Getting rooftop solar onto low- and middle-income housing

In this episode, Vero Bourg-Meyer of the Clean Energy States
Alliance discusses the barriers that keep lower- and
medium-income customers from installing rooftop solar, the types
of efforts most likely to overcome these barriers, and how to
keep momentum moving forward.


(PDF
transcript)


(Active
transcript)


Text transcript:


David Roberts


For all its explosive growth in recent years, rooftop solar is
far less frequently installed by low- and middle-income
households than by wealthy ones. Though that disparity is
diminishing somewhat over time, it remains large.


The barriers keeping lower-income consumers from solar go well
beyond the financial (though financial barriers are substantial),
ranging from credit histories to low-quality and poorly insulated
buildings to lack of supportive policy.


State policymakers, foundations, and non-profit groups have been
trying for years to overcome this problem. Finally, the pieces
are beginning to fall in place and it is becoming clearer which
kinds of interventions work and which kinds don’t.


No one knows more about the history, design, and successes of
these programs than Vero Bourg-Meyer of the Clean Energy States
Alliance. She has been analyzing and advocating for these
policies for years (she just came out with a report on how
foundations can help), so I was eager to talk to her about the
rationale for low-income solar programs, the features that make
them work, what's in the Inflation Reduction Act that can help,
and what further policies are needed.


Okay, then, with no further ado, Vero Bourg-Meyer, welcome to
Volts. Thank you so much for coming.


Vero Bourg-Meyer


Well, thank you so much for having me. I'm delighted to be here.


David Roberts


Cool, so there's a lot to talk about here with this topic, which
I've had sort of, like, in the corner of my eye for years and
years now, these programs for low-income and mid-income solar,
getting solar to low-income, mid-income people, I sort of had it
on my periphery forever. And so I'm happy to jump in directly. My
sense of the sort of state of play among the wonks is the best
way to help poor people is to give them money. And if you have
money to help them and you want to do something other than just
give it to them, you need to sort of justify, like, why is this
better than just giving them money?


Vero Bourg-Meyer


Yeah.


David Roberts


So I guess to start with, my first question is just why should we
care about specifically getting solar on these households versus
just helping them with money? So what is the sort of
justification for this kind of whole area? Why do we want to get
solar on low- and middle-income households?


Vero Bourg-Meyer


Well, so there are two questions in there, right? So one question
is that there's a climate question. Obviously, we want solar not
because we think it's great for savings and all that, but also
because we have a climate crisis that's ongoing and we need to do
something about this. So that's the reason why we want solar. But
why LMI communities and I'll use LMI in a kind of loose way. LMI
stands for low- and moderate-income. LMI sometimes is just
low-income and that generally means kind of in this area,
generally it means below 80% area median income.


Some people also define it as below 120%, but without going too
much in the details, that's generally what it means. So the
reason why you want to make sure people have access one of the
reason you want to make sure those people have access to solar is
they spend a much higher percentage of their income on their
utility bills as the rest of us. About almost four times as much
as you or me. And I'm lumping us in the same income brackets. I
don't know if that's correct. So they spend a lot of money on
their utility bills.


And so obviously when you're giving them away month after month
after month to reduce those utility bills, that can have a really
outsized effect on them. Right? So it's not just the cost of
purchasing the solar to begin with, it's the continuing saving
over the lifetime of the asset that you'd have to kind of look
at.


David Roberts


It's kind of like giving them money every month.


Vero Bourg-Meyer


Yeah, essentially. Yeah. Assuming there is a saving, which it has
to be structured that way. It doesn't just happen like that. And
then there is the resilience benefit that you can get when paired
with batteries. And I was saying earlier, I'm going to use
low-income communities as kind of LMI communities, very generally
speaking. But we're also talking here about communities of color
in communities that generally, because of redlining, have older
housing stock houses that are not well insulated. When you start
with that and you add storage, you get a really huge resilience
benefit for them.


