All in the Community: Using Community Solar
Gardens to Bring the Benefits of Renewable Energy
to Low-Income Communities
MEGAN O’CONNOR*
A
BSTRACT
The goal of this Note is to analyze a possible solution to make distributed
generation (“DG”) solar energy more affordable and available to low-income
customers. The growth of renewable energy, in the form of DG solar, in the
United States can be attributed to the benefits that DG solar has on mitigating
the effects of climate change and helping to reduce customers’ reliance on
tra-
ditional
utility energy, thereby reducing the costs of their energy bills. The
growth of DG solar in the United States can also be attributed to the declining
costs of installing DG solar coupled with federal and state policies that promote
the use of renewable energy.
Net-metering is a state policy that encourages the use of DG solar.
Specifically,
net-metering
is
a policy that allows DG solar customers to buy
electricity from utility companies when needed and to sell any excess electricity
from their DG solar back to the grid. However, because of the utility company’s
duty to serve, net-metering creates stranded costs as a result of the change in
demand for traditional utility energy. To try and recoup these stranded costs,
utility companies must seek to increase their rates, causing the bills paid by
tra-
ditional
utility customers to increase and in effect subsidize the DG solar cus-
tomers.
The cost
shifts of net-metering have a disproportionate impact on low-income
customers because low-income customers face several barriers in trying to
switch to DG solar, making DG solar inaccessible to them. The two main
bar-
riers
facing low-income customers when trying to switch to DG solar are the
costs of installing DG solar and that many low-income customers live in multi-
family apartments where they are renters. Renting an apartment means that
low-income customers do not have control over the roofs of their buildings. So,
even if they had the financial ability to switch to DG solar, they do not have the
physical capacity to make the switch.
This Note analyzes
the possible solutions to provide low-income customers
with the ability to switch to DG solar. Many of the available solutions only
* Georgetown University Law Center, J.D. 2018; University of Delaware, B.A. 2015. © 2019,
Megan O’Connor.
391
reduce the costs of low-income customers’ energy bills but do not reduce their
reliance on traditional utility energy nor provide them with the ability to switch
to DG solar. Therefore, the best solution is to have utility-financed community
solar gardens because this not only reduces the costs of low-income consumers’
energy bills but reduces their reliance on utility energy, thus helping to mitigate
the effects of climate change.
T
ABLE OF CONTENTS
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 392
I. Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 393
A. The Benefits of Distributed Generation Solar Energy . . . . . . . . . . . 394
B. The Growth of Distributed Generation Solar Energy . . . . . . . . . . . 396
II. Utility Regulation and the Growth of Distributed Generation Solar Energy
Have Resulted in the Stranded Costs of Net-Metering. . . . . . . . . . . . . . . 397
A. Features of Regulated Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 397
1. A Brief History of Utility Regulation. . . . . . . . . . . . . . . . . . . 398
2. Duties Imposed on a Regulated Utility Company . . . . . . . . . . 398
B. The Unintended Effects of Net-Metering . . . . . . . . . . . . . . . . . . . . 399
1. Stranded Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399
2. Cost-Shifting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399
III. Low-Income Customers Face Numerous Barriers When Trying to Switch
to Distributed Generation Solar Energy . . . . . . . . . . . . . . . . . . . . . . . . . 400
IV. Community Solar is a Better Solution to Provide Low-Income Customers
With the Opportunity to Switch to Distributed Generation Solar Energy
Than Traditional Finance Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 401
A. Traditional Finance Solutions and Why they are Insufficient. . . . . . 402
1. Government Assistance Programs . . . . . . . . . . . . . . . . . . . . . 402
2. Third-Party Ownership Models . . . . . . . . . . . . . . . . . . . . . . . 403
B. The Solution of Community Solar Gardens . . . . . . . . . . . . . . . . . . 404
1. The Benefits of Community Solar Gardens. . . . . . . . . . . . . . . 404
2. The Implementation of Community Solar Gardens . . . . . . . . . 405
C. Financing Utility Owned Community Solar Gardens . . . . . . . . . . . 405
1. On-Bill Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 405
2. Pay As You Save . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 406
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 406
INTRODUCTION
Until recently, solar energy was always considered too expensive to be a viable
method for combating climate change. However, recent price decreases in the
cost of installing solar energy has led to an increase in its popularity.
1
This price
1. BENTHAM PAULOS, SUSTAINABLE SOLAR EDUCATION PROJECT, BRINGING THE BENEFITS OF SOLAR
ENERGY TO LOW-INCOME CONSUMERS 5 (May 2017) [hereinafter BRINGING THE BENEFITS].
392 THE GEORGETOWN ENVTL. LAW REVIEW [Vol. 31:391
reduction in the costs of installing solar energy, although increasing the popular-
ity
of solar energy in wealthy communities, has still not provided low-income
communities much access to solar energy.
2
2. Bentham Paulos, 6 Recommendations for Bringing Solar Power to Low-Income Households,
F
UTURESTRUCTURE (July 18, 2017), http://www.govtech.com/fs/perspectives/6-Recommendations-for-
Bringing-Solar-Power-to-Low-Income-Households.html [hereinafter 6 Recommendations]; 30þ Facts
and Resources for Low Income Solar Power, S
OLAR RES. GUIDE, https://bill-solar.squarespace.com/30-
facts-and-resources-for-low-income-solar-power/ (last visited Jan. 20, 2019).
