Access to renewable energy in low-income and disadvantaged communities is a challenge the Biden-Harris Administration has been actively working to tackle with efforts like the Justice40 Initiative. Now, new federal guidance from U.S. Department of Health and Human Services (HHS) Office of Community Services (OCS) may make one form of renewable energy, community solar, much easier to access in these communities through its Low-Income Home Energy Assistance Program (LIHEAP).
Earlier last year, HHS released its first-ever guidance on community solar and the use of LIHEAP funds—which are administered by individual states to low- and moderate-income residents to cover their gas, electric, propane and fuel oil energy bills—to now include community solar subscription fees. The guidance also establishes strong consumer protections for these residents against fraud and other scams.
Community solar is a form of solar energy generation that allows multiple households, businesses, nonprofits, or others to access the meaningful benefits of renewable energy, such as lower energy bills, grid resilience, and workforce opportunities. Community solar is a great option for people who are unable to install solar panels on their roofs due to barriers such as renting, high installation costs, or unsuitable roof or electrical conditions. Community solar customers typically subscribe to—or in some cases own—a portion of the energy generated by a solar array and receive an electric bill credit for electricity generated by their share of the community solar system. These long-term bill savings can be especially beneficial for households with lower incomes who receive energy assistance.
Historically, most state LIHEAP programs have not allowed LIHEAP funds to cover community solar subscription fees, instead prioritizing more traditional forms of energy in order to avoid household utility disconnection.
But the OCS guidance encourages states to allow LIHEAP recipients to use their assistance funds for community solar subscriptions and states community solar can help LIHEAP households reduce their overall energy costs.
OCS includes some key considerations that states should address before allocating LIHEAP funds toward community solar subscriptions:
- LIHEAP community solar customers should be allowed to cancel the subscription agreement without fee or penalty, within such period as the state allows.
- Program design should avoid requiring bank accounts or credit cards to participate in community solar, as many low-income households are unbanked.
- Consideration should be given to ’no-money down’ subscriptions. Up-front payments for community solar subscriptions can be a barrier to participation by LIHEAP households and can lead to predatory practices.
- Flat, monthly fees for participants that are not in alignment with the reduction in the energy bill should be avoided.
- Subscription agreements and contracts should be provided in advance to potential subscribers and use clear and concise language that can be understood by those without legal training or experience reading contracts.
While this federal guidance for using LIHEAP funds for community solar is new, the practice is not. In 2021, the state of Minnesota opted to allow its LIHEAP recipients to allocate resources toward community solar subscription fees, making it one of the first states to do so.
"Many households who inquire about LIHEAP want to reduce their energy costs and use cleaner, more sustainable energy but aren't sure how,” said Michael Schmitz, director of the Minnesota Energy Assistance Program. “We knew it was important to help them cover the cost of their energy bills while also helping them to access the benefits of renewable energy, so enabling LIHEAP recipients to use their funds toward community solar subscription fees just made sense.”
With this new guidance, the hope is that more states will follow suit. To support this goal, the U.S. Department of Energy (DOE)’s National Community Solar Partnership (NCSP) is partnering with HHS on the Low-Income Clean Energy Connector, a digital tool that makes community solar with verified savings and strong consumer protections more accessible to households participating in LIHEAP. In addition, NCSP is working through its States Collaborative to share best practices and lessons learned from early adopters like Minnesota.
NCSP is a coalition of community solar stakeholders working to expand access to affordable community solar to every American household and enable communities to realize other benefits, such as increased resilience and workforce development. NCSP’s goal is to enable community solar systems to power the equivalent of five million households by 2025 and create $1 billion in energy savings for subscribers.