With rooftop solar prices falling, many households of all income levels can now save money by switching to solar energy. However, households with low and middle incomes are still less likely to use solar energy than households with high incomes. As a result, researchers at the Department of Energy’s Lawrence Berkeley National Laboratory (Berkeley Lab) investigated whether certain policies and business models could improve adoptive equity for household incomes.
In a new study published in Nature Energy, Berkeley Lab researchers found that three of the five policy and business models they examined, including targeted financial incentives and leasing models, reduced the uptake of solar photovoltaics (PV) among people with low and middle-income households increase households, thereby increasing adoption equity, which the authors define as the extent to which the income of adopters reflects the income of the general population.
Their study, “The Impact of Policies and Business Models on Income Equity in Rooftop Solar Implementation,” uses household-level income data from PV users, which covers more than 70% of the US residential PV market.
“I think most people are aware that the benefits of solar energy in terms of income have not been fairly shared. And the main finding of our study is: It doesn’t have to be this way – especially now that solar energy is getting cheaper,” said Eric O’Shaughnessy, a Berkeley Lab-affiliated researcher and lead author on the study. “The results were pretty robust. There’s no reason solar needs to be exclusive to high-income households.”
The study was co-authored by Galen Barbose, Ryan Wiser, Sydney Forrester and Naim Darghouth, all members of Berkeley Lab’s Power Markets and Policy Group, which conducts decision-making research in the US electricity sector. The group also publishes an annual report, Tracking the Sun, on Trends in the US PV Market, and has created an online tool that can examine demographics of solar adoption down to the county level. You can find these at solardemographics.lbl.gov.
Overall, PV prices are falling and the number of installations is increasing, Barbose said. “In the housing market, the rate of new adoptions has increased significantly at the national level over the past decade,” he said. “And most of the forecasts show significant growth in the next five to ten years.”
Different places have different policies and programs to promote PV adoption. The research team assessed the impact of five types of programs or business models on capital adequacy:
+ Financial incentives for low and middle income households.
+ Leasing that reduces upfront costs.
+ Property Assessed Clean Energy Financing (PACE), a program to finance PV through property tax payments only available in California, Florida, and Missouri for residential developments.
+ Financial incentives – usually discounts or other incentives to reduce upfront costs – are offered to customers of all income levels.
+ Solarize, a community initiative to recruit a coalition of potential PV users.
The study spanned the period from 2010 to 2018 and included data on more than 1 million residential rooftop PV systems installed in single-family homes in 18 states. The researchers compared modeled household-level income estimates for PV users to median household income based on US census data.
Their analysis found that the first three types of interventions – targeted incentives, leasing and PACE – are effective in increasing adoption equity. “The results for these three interventions are pretty strong,” said O’Shaughnessy. “And the research also provides evidence that these interventions result in both deepening or expanding existing markets, as well as expanding or entering new markets – low-income areas that traditionally lacked solar energy.”
One effect of expanding solar energy into new markets and neighborhoods is that it can affect spillover. “If a system is installed in a neighborhood that previously had no solar energy, the neighbors will see that system and that increases the likelihood that they will adopt themselves,” said O’Shaughnessy. “There has been a lot of research into these peer effects. So as the market expands and solar use moves into new markets, the potential indirect effects are more significant than if the market were to expand just by installing lower-income households in existing markets deepened. “
More widespread adoption of solar PV systems, particularly in low- and middle-income households, can accelerate the benefits of solar for clean energy. As the authors say, “By one estimate, low- and middle-income homes account for 42% of the rooftop photovoltaic area in the United States.”
As the solar market grows, the decision to install a system will be driven less by “environmental friendliness” and more by the financial benefits. “According to surveys, roughly half of the people who adopt these days do so mainly for economic reasons,” said O’Shaughnessy.
For low and middle income households, these benefits make a bigger difference. “Many low- and middle-income households have large ‘energy loads’, which is the fraction of a household’s income that is spent on energy and utilities,” Barbose said. “Interest in solar PV is now growing as another arrow in this quiver that will help reduce the energy burden on low-income households.”
While solar PV systems are not a panacea for households with high energy loads, Forrester pointed out that energy affordability remains a key tenet of community groups, local regulators, and other stakeholders. “Affordability is an important issue that everyone is interested in,” she said.
Lawrence Berkeley National Laboratory
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