Providing access to solar energy to
low-income communities will not only help the communities combat climate
change by reducing their reliance on fossil fuels, but also will help them save
on their utility bills and allow them to spend money on other necessities.
Although the financial costs of solar installation are a major barrier precluding
low-income communities from participating in solar energy, there are other bar-
riers
that are unique to low-income customers that further prevent their access to
solar installation.
3
Further, being denied the opportunity to participate in the solar
phenomenon has created a financial burden on low-income customers because of
cost-shifting.
4
This Note analyzes the best way to provide low-income communities access to
solar energy by overcoming the obstacles in their path. Part I of this Note
pro-
vides
an overview of the benefits of using solar energy and the growth of solar
energy in the United States. Part II presents the problem that the growth of solar
energy has created for low-income customers through the use of net-metering,
which has resulted in cost-shifting from solar energy customers to traditional
util-
ity
customers. Part III analyzes the unique barriers that low-income customers
face when trying to gain access to solar energy. Finally, Part IV provides some
solutions at the federal and state level to provide low-income communities access
to solar energy and discusses the problems with each option. Ultimately, this
Note will recommend community solar gardens owned by the utility companies
as the preferred method to provide low-income customers with access to solar
energy, which will reduce their energy costs and reduce the harmful effects of cli-
mate
change.
I. B
ACKGROUND
The effects of climate change will impact the lives of all people living in the
United States, but these effects will not impact every person equally. Low-
income communities, often referred to as environmental justice communities,
have fewer resources available to try and adapt to the effects of climate change.
5
Numerous studies have demonstrated that low-income communities, often
3. 6 Recommendations, supra note 2.
4. Adrienne L. Thompson, Protecting Low-Income Ratepayers as the Electricity System Evolves, 37
E
NERGY L.J. 265, 282 (2016).
5. Deborah Behles, From Dirty to Green: Increasing Energy Efficiency and Renewable Energy in
Environmental Justice Communities, 58 V
ILL. L. REV. 25, 25 (2013).
2019] ALL IN THE COMMUNITY 393
located in urban areas, bear more of the cumulative burden of pollution as
opposed to wealthier communities.
6
The cumulative burden of pollution has a
stronger effect on low-income communities because fossil-fuel-burning plants
that emit greenhouse gases and other harmful air pollutants are disproportionally
located next to these communities.
7
The deterioration of air quality from being
located next to these greenhouse gas emitting factories can lead to adverse respi-
ratory health effects.
8
Because of the deterioration in air quality, several studies
have demonstrated that low-income communities experience higher incidences
of respiratory health problems than wealthier communities.
9
Renewable energy is widely recognized as one of the most promising alterna-
tives
for reducing fossil fuel consumption and mitigating the effects of climate
change.
10
Using renewable energy avoids the harmful effects of fossil fuels and
will displace the sources of pollution that negatively and disproportionally impact
low-income communities.
11
One type of renewable energy—solar energy—is
expected to play a substantial role in reducing greenhouse gas emissions.
12
One
study asserts that solar energy could provide as much as a seventh of the
emis-
sions
reductions required globally to prevent the worst impacts of climate
change.
13
Switching to renewable energy sources, like solar energy, can mitigate the
harmful effects of climate change. The following sections provides some
back-
ground
on (A) the benefits associated with solar energy and (B) the growth of so-
lar
energy in the United States.
A.
THE BENEFITS OF DISTRIBUTED GENERATION SOLAR ENERGY
Scientists have determined that significant reductions of greenhouse gases are
necessary to avoid the harmful impacts of climate change.
14
Federal and state
governments have been evaluating different options to reduce greenhouse gases,
and, recently, their focus has been on the electric industry.
15
The electric industry
provides electricity to their customers by burning fossil fuels. This is a problem
because research shows that approximately 40% of carbon dioxide emissions in
6. Id. at 40–41; see BRINGING THE BENEFITS, supra note 1, at 9 (citing NAACP, COAL BLOODED:
P
UTTING PROFITS BEFORE PEOPLE (2012)).
7. Behles, supra note 5, at 41–42.
8. Id.
9. Id. (citing studies that found children living in low-income communities have a higher risk of
acquiring asthma than children living in higher-income communities).
10. Uma Outka, Environmental Justice Issues in Sustainable Development: Environmental Justice in
the Renewable Energy Transition, 19 J. E
NVTL. & SUSTAINABILITY L. 60, 62 (2012).
11. Id. at 70.
12. Jackson Salovaara, Just and Reasonable Rooftop Solar: A Proposal for Net Metering Reform, 7
A
RIZ. J. ENVTL. L. & POL’Y 56, 59 (2017).
13. Id.
14. Behles, supra note 5, at 38.
15. Id. at 39.
394 THE GEORGETOWN ENVTL. LAW REVIEW [Vol. 31:391
the United States are created from burning fossil fuels.
