Reduce the Price of the Solar System - American Cities Climate Challenge
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Reduce the Price of the Solar System

A team’s first priority should be identifying (1) the necessary incentives to reduce the up-front cost of rooftop solar and (2) the corresponding funding required.

Residents installing solar through a Solarize campaign typically receive an up-front price that is 10%–20% lower than market average due to the campaign’s numerous high-quality leads and its competitive contractor selection process. Whereas this discount may be sufficient for upper- or middle-income residents to view solar as cost-effective, campaigns typically need to provide additional incentives for lower-income residents that cover the majority of the up-front cost so they can receive immediate cost savings without taking on additional debt.

First, the team should determine the specific up-front incentives necessary to enable participation by lower-income residents. For example, with a Solarize price of $3 per watt for a 5 kilowatt (kW) system, the team could estimate the economic impact of a 100% buydown (i.e., $15,000) versus a 50% buydown incentive (i.e., $7,500) using calculators like RMI’s RESET. Then, the team could identify the corresponding funding needed to achieve its lower-income goal (e.g., with an identified incentive of $7,500 per system and a goal of 20 lower-income installs, the team would need to secure $150,000 in funding). Some teams may also prioritize funding to reduce the cost of roof and electrical upgrades. When identifying funding opportunities, teams typically consider the following sources:

  • Federal funds:

    The team can identify federal funding opportunities to apply for using resources such as RMI’s Federal Funding Opportunities for Local Decarbonization.

  • State or local government funds:

    The team can seek funds from local or state budgets.

  • Philanthropic funds:

    The team can seek funds from local foundations, corporations, or individuals.

Finally, when implementing income-dependent incentives, the Solarize team will need to determine an income verification process. Most campaigns either use enrollment in existing government programs as a proxy to verify income or have households sign a document confirming their income. Given disparities between government program income requirements and the complications of program verification paperwork, many campaigns opt for the latter.

Suggested Next Steps:

Identify strategies to further subsidize the cost of solar for lower-income residents. Consider using Part 1 of RMI’s forthcoming Inclusive Solarize Campaign: Developing LMI Financial Solutions Worksheet for assistance.

Case Study

Participants in RMI’s Solarize Cohort utilized a variety of federal, state, local, and philanthropic funds to reduce financial barriers for residents:

  • The 2022 Solar Over Louisville campaign leveraged $100,000 in federal Community Development Block Grant Program funding to fund low-income solar installations, resulting in more than 50% of installations being located in LMI census tracts.
  • The 2021 Solarize Asheville-Buncombe campaign dedicated $150,000 in local government funds to fully fund lower-income installations, resulting in more than 70% of installations being located in LMI census tracts.
  • The 2022 Solarize Santa Fe campaign raised $50,000 through a private donor to create LMI incentives and partnered with the Northern New Mexico School Employees Federal Credit Union to offer families with children in public schools more affordable and accessible solar loans, resulting in nearly 70% of installations being located in LMI census tracts.