Let’s Talk About Solar Power and Equity

By Jorge Madrid / Published: February 23, 2015

rp_solar-cells-491701_640-300x200.jpgWe need to have “the talk” about solar power and equity, because ignoring uncomfortable questions will invite misinformation and bad decisions. We need an informed dialogue about how local solar power can impact low-income communities and communities of color in the U.S. We need to talk about “all the good things, and the bad things, that may be.”

First things first: the price of solar panels has fallen by 80 percent since 2008. This significant decrease in cost, coupled with incentives such as net metering which allow customers to send the energy they produce from their solar systems back to the grid and receive a credit on their bill, and the emergence of new financing models like solar “leasing” programs, has led to an explosion of local solar in the U.S.

We now boast an estimated 20 gigawatts of solar energy nationwide (enough to power more than four million U.S. homes), and the United States added more solar capacity in the past two years than in the previous 30 years combined. In fact, as President Obama highlighted in his State of the Union address, “every three weeks, we bring online as much solar power as we did in all of 2008.”

So, who is benefiting from this solar boom? In regard to rooftop solar, it is mostly middle-income and working class homeowners, according to analysis from the Center for American Progress:

“Rooftop solar is not just being adopted by the wealthy; it is, in fact, mostly being deployed in neighborhoods where median income ranges from $30,000 to $90,000.”

The growth of the solar industry is also creating good jobs, and plenty of them. The solar industry added jobs nearly 20 times faster than the national average in 2014, and solar employment has increased 86 percent in the past five years.  Solar installers make an average of $20 to $24 per hour, and solar salespeople can make $30 to $60 per hour. And, as I have written before, solar and other clean energy jobs are generally more accessible to people of color and folks without advanced degrees.

Not to be overlooked are the environmental benefits of solar: the deployment of this clean energy resource helped avoid an estimated 20 million metric tons of harmful carbon dioxide emissions in 2014, the equivalent of taking four million cars off U.S. highways. The fact that solar averts dirty, fossil fuel pollution has a critical equity aspect, as approximately 68 percent of African Americans (and a similar percentage of Latinos) live within 30 miles of a coal-fired power plant, and a recent study claims that nearly 40 percent of communities of color breathe polluted air.

While all of this news is encouraging, there are still important questions about local solar access and affordability for low-income people, renters, and communities of color – constituencies that greatly overlap. [Tweet “We need an informed dialogue about how local solar power can impact low-income communities. http://ow.ly/JAG2J “]

There is no easy answer, but fortunately this issue has been a priority for many lawmakers and advocates – including Environmental Defense Fund – who are working to find solutions. A community solar pilot project in Los Angeles, for example, will empower residents to own a share of a local solar garden without installing panels on their own roofs. This has the potential to reach 51 percent of the population in L.A. who rent, and large swaths of residents who can’t afford their own solar system. These and other policies can create access and affordability for people who otherwise could not join the clean energy revolution – and we need to get these policies right.

But, in the meantime, we also need to counteract misinformation and bad ideas.

Enter the “solar hurts low income people” argument, which claims that low-income people are paying higher bills to subsidize solar power they can’t afford, and thus advocates and lawmakers should oppose it. This argument is misguided, ignores critical information, and often emanates from industry groups trying to turn low-income communities against clean energy.

To be clear, asking important questions regarding clean energy and equity is productive; so is pushing lawmakers to find solutions that work for all communities and don’t place unfair, burdensome costs on low-income people. What’s unproductive is misinformation and conjecture. To forge fair, lasting solutions, we need real, unbiased data and analysis on the costs of solar to customers and the grid, some of which already exists:

  • Fact: a study commissioned by the California Public Utilities Commission found that solar customers on average cover their full costs to the electric grid;
  • Fact: a study by the Nevada Public Utilities Commission and a study from the Mississippi Public Service Commission found that solar customers provide a net benefit to all ratepayers;
  • Fact: an analysis from Deutsche Bank finds that rooftop solar will be as cheap as traditional power by 2016 in all 50 states (this is already happening in 11 states); and
  • Fact: an analysis from the Lawrence Berkeley National Laboratory (LBNL) found that even the most aggressive net-metering solar programs would have minimal (0.1-2.7 percent) impact on electricity rates.

So, why would some industry groups want to slow the growth of local solar? (Spoiler alert: it’s about THE MONEY!) The LBNL study found that local solar will have significant impacts on utility shareholder profits – up to a 40 percent loss for some. It seems clear that the efforts to attack local solar may have more to do with threats to utility profits than negative impacts on low-income people.

And, thus, we arrive back where we started: let’s not decoy, avoid, or make void this topic. We need to ask complex and sometimes uncomfortable questions when it comes to local solar power and equity. It’s ok that we don’t have all the answers figured out ahead of time, as long as we learn together and arrive at solutions based on real information. But it’s not ok to allow misinformation and bad ideas to lead us to making the wrong decisions.