16
To reduce the levels of
greenhouse gases produced by the electric industry, federal and state
govern-
ments
have focused on using renewable energy to reduce customers’ reliance on
electric utility companies, ultimately reducing the amount of fossil fuels burned
by those utility companies.
17
One study asserts that solar energy could provide as
much as a seventh of the emissions reductions required globally to prevent the
worst impacts of climate change.
18
Solar energy can take the form of distributed
generation (“DG”) solar and utility scale solar.
19
This Note will focus primarily
on the use of DG solar energy as an alternative to traditional utility energy.
DG is
defined as small-scale electricity generation resources located near load
requirements.
20
DG can also refer to community-scale renewable energy projects
that serve neighborhoods via a microgrid which may or may not be connected to
the large utility grid.
21
Solar energy is the most common form of DG because it
can be easily placed on the roofs of buildings.
22
DG solar energy is produced by
photovoltaic (“PV”) cells, known as solar panels, which can be placed on roof-
tops or mounted on the ground.
23
DG solar accounts for one-third of installed so-
lar
capacity (complementing utility-scale solar) and is one of the fastest growing
segments.
24
The switch to renewable energy in the form of DG solar can have other benefi-
cial
impacts aside from reducing climate change, such as operational and produc-
tivity
benefits. DG solar can provide benefits for the resiliency of the grid by
providing a more diversified portfolio of energy sources than schemes that rely
exclusively on electricity produced by large power plants.
25
DG systems in gen-
eral
have beneficial effects on land use because they reduce the need for rights-
of-way for electric transmission and distribution.
26
Further, because DG solar is
primarily generated and consumed on the same property, this reduces congestion
of transmission and distribution lines.
27
According to a study by the Federal
Energy Regulatory Commission, the reduction in congestion of the transmission
lines creates benefits at the local level, such as allowing utilities to make capital
investments in transmission and distribution, creating opportunities to provide
16. Id.
17. Id. at 40.
18. Id. at 38.
19. Id.
20. Id. at 34.
21. Outka, supra note 10, at 118–19; Richard L. Revesz & Burcin Unel, Managing the Future of the
Electricity Grid: Distributed Generation and Net Metering, 41 H
ARV. ENVTL. L. REV. 43, 45 (2017).
22. Behles, supra note 5, at 34.
23. Revesz & Unel, supra note 21, at 44.
24. Salovaara, supra note 12.
25. Revesz & Unel, supra note 21, at 45.
26. Megan McLean, Throwing Shade: The Case Against Judicial Interference with Solar Net
Metering Policies, 46 E
NVTL. L. REP. NEWS & ANALYSIS 10873, 10875 (2016).
27. Id.
2019] ALL IN THE COMMUNITY 395
reactive power and voltage support, and improving power quality and reliabil-
ity.
28
Because the transmission system operated today is outdated, it is prone to
blackouts and shortages, especially during peak demand.
29
The peak demand pe-
riod
is typically in the afternoon, and the demand can be so high that transmission
lines may lack adequate capacity to handle it, forcing grid managers to curtail
electricity deliveries to certain sources.
30
Because DG solar gets most of its
energy during mid-day when the sun is at its height, this reduces peak demand,
which in turn decreases transmission line congestion, increases efficiency, and
prevents the need for curtailment.
31
The final benefit of switching to DG solar, unlike the benefits previously men-
tioned,
directly effects the individual consumer in the form of utility bill savings.
Electricity provided by DG solar systems gives consumers more control over
their utility bill.
32
Consumers can choose to carry out energy intensive activities
during periods when their solar panels are the most productive, thus reducing
their reliance on electricity produced by their local utility and lowering their
bill.
33
B. THE GROWTH OF DISTRIBUTED GENERATION SOLAR ENERGY
The growth of DG solar can be attributed to the decrease in the price of instal-
ling
DG solar. This price reduction results from state and federal policies along
with advances in technology. Overall, DG solar installation costs have dropped
63% since 2011, 18% between 2015 and 2016, and 70% from 2009.
34
As a result
of these price decreases, DG solar has been growing in the United States at over
50% per year from 2011 to 2016.
35
In 2015, “solar accounted for 29.4% of new
electric generating capacity installed in the U.S.,” and in the first quarter of 2016,
it accounted for 64%.
36
In 2016, the one-millionth rooftop solar array was in-
stalled
in the United States, completing the “Million Rooftop Initiative” which
was announced by the federal government in 1997.
37
The two-millionth rooftop
solar array is predicted to be installed by 2018.
38
28. Id.
29. Ryann White, Three Steps to a Greener Tomorrow: Encouraging Solar Energy Development in
the Sunshine State, 31 J. L
AND USE & ENVTL. L. 263, 268 (2016).
30. Id.
31. Id. at 268–69.
32. Id. at 269.
33. Id.
34. Mark James, Ashleigh H. Krick, & Kelsey R. Bain, Planning for the Sun to Come Up: How
Nevada and California Explain the Future of Net Metering, 8 S
AN DIEGO J. CLIMATE & ENERGY L. 1, 4
(2017).
35. B
RINGING THE BENEFITS, supra note 1, at 9.
