Solar panels on the top of a building

Unlocking the High Value of Clean Energy in Low-Income Communities

Among the 135 stakeholders of RMI’s Electricity Innovation Lab (eLab) who gathered for the first eLab Summit at the end of 2016, many are involved with Leap, an ongoing RMI initiative dedicated to empowering and improving the lives of low-income communities and households in a clean energy future. One in three Americans have incomes that put them below 200 percent of the official poverty line (200 percent is about $45,000 for a family of four), and many more have problems making ends meet. Any real transition requires solutions that work for the many Americans who are financially challenged. The intense work at the Summit provided a strong sense of the challenges and opportunities in this rapidly evolving field. Two of Leap’s staff explained what is happening, and what we can expect.

Collaboration Is Needed for Uncharted Territory

Attendees concerned with Leap at the e-Lab Summit included entrepreneurs, utilities, and community groups. Coreina Chan, a principal with RMI and leader of the Leap initiative, explains that for this work, “You can’t get it right unless you include a number of diverse stakeholders. There’s no single entity that has all the resources and knowledge to get it done on their own.” What’s behind this complexity, explains Sherri Billimoria, an associate at RMI on the Leap team, is that, “Existing clean energy solutions haven’t been tailored to low-income customers, for whom there are few options. Solutions have, by and large, served more affluent businesses and households.”

Chan said that the hardest part about Leap’s work is the same thing that makes it the most exciting: the challenges of including disadvantaged households and communities in the clean energy transformation haven’t been addressed before. “If they had been,” said Chan, “we could look at the last best example and duplicate it. The solutions need to be created.” And to do that, Chan said, “Collaboration is necessary.”

The essence of Leap’s work is accelerating that collaboration, and the Leap team convenes a number of events to do that. The e-Lab Leap Social Change Lab in New York brings together stakeholders from more than 45 organizations to develop and implement unique solutions for low-income energy needs in the state. The upcoming e-Lab Forge 2017 event, taking place June 13 to 15, is a bootcamp for accelerating the design of innovative business models that connect low-income households in New York to clean energy benefits. And at this year’s 2017 e-Lab Accelerator, two teams serving disadvantaged and low-income customers focused on developing and scaling business models that increase access to shared solar for low-income households. One team, championed by Vermont Energy Investment Corporation (VEIC), is developing a model that provides access to community solar for wage-earning employees through employer benefits. Employers serve as the backstop off-taker of solar should employees decide to end their participation. The other team, a collaboration between a utility and its community, is developing a mutually beneficial business model that enables the community to benefit from shared asset ownership.

It’s not easy. Providing clean energy, energy storage, and energy efficiency services to low-income customers is a field where “one of the issues is that in most places, community-based organizations and individuals have not had a say in the kinds of options and energy choices they have,” said Chan. In many communities around the U.S., there is a legacy of conflicted relationships between stakeholders like regulators and utilities, who have historically made decisions about how electricity is sourced and provided to ensure that all customers can be served, and community-based organizations from low-income communities, which know the population, understand their emerging energy needs, and have the social capital to engage households. Creating new business models depends on constructive engagement among such diverse stakeholders.

A Richer Bottom Line

Creating new business models also depends on recognizing that low-income households and communities are diverse—not all communities have the same opportunities and objectives—and recognizing that listening is the key to getting that right. Extending the clean energy transformation to low-income customers involves a richer bottom line than a solely financial bottom line. There are values beyond financial ones that are integral, including addressing disenfranchisement and extending the benefits of ownership. Chan said, “Some of our stakeholders have ownership as an end goal, and this can be rooted in deeper issues of financial and energy independence, and in building equity.” Billimoria said, “We’ve heard a lot of different people say ownership is a priority for them and for their communities.”

But, Billimoria continued, “As one attendee at the Summit pointed out, any new model will only provide the benefits it’s designed for. A model intended to generate wealth for low-income families will look very different than one designed simply to get solar on the roof of multifamily buildings.” And that’s where the need for innovation lies: “If you’re designing for ownership and wealth generation, that has its own challenges and its own complexities,” Billimoria said.

Chan said, “When it’s just about electrons, we can say, ‘hey there’s a more efficient and more reliable way to get electrons, and it may or may not include community ownership.’” However, when it’s about having a voice in your own energy future, and access to other benefits like job creation, revenue, or climate resilience, then those objectives need to be carefully included in the designs of emerging business models. Chan said, “There are many cases in the U.S. where people are working on really cool projects that deliver more than energy cost savings.”

New Approaches

A lot of the interesting emerging business models that the Leap team sees involve working around credit issues, as with VEIC’s provision of community solar to its employees as a benefit, and unlocking new funding sources to enable clean energy access for low-income customers.

Another approach to credit issues is creating new legal structures (or working within existing ones) to provide low-income customers access to loans that they otherwise would not have. A pioneer in this space is PosiGen, a solar and efficiency company in Louisiana and Connecticut that provides solar and efficiency leases to households without requiring credit checks. One of the ways it is able to do this is by using unique financing sources, which include partnerships with impact investors like the Connecticut Green Bank. What’s more, Billimoria said, “By bundling efficiency and solar, PosiGen is able to deliver savings to customers in the first month.”

VEIC is also using clean energy resources to build generational wealth. The ZEM, or zero-energy module, is a manufactured home with solar and storage that could actually be a tool for wealth generation because a home can appreciate (not just depreciate, like solar or storage equipment sold alone). “Rather than being a depreciable asset, like a car, it’s possible that ZEM could be an appreciating asset, allowing low-income families to generate wealth,” said Billimoria.

An Innovation Frontier

“What’s exciting about this work is that energy access for low-income customers is an innovation frontier,” said Chan. Billimoria said, “Things are growing and changing as we continue on with this work, and it’s invigorating to be at the forefront of an evolving movement.” Chan added, “Low-income energy access is often thought of as lagging, or as a case for charity. This is not the case in our work. This is cutting edge.”

Image courtesy of iStock.