Policies Attempt to Enable Low- and Middle-Income Households to Increase Energy Efficiency

The National Conference of State Legislatures provides useful research and news on a variety of topics being addressed by state governments. NCSL recently released a report on state policies for low- and moderate-income (LMI) customer access to renewable energy and energy efficiency.

LMI households dedicate a bigger portion of their gross income to energy costs than higher income households. As such, they can be the biggest relative beneficiaries to utilize energy-efficient utilities, making energy-efficient improvements to homes, and utilizing renewable energy sources like solar.

LMI households are also much less likely to be able to take advantage of renewable sources and energy-efficient appliances and structures. The barriers to utilization are generally financial, but policy-makers need to define more specific measures in order to try to increase utilization through policy. Some of the specific barriers are:

  • Large upfront capital requirements.
  • Reduced access to desirable financing.
  • Customers’ low credit scores.
  • Lack of home ownership.
  • Inability to access tax incentives.
  • Residence in multi-family housing.
  • Residence in inefficient manufactured housing.
  • Lack of roof access.

The report looks at different financing policy remedies, like “green energy banks”. Green energy banks are a form of public-private partnership that opens up use of financing arrangements that may be too risky for traditional banking. An example is the Connecticut Green Bank. CGB has a program called the Resident Solar Investment Program (RSIP), which supports the installation of residential solar systems in Connecticut by providing direct purchase and third-party ownership incentives, in addition to other services. An independent study in March of this year of the RSIP program ran five separate cost-benefit analysis, which found a mean net-benefit value of $142 million since its inception in 2012.

The report from NCSL includes additional information on state level case studies, like California’s cap-and-trade program, Massachusetts’s Solar Loan Program, and other policies specifically targeted at low- and middle- income families