36. Shannon Elizabeth Bell, Environmental Injustice and the Pursuit of a Post-Carbon World: The
Unintended Consequences of the Clean Air Act as a Cautionary Tale for Solar Energy Development, 82
B
ROOK. L. REV. 529, 551–52 (2017).
37. James, Krick, & Bain, supra note 34, at 4–5.
38. Id. at 5.
396 THE GEORGETOWN ENVTL. LAW REVIEW [Vol. 31:391
Aside from the decreasing cost of DG solar, federal and state policies promot-
ing
the use of renewable energy also have contributed to the growth of DG solar.
The federal Energy Policy Act of 2005 (“EPACT”) requires state regulatory
com-
missions
and electric utilities to consider making net-metering services available
to retail electricity customers upon request.
39
As a result, forty-four states and the
District of Columbia now have some form of net-metering policy.
40
A second policy driver of DG solar has been state polices concerning renew-
able
portfolio standards (“RPS”). RPS require or encourage load serving entities
and utilities to source a certain amount of their electricity from renewable sour-
ces.
41
By 2015, twenty-nine states and the District of Columbia had RPS pro-
grams,
and eight additional states had a non-binding renewable portfolio goal.
42
However, these policies and the growth of DG solar have had some un-intended
consequences for low-income customers.
II. U
TILITY REGULATION AND THE GROWTH OF DISTRIBUTED GENERATION SOLAR
ENERGY HAVE RESULTED IN THE STRANDED COSTS OF NET-METERING
The switch to DG solar promoted by the federal and state policies previously
mentioned has caused some harmful effects to low-income customers, especially
through the use of net-metering policies. The following sections provide some
(A) background on the utility industry in the United States and (B) uses this
back-
ground
to explain the issues caused by net-metering.
A.
FEATURES OF REGULATED UTILITIES
There are some fundamental features of utility regulation that are important
to understanding the utility’s role—in this case the electric utility—in the switch
to renewable energy. The energy market of the United States was built on the
principles of monopolism, meaning that vertically integrated utility companies
controlled all stages of energy production: generation, transmission, and
distribu-
tion.
43
In exchange for this control, the electric companies were subject to exten-
sive
regulation turning them into highly regulated public utility companies.
44
To
understand this development, the next two sections focus on (1) the history of this
regulation and (2) how it imposed several important duties on the electric
util-
ities:
the duty to serve, the duty of non-discrimination, and the ability to pay
principle.
39. Steven Ferrey, Net Legal Power, 53 SAN DIEGO L. REV. 221, 230 (2016).
40. Id.
41. Revesz & Unel, supra note 21, at 57.
42. Id.
43. Christina Alam, It’s Not Always Sunny in Philadelphia: The Problem with the Pennsylvania
Solar Initiatives, 16 U. P
ITT. J. TECH. L. & POL’Y 208, 210 (2016).
44. Id.
2019] ALL IN THE COMMUNITY 397
1. A Brief History of Utility Regulation
The Public Utility Regulatory Policies Act (“PURPA”), which is part of the
National Energy Act of 1978, required
electric utilities to procure a portion of
their electricity from “qualified facilities,” which were basically small generation
sources of alternative energy.
45
The Federal Energy Regulatory Commission
(“FERC”) was put in charge of PURPA implementation, and FERC promulgated
regulations setting a minimum price for the energy procurement from such
gener-
ation
sources.
46
Under these rules, electric utilities had to buy energy at the price
charged to the utilities’ own customers, which was a significant step toward
encouraging the use of renewable energy.
47
In the 1990s, because of the Energy Policy Act of 1992 and FERC Order No.
888, the vertically integrated monopolies were unbundled, meaning that there
were separate charges for generation, transmission, and distribution, creating
competition in the wholesale transmission market.
48
However, the federal gov-
ernment
only has power to regulate the wholesale and not the retail sale of elec-
tric
service under PURPA. This ended up not being an issue because the state
legislatures and utility commissions followed suit and introduced competition
into the retail market.
49
Under this new regime, customers were allowed to
choose the type of generation source they wanted, opening the door to renewable
energy use.
50
2. Duties Imposed on a Regulated Utility Company
The duty to serve is an obligation on the utility to provide service to any mem-
ber
of the public in the utility’s service area who has applied and is willing to pay
for service, including both profitable and unprofitable customers.
51
Along with this duty to serve is the duty of non-discrimination. This duty
requires that a utility provide service without undue discrimination, meaning “to
[the] extent of its capacity, serve all who apply, on equal terms, as far as they are
in [the] same class and similarly situated.”
52
Low-income customers have been
given rate discounts by utility companies, but these discounts have withstood the
common law duty because the discrimination is not undue.
53
Finally, the ability
to pay principle states that, because electricity is a necessity, it should not be
45. Id. at 211.
46. Id.
47. Id.
48. Id. at 211–12.
49. See id. at 212.
50. Id.
51. Thompson, supra note 4, at 274.
52. Id. at 275 (citations omitted).
53. Id.
398 THE GEORGETOWN ENVTL. LAW REVIEW [Vol. 31:391
denied to low-income customers purely because they cannot pay the full cost of
the service.
54
B. THE UNINTENDED EFFECTS OF NET-METERING
Net-metering is a policy governing how utility customers are compensated for
the electricity they provide to the grid.
