Bonds raised by the City of Richmond to purchase abandoned homes and renovate them with solar power, batteries, appliances and efficiency upgrades. McGee said. In addition, they are installing "all the appliances: the batteries, the electric vehicle charging, the solar panels, the heat pump water heaters."

To fund the upfront cost of newly renovated and existing homes, MCE and its partners are "investing everything we have into this project," McGee said, including existing MCE homes.energy efficiency and distributed energy incentives,Interest-free loans for homebuyers with qualified incomeand corresponding state grants from the City of Richmond.

Through this creative use of grants, bonds, incentives and interest-free loans to complete projects, partners will be able to sell homes at a discount to low-income first-time buyers, he said. And monthly MCE payments to homeowners for participating in the virtual power plant will keep home energy costs low. So far, one home has been renovated and sold, and more are on the way, he said.

While the project is still in its early stages, the goal is to add 1 megawatt of solar capacity and 2.5 megawatts of energy storage and loads that can be shed during peak grid demand times, McGee said.

"Once you get to that size, that's where you can get the real value of MCE," he said. Much of the power that community option aggregators (CCAs) bring to customers comes fromcontracted clean energy resources, but they also need to secure additional power and capacity for times of the year when grid supply is scarce. This is the most expensive energy, and anything CCAs can do to protect against exposure to these high costs, such as enrolling more customers in virtual power plants, could make a big difference.

Sachu Constantine, executive director of the nonprofit Vote Solar, said MCE's work in Richmond represents a new alignment of efforts to expand clean, reliable energy with the goal of revitalizing the community. "It's a path to home ownership" for the customers involved. In terms of its value to the network, "it's clearly visible to the utility: they can build it into their planning," he said.

MCE's Richmond project is just one of many virtual power plants being developed across the state. Others are managed by California's big three investor-owned utilities: Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric, as well as utilities including the Sacramento Municipal Utility District and CCAs such as East Bay Community Energy and Clean Power. Alliance.

Some of these programs offer incentives for a certain number of solar and battery systems to be targeted at low-income customers. The generosity of these incentives may depend on the value that batteries and other controllable devices can provide to CCAs and their corporate partners, values ​​that may change depending onunderlying regulatory structuresand changes in energy market conditions.

It also depends on how ownership of these assets is structured. MCE's Virtual Power Plant in Richmond is designed to direct customer ownership to these assets. Other approaches are to place the costs and risks of owning these assets in the hands of a third party.

Bringing Third-Party Batteries to Low-Income Californians

For more than a decade, the Self-Generation Incentive Program has been California's premier policy to help homeowners and businesses pay for their own batteries. This summer, state legislators increased the program's budget by $900 million, of which $630 million went to low-income clients. As previous funding commitments for the program have already been exhausted for the most in-demand parts of the market, this money is likely to run out fast.

In recent years, California regulatorsrefocused this decades-old programto make batteries available to people at greater risk of increasingly frequent power outages to prevent forest fires in the state. For medically vulnerable customers or disadvantaged communities, the incentives are high enough to cover nearly the entire cost of installing a new battery, enabling partnerships like those betweenNetwork and Sunrun Alternativesand PG&E and Enphase to offer free batteries to customers in high fire risk parts of the state.

But that's just one way to get batteries into the homes of low-income customers. Sunrun also acts as a third-party owner of solar and battery systems that Grid Alternatives installs for customers who are unable or unwilling to borrow money to finance them. Third-party landlords can monetize the value of federal tax credits for low-income families who don't pay a large enough federal tax bill to take advantage of the credits.

home battery companyelectricityesworking with the city of Santa BarbaraySanta Barbara Clean Energy, the county's community options aggregator, in another version of this third-party ownership model, aimed specifically at homeowners who don't have credit scores high enough to finance their own facilities.

Despite its reputation as a wealthy coastal paradise, the city and county of Santa Barbara is home to many low-income residents, including those working in the agricultural and service industries, said Electriq CEO Frank Magnotti. The county also has relatively few network connections to the rest of the state, with many of its longest lines running through areas with a high risk of wildfires. Third-party solar and battery systems can help low-income residents and help the grid. They reduce demand on overloaded network circuits and provide backup power when circuits must be shut down to reduce the threat of wildfires.

In accordance with the Santa Barbara Clean Energy Acthome energy program, Electriq owns the batteries installed in the homes of low-income customers, and the company has lined up other financial parties interested in the long-term ownership as well as the federal tax credit value of the projects, Magnotti said. Participants will be able to enter into power purchase agreements to buy solar energy from systems on their roofs at rates that are 10 to 20 percent below utility rates.

In return, customers agree to allow Electriq to use the battery's capacity for a certain number of hours per year to meet grid needs, Magnotti said. That network value "will take a little time to reach enough scale to be meaningful" to utilities, he said. But as the program grows, it could become significant enough to allow what he calls "sustainable communities" to make bilateral agreements with utility companies to defer the cost of building network infrastructure. (For homeowners who can buy their own systems, Santa Barbara Clean Energy also offers discounts on solar systems from Brighten Solar and batteries from SimpliPhi, two local companies.)

It's important to remember that California's rapidly rising electricity rates are being driven primarily by the cost of hardening utility networks against wildfire risks and building new transmission lines to provide the clean power needed. Solar power and distributed batteries can reduce these costs if utilities and regulators can come up with ways to reward their owners and users for deploying them where they're needed most and using them to provide grid services when it matters.

It remains to be seen whether approaches like these can become financially self-sufficient ways of bringing solar power and batteries within reach of a range of overseas customers. But for the city of Santa Barbara and its CEC, bringing the future of distributed clean energy to low-income residents is critical to its mission, Magnotti said. "We'll only do this if we can do it across all classes of customers, not just target the biggest houses."