LMI community solar: What you need to know

For many electricity users nationwide, rooftop solar panels don't make sense – there are physical reasons (i.e., roof availability, home size), personal reasons (i.e., aesthetics), and financial reasons. Specifically for individuals who classify as "low to moderate income" (LMI), there are several reasons why community solar can be a great way to benefit from solar energy while not needing the traditional financial resources to install your solar panels.

There are many reasons why community solar can make sense for LMI households. Most importantly, community solar requires little to no upfront investment. It's a cost-effective option for renters, and you don't miss out on the federal ITC because of low tax liability.

Community solar requires less (if any) money upfront.

One traditional hurdle to installing rooftop solar panels is the upfront cost – with a cash purchase, solar panels can cost tens of thousands of dollars. You'll likely make all that money back plus some over the lifetime of your solar panel system, but the upfront cost can still be daunting. In contrast to an outright purchase of a rooftop solar panel system, with most community solar pricing models, you pay monthly for the electricity you're getting from your share of the community solar farm – just like you probably do for your current electrical bill. Some local solar farms have joining fees, but those are not near the scale of a cash purchase price for your system.

Community solar is great for renters.

To install solar panels, you need space. Most often, this is the roof above your head. However, when you rent a home or an apartment, you most likely won't own the roof above your head and, therefore, won't be able to install solar panels on it. Luckily, you can subscribe to a community solar farm and still benefit from solar – all you need is an electric bill.

You don't need tax liability to take advantage of the best incentives.

The best solar incentive, the federal investment tax credit (ITC), takes 26% off the cost of a solar panel system and gets you a credit for that amount on your federal taxes. But what happens if you don't have enough tax liability to use that full credit? You can roll over unused credit to your next year of taxes, but you may lose unused credit forever after that, as the ITC is a nonrefundable tax credit. With community solar, there's no ITC credit, so whether or not you have the tax liability to take advantage of it doesn't change your savings!

Reminder: we here at EnergySage are not tax experts, so we always recommend talking to a certified professional about the solar tax credit.

Beyond just having a generic community solar offering, many places around the U.S. specifically use community solar to expand access to solar energy for LMI communities. This is usually achieved in one of three ways:

Low-income solar carve-outs

Solar carve-outs are tools used by policymakers to ensure that solar energy is represented to a certain degree in the electricity generation mix, and low-income solar carve-outs work similarly. A low-income solar carve-out is a policy tool that mandates that a certain percentage of a program or individual solar project's capacity goes to LMI customers. This means that a utility might be required to sign up a certain number of community solar subscribers who identify as LMI, or an individual solar farm might need to fill an assigned portion of its production capacity with local LMI customers.

Income-based incentives

Another way to encourage community solar sign-ups from the low to moderate-income bracket is to offer specific financial incentives based on income levels beyond the electric bill savings from which most subscribers will benefit. For example, a utility could offer to waive sign-up fees if customers fall into a certain income bracket or even place a cap on the amount of money a community solar vendor can charge certain participants, regardless of how much electricity they end up getting from the project (like in the Illinois Solar For All program).

General government-run programs

Last, there's the catch-all bucket of "government programs." These are a little harder to define, but generally, a government-run community solar program that focuses on spreading solar adoption to LMI communities will have some method of making community solar more accessible. This often looks a little like an income-based incentive but with more hand-holding and involvement from the government body that runs the program. For example, New York State Energy Research and Development Agency (NYSERDA) runs the Solar For All program in New York. It is available to several groups of energy customers and works by signing individuals or families up for parts of community solar farms and automatically crediting their bills. There are no sign-up fees, no monthly charges, and everything is done automatically through your utility account.

Many states with community solar programs also have an LMI-specific sub-program. Here are two examples of how states are making community solar more accessible:

New York

As previously mentioned, NYSERDA's Solar for All program is a "utility bill assistance program" that residents can join to automatically save money on electric bills – up to $180 per year, with no money spent upfront. According to NYSERDA, residents may be eligible if they:

• Rent or own their home

• Are a veteran receiving disability benefits

• Are on a fixed income

• Earn a minimum wage.

• Participate in HEAP, SNAP, TANF, or other electric bill assistance programs.

Illinois

Illinois's Low-Income Community Solar program is similar to New York's setup. For income-eligible residents, public facilities, and nonprofit organizations, the program helps you find and subscribe to local community solar projects with guaranteed savings attached. The cost of a subscription through the program is capped at 50 percent of the value participants get back from their share. For example, if subscribers receive $50 worth of electricity for a month, they can only be charged $25 at most for that month's subscription, which guarantees savings.

EnergySage is the nation's leading online solar marketplace; using our Community Solar Marketplace, you can compare local options, get a quick community solar savings estimate, and seamlessly subscribe to an open project in your area. Over 10 million people visit EnergySage annually to learn about, shop for and invest in solar. Compare your community solar options today to see how much solar can save you.