55
Net-metering regulations allow DG solar
customers to buy electricity from utility companies when needed and to sell any
excess electricity from their DG solar to the grid.
56
At the end of the billing pe-
riod,
customers only pay for the net amount of electricity used, meaning their
consumption minus their generation.
57
Although net-metering is helpful to those
who can afford it, net-metering also has the negative effects of (1) stranded costs
and (2) cost-shifting.
1. Stranded Costs
The problem with net-metering and why utility companies oppose these
poli-
cies
is stranded costs.
58
Stranded costs are prudent investments that are unrecov-
erable
because of changes in regulatory policy, technology, or demand.
59
Utilities
point to three main types of stranded costs in the net-metering context: “(1)
obli-
gations
incurred to carry or abandon redundant or obsolete energy generation
plants; (2) added transition expenditures not recoverable under net metering
poli-
cies;
and (3) contractual obligations to purchase electricity from DG customers at
above market prices.”
60
2. Cost-Shifting
Cost-shifting refers to cross-subsidization of DG solar users. Cost-shifting fea-
tures
prominently in the fairness argument, which is one other common argument
made by utility companies concerning the use of net-metering. Utilities argue that
net-metering allows DG solar customers to free-ride off of other customers who
do not have PV solar panels because they are allowed to make use of the electric
grid as a back-up power source without paying their “fair share” of the costs of
building and maintaining it.
61
This effectively creates a cross-subsidization for
DG solar users.
62
When a utility customer enrolls in DG solar, the quantity of
grid-sourced electricity that they consume shrinks to a fraction of their former
54. Id. at 276.
55. Salovaara, supra note 12, at 63.
56. Id.
57. Id.
58. McLean, supra note 26, at 10874.
59. Id.
60. Id.
61. Troy A. Rule, Solar Energy, Utilities, and Fairness, 6 S
AN DIEGO J. CLIMATE & ENERGY L. 115,
129 (2015).
62. Id. at 131.
2019] ALL IN THE COMMUNITY 399
amount, causing utilities to seek increases in their rates to maintain the same
basic grid infrastructure while selling less power.
63
This causes the bills paid
by traditional utility customers to increase, thus subsidizing the DG solar
costumers.
64
Because of the many barriers that prevent low-income customers from partici-
pating
in DG solar, these customers have no choice but to pay the higher utility
rates, creating wealth transfers from low-income customers who cannot obtain
DG solar to high-income customers who have access to DG solar.
65
The concerns
of cost-shifting come from two sources: DG solar customers take service under
usage-based rates, and they receive retail rate reimbursements for the excess
energy they export back to the grid.
66
Usage-based rates combine infrastructure
costs with energy costs, but DG solar costumers can avoid these infrastructure
costs.
67
The California Public Utility Commission conducted an expansive study
of the economic impacts of net-metering and found that, by 2020, this policy will
cost California’s traditional utility customers $1.1 billion.
68
If DG solar remains
out of reach for low-income customers, then they will be less able to manage
spikes in their loads that occur during periods of high demand, causing increased
bill volatility and higher prices.
69
Many state utility commissions have been trying to change their net-metering
policies to avoid their unintended effects.
70
However, reforming net-metering is
not the subject of this Note because simply reforming the policies does not cure
the problem of reducing the barriers faced by low-income customers trying to
gain access to DG solar.
III. L
OW-INCOME CUSTOMERS FACE NUMEROUS BARRIERS WHEN TRYING TO SWITCH
TO
DISTRIBUTED GENERATION SOLAR ENERGY
The effects of climate change tend to have a disproportionate effect on low-
income communities; low-income customers feel the economic effects not only
from net-metering, as described in Section II.B, but from regular energy bills as
well. Low-income customers pay a much higher portion of their income for
energy than middle and high-income customers.
71
In a recent study of the 48 largest U.S. cities, the American Council for an
Energy Efficient Economy (“ACEEE”) found that households with income below
63. Id. at 130.
64. Id.
65. Id. at 135.
66. John V. Barraco, Distributed Energy and Net Metering: Adopting Rules to Promote a Bright
Future, 29 J. L
AND USE & ENVTL. L. 365, 380 (2014).
67. Id.
68. Id. at 381.
69. Shelley Welton, Clean Electrification, 88 U. C
OLO. L. REV. 571, 600 (2017).
70. Revesz & Unel, supra note 21, at 64.
71. B
RINGING THE BENEFITS, supra note 1, at 1.
400 THE GEORGETOWN ENVTL. LAW REVIEW [Vol. 31:391
80% of the median income in that area experienced higher energy burdens than
the average household in the city.
72
The median energy burden across all of the
cities in the study was 3.5%, while the median low-income household’s energy
burden was more than twice as high, at 7.2%.
73
The federal Energy Information
Administration found that, depending on the state, the energy burden on middle
to high income ratepayers is 1–5%, whereas low-income customers face burdens
from 6–30% or more.
74
Studies have further shown that energy bills can be up to
30% of a low-income family’s monthly income, and low-income households are
estimated to represent over 95% of those households that are considered to have a
high energy burden.