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6 Comments

  1. Bob Meinetz
    Posted February 24, 2015 at 2:46 pm | Permalink

    Jorge, I welcome your proposal to discuss net metering. Let’s “talk about it” – but specifically, let’s talk about what the data says minus EDF’s spin on it:

    1) Fact: what CPUC’s study does not say is that residential customers on average cover their full cost to the grid. What the three utilities evaluated – PG&E, SCE, and SDG&E – are doing, in fact, is charging their non-residential customers more to cover losses from residential solar (cost-shifting).

    2) Fact: Deutsche Bank has $5 billion climate portfolio, much of it invested in solar. Their analysis includes the following disclaimer:

    Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

    3) Fact: the word “minimal” appears nowhere in LBNL’s analysis and appears to be a fabrication on the part of EDF. What it does say:

    Even at penetration levels significantly higher than today, the impacts of customer-sited PV on average retail rates may be relatively modest (though we stress that our analysis does not isolate cost-shifting per se).

    LBNL’s analysis shows that on average (a critical phrase omitted by EDF) impact on retail rates may be “relatively modest” – in effect, acknowledging that poorer, non-solar owners may be disproportionately impacted.

    4) Fact: Last year EDF raked in $90 million from unnamed “foundations and other institutional giving” – more than half of its entire support. Might your own salacious comment be apropos, i.e.: “Spoiler alert: it’s about THE MONEY”?

  2. John Robinson
    Posted February 26, 2015 at 4:37 pm | Permalink

    “Development Integration Of Renewable Energy: Lessons Learned From Germany” is a White Paper outlining the detrimental effect of Germany’s renewable energy policy on the wholesale electricity markets, and on the Germany Economy. The authors of this white paper state that they fully support renewables as a part of the overall power portfolio. All the authors have worked with both electric utilities and purely renewable companies. Some of them have 20+ years of experience in the power sector, and a couple have direct equity interests in renewable projects.

    “Large penetration of renewable energy has not only translated into higher costs for the economy, it is also having profound effects on wholesale electricity markets that could ultimately result in a deterioration of the country’s reliability. Subsidized renewables have dispatch priority over thermal generators and come first in the market’s merit order, thus depressing wholesale prices to levels that are making thermal plants uneconomical. At the same time, increasing amounts of renewables require increasing amounts of back-up and balancing power that only thermal plants can provide. The implications of these developments for reliability are evident.” The problem is that prior to the introduction of utility scale renewables the wholesale market was orderly. The subsidized renewables impact on the wholesale market is destabilizing causing the thermal generators to become unprofitable and no longer viable. Ironically Utility Scale Renewables need the thermal producers to exist due to the intermittency of power production. http://www.finadvice.ch/files/germany_lessonslearned_final_071014.pdf

    From the Table of Contents

    UNINTENDED CONSEQUENCES OF GERMANY’S RENEWABLE POLICIES
    Enormous governmental subsidies for renewables
    Ever increasing power prices to residential customers
    Impact on national competitiveness
    Financial impact to thermal generators and reliability
    Impact of renewables’ variability on market operations and thermal plants Expansion and additional investment in the power grid
    Repeated redesigns and boom and bust cycles

    • Peter Sopher
      Posted March 4, 2015 at 10:34 am | Permalink

      Hi John, thank you for your comments and points about the transition to distributed generation’s costs and impact on reliability. These are two very important aspects that must be considered as we move toward a carbon-free economy. I would like to point you to two previous posts that address these very issues in the context of Energiewende:

      • http://blogs.edf.org/energyexchange/2014/10/06/while-critics-debate-energiewende-germany-is-gaining-a-global-advantage/?_ga=1.221762712.1472792959.1355868601
      • http://blogs.edf.org/energyexchange/2014/10/19/germanys-energiewende-proves-electricity-can-be-clean-and-reliable/?_ga=1.242152450.1472792959.1355868601

      I do think it’s important to note the difference between the cost and the price of energy in Germany. While the price of a kilowatt-hour of energy is high in Germany, the cost of electric bills is not unreasonable. The average German and American electric bills, at about $100/month, are the about same. Germany’s energy efficiency leadership enables them to afford high rates without especially high bills.

      In regard to reliability, the country has actually improved its status as a grid reliability leader, causing the Heinrich Böll Foundation’s Energy Transition blog to conclude, “Clearly, installing the equivalent of 100 percent of peak demand as wind and solar capacity does not bring down the grid.” Renewables International further asserts, “Renewables have not yet reached a penetration level that has detrimentally impacted grid reliability.”

      Best, Peter Sopher, EDF Clean Energy Policy Analyst

  3. Lee Mortinson
    Posted March 2, 2015 at 7:53 pm | Permalink

    California is the biggest market for solar in the USA and definitely a large portion of solar panel users are middle class. There are legitimate problems that should be brought to the table to discuss as Bob Meinetz and John Robinson have done, but this is no reason to go backwards. The more we can decentralize the power grid and lower costs, the better off we”ll be in the long run.

  4. Max Foltz
    Posted March 5, 2015 at 5:24 pm | Permalink

    I just want to say how much of a pleasure it was to read everyone’s comments. There is a very healthy dialogue happening on this blog and everyone seems to be contributing excellent information. Thank you.

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