Solar is about to get a lot more affordable for low-income households

The Biden administration is making a historic $7 billion investment in solar initiatives for low-income families. The funding will help nearly half of U.S. states to create such programs for the first time — and enable the other half to build on existing progress.

To celebrate Earth Day on Monday, the White House and the Environmental Protection Agency announced 60 winners of the Solar for All grant competition, one of three initiatives of the Inflation Reduction Act’s $27 billion Greenhouse Gas Reduction Fund. The EPA granted 49 state and territory awards totaling $5.5 billion, six tribal awards worth more than $500 million, and five multistate awards amounting to $1 billion. Together, the awards cover all 50 states, Puerto Rico, and the District of Columbia. All of the funding is dedicated to low-income and disadvantaged households.

Solar for All is ​“unprecedented,” said Warren Leon, executive director of the Clean Energy States Alliance. ​“There’s never been an initiative anywhere near as big for expanding solar for the benefit of low- and moderate-income households across the country. This is going to give a tremendous boost to an important share of the solar market that has not received sufficient attention in the past.”

The 60 selected programs, administered by state agencies, municipalities, tribal governments, and nonprofits, will use grants and low-cost financing to develop community solar, rooftop solar, and battery storage for individual homes and multifamily affordable buildings.

In some cases, the Solar for All grants will help grow existing programs, including large ones in California and New York, Leon said. But for 25 states and territories, this will be the first time they’re getting low-income solar programs, he noted. Among the newcomers — most of them Republican-leaning states — are Arkansas, Arizona, Idaho, Missouri, Nebraska, North Dakota, and South Dakota.

With this later start, they’ll be able to adopt the tactics that other states have wielded successfully, such as leveraging public-private partnerships, using qualifications other than a credit score for solar projects, and collaborating with community-based organizations to deploy solar more broadly, he said.

“Without Solar for All, it’s highly unlikely these states would have had any significant programs” in the next five years, Leon said.

Importantly, this funding will prove to be much more than just a one-time infusion, Leon added; it’ll help ​“de-risk” private investment in solar for low- and moderate-income households, kick-starting a market that will facilitate many millions more in future investment.

Solar’s equity problem

Many Americans can’t afford a solar project’s high upfront cost of $10,000 to $20,000, Senator Bernie Sanders (I-Vermont) said at the Earth Day announcement with the president in Triangle, Virginia.

Solar adoption has indeed skewed toward wealthier homes. According to Lawrence Berkeley National Laboratory, the median incomes of households installing solar in 2022 ranged from 108% to 180% of their state’s median income; low-income households are often defined as earning less than 80% of area median income, and moderate-income households less than 120%.

That inequality is a problem, given the vast bill savings the tech can provide, not to mention its health and climate benefits. President Joe Biden touted those advantages at the Earth Day event, where he said the program will help families ​“save over $400 a year on utility bills.” It’ll also cut 30 million metric tons of carbon pollution cumulatively, according to the EPA — an amount roughly equivalent to taking 7 million cars off the road.

Solar adoption has been growing among poorer households over time, in part because of falling solar costs as well as state solar equity programs, Leon said. For example, Connecticut’s Solar for All program, which ended in 2021, installed solar for more than 25,000 low- and moderate-income households, he noted. The new funding will help dramatically ramp up similar efforts in every U.S. state.

“Families who have in the past not been able to take advantage of solar panels will now be able to do so,” Sanders said.

The EPA will finalize the awards with recipients this summer. Then in the fall and winter, it anticipates existing programs, such as those in Georgia and Rhode Island, will begin using the funds to install solar projects and new programs will start launching.

The agency will deploy the funding over the next five years to build an estimated 4 gigawatts of rooftop and community solar power. The projects, which are required to reduce customer electric bills by at least 20%, will save 900,000 households $8 billion over the 25-year lifespan estimated for solar installations.

And ideally, Leon said, these projects will knock down systemic barriers that historically disadvantaged groups have faced around solar adoption, helping make clean energy more accessible for all — well after the initial $7 billion runs out.