75
These studies, along with the effects of net-metering, dem-
onstrate
that those who would benefit the most from a reduction in energy bills
are the ones who are denied access to DG solar.
76
Although cost is a major factor that prohibits low-income customers from par-
ticipating
in DG solar, there are several other barriers that foreclose this option to
these customers. Low-income customers do not have enough savings to pay cash
or down payments for solar energy systems.
77
Further, many low-income custom-
ers
do not have enough income tax to take full advantage of federal tax credits for
solar power.
78
Low-income customers also cannot take advantage of third-party
leasing of solar energy systems because they may have insufficient lending
activ-
ity
to generate a credit score, which automatically bars them from solar offer-
ings.
79
Finally, low-income customers may lack home ownership, and many of
them live in multifamily housing as renters with no control over their roof
space.
80
80. Solar for All: What Utilities Can Do
Right Now to Bring Solar Within Reach for Everyday Folks, S.
E
NVTL. L. CTR. 1 (2017), https://www.southernenvironment.org/uploads/words_docs/SolarForAll_InlineDoc_
061716_Final.pdf [hereinafter Solar for All].
IV. COMMUNITY SOLAR IS A BETTER SOLUTION TO PROVIDE LOW-INCOME
CUSTOMERS WITH THE OPPORTUNITY TO SWITCH TO DISTRIBUTED GENERATION SOLAR
ENERGY THAN TRADITIONAL FINANCE SOLUTIONS
The traditional focus on lowering the energy costs of low-income customers
was to provide subsidies and rate decreases from utilities and commissions. Some
states have tried to implement these same methods to reduce the stranded cost
problem and to reduce the cross-subsidization issue. However, the focus should
not be on just alleviating the cost-shifts because then low-income individuals will
still bear the health risks of climate change, instead of just the economic burdens
72. Id. at 9.
73. Id.
74. Thompson, supra note 4, at 269.
75. Behles, supra note 5, at 43–44.
76. Welton, supra note 69, at 632–33.
77. B
RINGING THE BENEFITS, supra note 1, at 11.
78. Id.
79. Id.
2019] ALL IN THE COMMUNITY 401
imposed by wealthier individuals switching to DG solar. Instead, the focus should
be on providing low-income customers with the ability to participate in the DG
solar movement and give them access to DG solar. Not only will this help combat
the issues associated with climate change, but this also will reduce the energy
needs of these customers. Increasing access to DG solar to low-income customers
will require participation from policy makers, regulators, agencies, and utilities
from both the federal and state levels.
The following sections (A) outline possible financial solutions to bring DG
so-
lar
to low-income customers along with the flaws of each solution, (B)
recom-
mend
as the best solution a community solar garden system, and (C) recommend
that the system be owned and funded by the electric utility companies.
A.
TRADITIONAL FINANCE SOLUTIONS AND WHY THEY ARE INSUFFICIENT
Traditionally, financial solutions in the form of (1) government assistance pro-
grams
and (2) third-party ownership models have been the main method used to
solve the problem of providing low-income customers access to DG solar.
1. Government Assistance
Programs
One solution to help reduce the cross-subsidization
effects of net-metering is
to continue to offer utility discounts to low-income customers along with federal
and state subsidies. Federal programs such as the Low-Income Home Energy
Assistance Program (“LIHEAP”) and the Weatherization Assistance Program
(“WAP”) focus on giving direct subsidies to the consumer to lower current
energy bills.
81
These programs are beneficial and should continue to be used to
help reduce low-income customers’ energy costs, but only a small portion of
these programs are used to try to prevent low-income customers from continuing
to face the same energy burdens in the future.
82
Furthermore, the funding for
these programs is usually subject to budget cuts.
83
Several states have programs similar to the federal programs just mentioned,
but as with the federal programs, they face the same funding issues.
84
In some
states there is a straight discount program available to help low-income
cus-
tomers
reduce the amount of their bill.
85
The last financing option that is being
explored by states is virtual net-metering (“VNM”). VNM as contemplated in
Massachusetts would allow a DG solar customer to allocate any of their credits
from their DG solar energy system to be given to anyone in the same community.
86
86. Hannah Flint, State Market Assessment: Solar
in Massachusetts, G
EO. ENVTL. L. REV. BLOG
(Jan. 14, 2015), https://gelr.org/2015/01/14/state-market-assessment-solar-in-massachusetts/; BRINGING
THE BENEFITS, supra note 1, at 31.
81. Behles, supra note 5, at 27.
82. Id. at 30–31.
83. Id. at 31.
84. Id. at 31–33.
85. Thompson, supra note 4, at 277.
402 THE GEORGETOWN ENVTL. LAW REVIEW [Vol. 31:391
The issue with all of these financing models is that they just help low-income cus-
tomers
pay for their current energy bill but do not help to reduce their energy
intake and do not help to solve the environmental problems that would be cured
with providing access to DG solar.
2. Third-Party Ownership
Models
One option to actually provide low-income
customers with access to DG solar
is through third-party ownership models. Many states allow third-parties to own
rooftop solar systems and provide solar energy to a customer through a lease, a
power purchase agreement (“PPA”), or an energy service agreement.
87
The most
common models are PPAs and leases, which are implemented when a developer
installs a solar energy system on the customer’s property, maintains the system
for them, and leases the power to the customer.
