Powering Strong Communities

Berkeley Lab report finds three policies most effective at solar PV adoption

A new study by the Lawrence Berkeley National Laboratory identified three policy and business models that boost “adoption equity” for solar power installations.

The authors of the study define adoption equity as the degree to which adopter incomes reflect the incomes of the general population.

“I think most people are aware that the benefits of solar energy have not been equitably distributed with respect to income,” Eric O’Shaughnessy, a Berkeley Lab affiliate researcher and the study’s lead author, said in a statement. The “key takeaway of our study is: It doesn’t have to be that way – especially now that solar is getting cheaper.”

The study, “The impact of policies and business models on income equity in rooftop solar adoption,” published in Nature Energy earlier this month, analyzed five policies and programs that have been used to spur solar photovoltaic (PV) adoption:

  • Financial incentives targeted at low- and middle-income households;
  • Leasing, which reduces upfront costs;
  • Property Assessed Clean Energy (PACE) Financing, a program to finance PV through property tax payments, available only in California, Florida, and Missouri for residential installations;
  • Financial incentives – usually rebates or other incentives to reduce upfront costs – offered to customers of any income level; and
  • Solarize, a community initiative to recruit a coalition of prospective PV adopters.

The report found that the first three types of interventions – targeted incentives, leasing, and PACE – are effective at increasing adoption equity.

“The results for those three interventions are pretty strong,” O’Shaughnessy said. “And the research also provides evidence that these interventions are leading to both deepening, or expanding in existing markets, and broadening, or moving into new markets – low-income areas where there traditionally was not solar.”

The authors argued that when solar installations enter a new market or neighborhood, it can have a spillover effect. “If a system is installed in a neighborhood that had no solar before, then the neighbors are going to see that system, and that makes them a little bit more likely to adopt themselves,” O’Shaughnessy said. “There’s lots of research on these peer effects. So, if the market broadens and solar deployment moves into new markets, the potential indirect effects are more significant than if the market only deepens by installing systems on lower-income households in existing markets.”

In addition, as the solar power market grows and costs continue to decline, the decision to install a system is driven less by environmental concerns and more by financial benefits. “Surveys suggest that roughly half of people who adopt nowadays are really doing it primarily for economic reasons,” O’Shaughnessy said.

And, for low- and middle-income households, financial benefits can make more of a difference. “Many low- and moderate-income households have a large ‘energy burden,’ which is the fraction of a household’s income that gets spent on energy and utility expenses,” Galen Barbose, a Berkeley Lab research scientist and one of the authors of the report, said in a statement. “There’s growing interest now in solar PV as being another arrow in that quiver of helping to reduce the energy burden of low-income households.”

The authors also noted that low- and middle-income housing accounts for 42% of PV-viable rooftop space in the United States.

In the study, the authors tapped household-level PV adopter income data covering more than 70% of the U.S. residential PV market. The study covered the period from 2010 to 2018 and included data on more than 1 million residential rooftop PV systems installed on single-family homes in 18 states. The researchers compared modeled household-level income estimates for PV adopters with area median household incomes, based on U.S. Census data.