New forms of solar and battery-powered energy could soon be accessible to all—with some strategic assistance from the philanthropic sector.
Recent years have brought revolutionary changes in clean, renewable solar energy markets. The cost of solar panels has plummeted. And there have been breakthroughs in supporting technology: Sophisticated battery backup systems store excess power for when the sun doesn’t shine, reducing utility bills in multiple ways. These “solar + storage” systems are reaching a robust, market-acceleration phase as costs decline and technology becomes cheaper and more efficient.
Unfortunately, solar + storage has yet to penetrate the markets where it’s needed most: low-income communities in rural and urban areas. Clean energy companies are mainly marketing their innovations to commercial customers seeking to improve their bottom lines. Low-income communities are still awaiting their turn.
That’s a huge missed opportunity. Solar + storage systems in affordable housing could slash utility bills for low-income tenants and homeowners, helping to keep families from sliding further into poverty. Installed in food banks, fire stations and emergency shelters, those systems could build community resilience by maintaining critical services when grid power is disrupted. (And we can expect more power disruptions, as a warming planet brings more extreme weather.) Finally, by reducing reliance on fossil fuels, solar and battery power can slow the advance of climate change.
Why has the market failed to deliver clean energy to those most in need, and what can foundations do about it? A new report offers some timely answers.
The report, "A Resilient Power Capital Scan: How Foundations Could Use Grants and Investments to Advance Solar and Storage in Low-Income Communities," is the first empirical analysis of the solar + storage market. It was informed by interviews with over 30 industry leaders, advocates, foundation officials, and state and local policymakers. Commissioned by the Kresge Foundation, the Surdna Foundation and the JPB Foundation, the report was authored by the Clean Energy Group (CEG), a nonprofit working to bring about clean energy equity.
The report suggests a rigorous, comprehensive approach to bring solar + storage power to low-income communities—one that understands and harnesses the free market while acknowledging the market’s limitations.
The report found a series of structural market barriers, including gaps in technical capacity, data, finance and regulatory policy. Importantly, the authors identified more than 50 interventions—ranging from grants to program-related investments and endowment investments—that could surmount those barriers. For example:
- Working capital. Provide pre-development funding to support the identification and development of appropriate sites and projects, and to help low-income groups build capacity to capitalize on opportunities in their communities.
- Reduced risk. Provide credit enhancements to reduce risk for investors and building owners through “performance loss reserves” that reimburse monetary losses from unrealized economic benefits.
- Financial incentives. Create incentives to encourage owners of affordable housing to implement solar + storage solutions as they renovate their properties or plan new ones.
- Project software. Support the creation of an online software platform to assess the technical and financial feasibility of solar + storage in affordable housing and nonprofit-owned facilities.
- Better data. Collect and disseminate data on the potential of solar + storage to reduce electricity bills, particularly in affordable housing and community facilities.
- Community mandates. Support mandates for localities to require installation of solar projects in community facilities.
- Standardized transactions. Support nonprofit intermediaries’ efforts to streamline and standardize deal structures and documents to facilitate the aggregation of financing for bundled projects.
If deployed at scale, these strategies could reshape markets and greatly improve access to solar and stored energy. “This report is an important step toward ensuring that the benefits of solar + storage are shared equitably,” said Lois DeBacker, managing director of the Kresge Foundation's Environment Program.
That’s important, for obvious reasons: Low- and moderate-income families have the most to gain from affordable, clean energy. It’s also important to secure ongoing political support. If the benefits of new solar + storage technology accrue mostly to affluent corporations and homeowners, there will not be a broad constituency for policies and programs to encourage the rapid diffusion of renewable power. Broad support is especially needed now, as we face a new administration whose clean energy strategies seem unclear at best.
Foundations have a crucial role to play. They can step in where markets fail, making strategic grants and investments to extend solar power to underserved communities. In this way, they can jumpstart a just energy transition, with clean, affordable power for all.
Lewis Milford is president and founder of Clean Energy Group (CEG) and Clean Energy States Alliance (CESA), two national nonprofit organizations that work with state, federal, and international organizations to promote clean energy technology, policy, finance, and innovation. Rob Sanders is senior finance director of CEG.