88
Although this option would
break down many of the barriers that preclude low-income customers from
accessing DG solar, the problem is that third-party providers rarely serve low-
income customers because credit score is an important factor in determining the
financial risk of taking on a customer, and, as previously stated, one of the other
barriers facing low-income customers is either having a poor credit score or no
credit score at all.
89
Therefore, this is not a great option to provide low-income
customers access to DG solar.
Finally, as outlined in Part III, aside from cost, one of the biggest barriers for
low-income customers to overcome when contemplating
DG solar is that many
such customers rent the buildings that they live in and do not own their own
roofs.
90
The problem with installing solar on multi-family dwellings is that land-
lords
may not approve of the idea because landlords do not benefit directly.
91
Multi-family buildings have a single “master” electric meter for the common
areas in the building, which is billed to the building owner and sub-meters for
individual apartments, which is billed to the tenant.
92
This can result in split
incentives where the costs and benefits of making building improvements like
DG solar can have differing impacts on who makes the investments and who
ben-
efits
from them.
93
A landlord who does not pay the utility bills on a multifamily
housing property will not see the full bill savings from an investment in solar
power.
94
Landlords, however, may benefit from tax credits, energy savings, and
87. BRINGING THE BENEFITS, supra note 1, at 45.
88. Id. at 46.
89. Id.
90. 6 Recommendations, supra note 2; see also B
RINGING THE BENEFITS, supra note 1, at 14; Solar
for All, supra note 80, at 1.
91. Richard L. Ottinger & John Bowie, Innovative Financing for Renewable Energy, 32 P
ACE
ENVTL. L. REV. 701, 704 (2015).
92. B
RINGING THE BENEFITS, supra note 1, at 14.
93. Id.
94. Id.
2019] ALL IN THE COMMUNITY 403
increases in property value from going solar but may be unwilling to share those
savings with tenants.
95
Because of these issues, it is unlikely that landlords will
invest in DG solar, and it is unclear as to whether low-income customers would
actually see the benefits if DG solar was actually installed.
B.
THE SOLUTION OF COMMUNITY SOLAR GARDENS
Community solar projects allow for broad community participation and also
reduce the cost barriers to DG solar.
96
96. L
OW-INCOME SOLAR POLICY GUIDE 45 (2016), http://www.lowincomesolar.org/wp-content/
uploads/2016/03/Low-Income-Solar-Policy-Guide_3.11.16.pdf.
The general definition of a community so-
lar
garden (”community solar”) is a solar project owned, developed, and con-
trolled
by either residents or an entity of the community in which the project is
located.
97
Community solar works by allowing customers to subscribe or to buy a
portion of an offsite solar installation and receive utility bill credit from its
out-
put.
98
In addition, the community solar model reduces the high upfront installa-
tion
costs associated with DG solar by spreading the costs among a group of
customers.
99
The following sections outline the (1) many benefits of community
solar gardens and (2) how some states are already trying to implement
commu-
nity
solar gardens.
1. The Benefits
of Community Solar Gardens
Community solar gives multiple users who may lack the ability or desire to
install rooftop DG solar panels the chance to purchase a portion of their electricity
from a solar facility located off-site.
100
Members of the community who purchase
energy from these community-owned solar panels receive the same net-metering
benefits as if the panels were located on their own property.
101
Because of these
characteristics, community solar is a viable option for homeowners or renters
who either do not have a roof that could support solar panels or who rent and do
not own their own roofs.
102
Community solar is one of the best options to bring
solar energy to low-income communities because this type of solar energy
ena-
bles
a wider range of customers such as renters, apartment dwellers, and people
in homes that are ill-suited for rooftop solar panels to gain access to DG solar.
103
95. Id. at 8.
97. Behles, supra note 5, at 45.
98. B
RINGING THE BENEFITS, supra note 1, at 10.
99. Kristen L. Bailey, Insecurity for Community Solar: Three Strategies to Confront an Emerging
Tension Between Renewable Energy Investment and Federal Securities Laws, 10 J. T
ELECOMM. & HIGH
TECH. L. 123, 124 (2012).
100. Id. at 129.
101. Behles, supra note 5, at 46.
102. B
RINGING THE BENEFITS, supra note 1, at 10.
103. Id.
404 THE GEORGETOWN ENVTL. LAW REVIEW [Vol. 31:391
2. The Implementation of Community Solar Gardens
The model of community solar is still relatively new, but many states are test-
ing
new possibilities.
104
In some states, community solar is designed to save cus-
tomers
money by relying on virtual net-metering to allow customers to capture
the value while others pay a premium to participate in community solar owned by
a utility.
105
Colorado became the first state to pass statewide shared renewable
legislation when, in 2015, it passed the Community Solar Gardens Act.
106
The
California and Colorado community solar laws even require utilities to reserve a
percentage of their projects for low-income customers.
107
At least fourteen states
and the District of Columbia have some form of community solar policy in
place.
108
The National Renewable Energy Laboratory (“NREL”) calculates that
community solar could represent between a third and a half of the distributed PV
market in 2020.
