Reducing Energy Burden with Solar: Colorado’s Strategy and a Roadmap for States

May 14, 2018 by Jeffrey J. Cook

Low-income residents suffer from a higher energy burden, or ratio of energy expenditures to overall household income, than higher-income households. This higher burden can result in a scenario where residents must choose between paying energy bills and purchasing other necessities. In some circumstances, solar photovoltaics (PV) can reduce this energy burden, but low-income residents face a variety of barriers to solar deployment such as homeownership status, housing assistance, and lack of financing. Some states have taken steps to address these barriers, and a recent NREL report details Colorado’s low-income PV strategy and offers a blueprint for other states considering this approach.

The Colorado Energy Office (CEO) is charged with managing the state’s energy programs, including those tailored to low-income Coloradoans. CEO identified that many low-income residents suffer from high energy bills split evenly between natural gas home heating and electricity costs. CEO pursued a three-pronged strategy to maximize energy burden reductions, which included:

1. Supporting low-income community solar demonstration projects
2. Incorporating PV into its weatherization program
3. Promoting utility investment in low-income PV programs.

In 2015, CEO launched its low-income community solar program in partnership with GRID Alternatives and eight cooperative and municipal utilities across the state. The goal of the program was to help reduce the energy burden for at least 300 low-income households and demonstrate whether dedicated community solar projects can be mutually beneficial for utilities and participants. The program has resulted in 1.5 megawatts (MW) of community solar projects and energy bill savings for nearly 400 households.[1]

CEO also began to integrate PV into its weatherization program in 2015. CEO receives grant funding from the U.S. Department of Energy and the Department of Health and Human Services to provide no-cost weatherization retrofits to eligible low-income residents. CEO identified that installing rooftop PV alongside other weatherization measures would result in about $400 of additional bill savings to customers annually. CEO pursued and received U.S. Department of Energy approval to install PV with federal weatherization dollars, becoming the first state to do so in 2016.

CEO pursued the third prong of its strategy, when Xcel Energy, the largest utility in the state, submitted three filings to the Colorado Public Utilities Commission relating to rates, corporate renewable procurement, and renewable energy standard compliance from 2017 to 2019. CEO, GRID Alternatives, and other stakeholders identified that high-income residents had disproportionally benefited from Xcel Energy’s available renewable incentive programs, despite low-income residents’ financial contributions through electricity rates. To rectify this imbalance, Xcel Energy collaborated with CEO and other stakeholders to propose two low-income programs that were approved by the commission. In the first program, Xcel will provide incentives to install up to 300 rooftop PV systems on CEO weatherized homes by 2019. In the second program, Xcel will issue a competitive solicitation for 13.5 MW of low-income community solar projects, to be in development by 2019.

The implementation of this multi-pronged strategy has yielded three key lessons:

1. The community solar demonstration showed that 100% low-income community solar projects can offer meaningful electricity bill savings for subscribers.
2. CEO’s successful integration of PV into its weatherization program reveals how a state can leverage federal funding to support low-income rooftop PV projects.
3. CEO’s efforts to promote utility investment in low-income PV shows how this partnership can significantly expand market impact.

Although CEO’s strategy was tailored to the unique needs of Colorado, other states could learn from the state’s experience in designing similar programs. The recent NREL report concludes with a six-step roadmap that policymakers can reference when considering their own low-income initiatives (see Figure 1).

Figure 1. Roadmap for developing a comprehensive low-income solar PV strategy

As was the case in Colorado, a state might begin by assessing the factors that drive energy burden, how PV might reduce that burden, and what financing options could be deployed to offset PV adoption costs. If a state wishes to proceed with a PV program, they can reference the Colorado strategy in designing policy and seeking approval. Given programs will vary based on a specific state’s characteristics, policymakers might consider launching pilots to evaluate different program designs. From this foundation, the state can pursue broader implementation and then consider next steps for further reducing low-income energy burden in a subsequent generation of PV programs.

Register for the May 30^th informational webinar.

Access the  full report.

[1] NREL’s Solar Technical Assistance Team (STAT) worked with CEO to conduct a separate analysis of the low-income community solar program. Findings from an analysis of utility business models are available at (https://www.nrel.gov/docs/fy18osti/70536.pdf).