109
C. FINANCING UTILITY OWNED COMMUNITY SOLAR GARDENS
One of the issues with community solar is deciding who will own and operate
the DG solar systems. Government entities, utilities, nonprofits, or other
adminis-
trative
programs all have the ability to run and finance community solar.
110
Utilities would be good candidates to own community solar because they would
be able to communicate directly with low-income customers and would be able
to help these customers pay for the community solar.
111
Utilities would be able to
help low-income customers pay for the community solar gardens through either
(1) on-bill repayment or (2) pay as you save.
1. On-Bill Repayment
If the utility ran the on-bill program, they could base qualification and
partici-
pation
on an individual’s utility bill payment history and not their credit score his-
tory.
The low-income customer could pay for their share of the community solar
garden through on-bill financing.
112
On-bill repayment lets customers pay for
energy improvements in installments on their utility bill.
113
On-bill financing
eliminates the obstacles to renewable energy investment caused by landlord-
104. See LOW-INCOME SOLAR POLICY GUIDE, supra note 96, at 11, 15.
105. B
RINGING THE BENEFITS, supra note 1, at 31.
106. L
OW-INCOME SOLAR POLICY GUIDE, supra note 96.
107. Thompson, supra note 4, at 292.
108. L
OW-INCOME SOLAR POLICY GUIDE, supra note 96, at 15.
109. B
RINGING THE BENEFITS, supra note 1, at 10 (citing DAVID FELDMAN ET AL., NAT’L RENEWABLE
ENERGY LABORATORY, SHARED SOLAR: CURRENT LANDSCAPE, MARKET POTENTIAL, AND THE IMPACT
OF
FEDERAL SECURITIES REGULATION (2015)).
110. Behles, supra note 5, at 65.
111. But see id.
112. Solar for All, supra note 80, at 2.
113. B
RINGING THE BENEFITS, supra note 1, at 38.
2019] ALL IN THE COMMUNITY 405
tenant disincentives because the repayment obligation attaches to the utility bill
or property tax, passing on the advantages of the energy savings and the
obliga-
tions
for repayment to successor lessees.
114
One issue with the utilities owning community solar is that utilities may be
reluctant to play such an active role in financing because lending laws can vary
by state.
115
For this to work, rules must be established around whether and how
utilities can disconnect service in the case of customer default and the
transfer-
ability
of loan obligations between customers.
116
Of the forty-five programs in
thirty-two states that use on-bill financing, the cumulative default rates are low—
ranging from zero to three percent financing.
117
If these rates stay low, then util-
ities
may be more comfortable taking on this financing.
2. Pay As
You Save
Another option is Pay As You Save (“PAYS”), where the utility rather than the
homeowner invests in the energy upgrade.
118
The utility gets paid back through
the customer’s tariff because there is no loan or lien, and the repayment
obliga-
tion
stays with the property and not the customer.
119
It remains on the bill for that
location until all costs are recovered.
120
PAYS circumvents the traditional barriers
to financing solar energy by providing the upfront capital requirements.
121
PAYS
does not require credit checks or liens, and all obligations attach to the meter.
122
Community solar gardens financed by utility companies through on-bill financ-
ing
or PAYS is one of the best ways to avoid almost all of the barriers to obtaining
DG solar for low-income individuals. Utilities also benefit because they would be
able to fulfill their RPS requirement using this program. Further, this method,
unlike financing alone, actually helps low-income customers gain access to DG
solar, lowers their energy burden, and helps mitigate the effects of climate
change.
C
ONCLUSION
The effects of climate change will have a larger impact on low-income com-
munities
because of the already heightened exposure to pollution faced by these
communities. Renewable energy in the form of DG solar can help limit the
pro-
duction
of fossil fuels and lower customers’ energy bills. However, low-income
customers who would proportionally benefit more than higher-income customers
114. Ottinger & Bowie, supra note 91, at 725–26.
115. B
RINGING THE BENEFITS, supra note 1, at 39.
116. Id.
117. Id. at 38.
118. Id. at 44.
119. Id.
120. Id.
121. Ottinger & Bowie, supra note 91, at 730.
122. Id.
406 THE GEORGETOWN ENVTL. LAW REVIEW [Vol. 31:391
face barriers to accessing DG solar energy in the form of financial costs and lack
of roof ownership. Although there are many different solutions to help low-
income customers, many of these options only help low-income customers pay
for the extra costs of their utility bills that result from net-metering but do not
help to reduce low-income customers’ reliance on fossil fuels, thus not mitigating
the effects of climate change.
Currently, the best solution to provide low-income customers with access to
DG solar
is through utility owned and maintained community solar. Community
solar helps to distribute the costs of installing DG solar to multiple customers and
does not require a low-income customer to own the roof on their house, making
community solar a good solution for many low-income customers who typically
are renters. The utility companies who own community solar will not only fulfill
their state RPS requirements but can also help to make community solar more
affordable to low-income customers by using on-bill financing and PAYS. This
solution is not perfect and will not bring DG solar to all low-income customers,
but it is a good start and will provide a lot more low-income communities with
DG solar, thus helping to reduce their energy bills and helping to combat the
harmful effects of climate change.
2019] A
LL IN THE COMMUNITY 407