LMI also means higher rate of chronic diseases, right. So you
need your dialysis machine to work all the time, not just some of
the time. So that's another really big reason. But I'd say your
question though, about why not just give them money? If you kind
of put aside, is it politically pragmatic to just give them
money? Which I don't think at this stage it is. We tend to wage a
war on the poor instead of waging a war on poverty in this
country, right?


David Roberts


Yes.


Vero Bourg-Meyer


So setting that aside, if you're looking at who deploys the solar
in this country, it's the private sector, right? And there are
other barriers that are kind of standing in the way of LMI
communities getting solar other than just the initial funding.
The initial funding is a big part of it, but there's also lots of
other reasons why customers don't trust the developers.
Developers are not interested in serving or generally not all of
them.


David Roberts


Let's talk about those a little bit. Let's talk about those
barriers. Because I know intuitively, as you say, the obvious
barrier, I think, which jumps out at everybody is just not enough
money. That's what low-income means. But that's not the only
reason that deployment of rooftop solar is lower in these
communities even than what you would predict based on income,
right? The barriers that go beyond income. So let's talk about
some of those. Like, what are the kind of things that are
stopping these households from accessing rooftop solar?


Vero Bourg-Meyer


Well, so the funding one, I don't want to just fully put it
aside, right. Because that's a really huge one, the upfront cost,
and just for your listeners who may not be familiar with the cost
of solar for a regular household. So if you look at the average
size of a solar asset in this country, which is about seven
kilowatt, I believe, and then the average cost between $3 and $4
per watt. So that's what? That's $25,000, roughly, that you have
to find.


David Roberts


That's not small for anyone ...


Vero Bourg-Meyer


It's not small. And that upfront cost you and I have access to
other kind of funding. We have access to financing, right?
Low-income communities might people might have a lower FICO score
or no FICO at all, or maybe even no bank.


David Roberts


FICO is just a credit score, right?


Vero Bourg-Meyer


Yes, that's right. Yeah, that's a credit score that's being used
by lenders to decide how much they want to charge you,
essentially, and whether they will even charge you, whether they
will agree to give you a loan. Not to mention if you are really
struggling to put food on the table, the idea of taking on
additional debt is just not always interesting, at least not for
everybody. We can get back to that. So a big barrier beyond the
funding is the physical barrier, right?


So the site suitability, what's called site suitability criteria,
roofs could be in a really poor shape. If you have issues of lead
and asbestos in your house, it's really hard to get a contractor
to go in and crawl in your attic to go install something. They're
just not going to want to do it. And then there are some things
that are kind of more linked to the type of housing you might be
looking at, right. So single family homes is one thing.
Multifamily homes have specific issues. You could think of where
the meters are located. That's kind of a dumb one, but it really
is a problem.


So if you have meters that are specifically dedicated to
apartments, that's great. If you have one meter and then
everybody kind of shares, that's creating kind of more issues.
So, yeah, physical barriers are a big one. And also the way that
the subsidies that we've mostly been using for solar up to this
point so the tax credits, primarily. So the investment tax
credit, up to this point, the PTC, the production tax credit,
wasn't open to solar. Now it is with the IRA. You can't monetize
the ITC if you don't have a tax basis, right. The non-taxable
entities, affordable housing, the non-profit developers, none of
those can access the ITC.


Could access the ITC until the IRA with direct pay. And then as
an individual, a homeowner that does not pay taxes cannot utilize
that in a very obvious way. So there are ways to kind of go
around that. But generally speaking.


Isn't it also the case that LMI people are more likely to rent or
more likely to live in apartment buildings where they don't?


Well, it depends actually ...


David Roberts


Isn't that also a problem?


Vero Bourg-Meyer


I mean, it is an issue. You'll find those traditional kind of
split incentive issues, but it's not necessarily the case that
it's everywhere. I don't have in mind the number, the percentage
of renters versus homeowner on top of my head, but it really
depends on the states. And I think that's when you're a state
policymaker, you're looking at kind of building a solar program.
Your housing market is not a monolith, and your solar market as a
result is also not a monolith. So you have to really dedicate
brain space to creating solutions that are really tailored to
what you're trying to tackle to specific issues in your state.


David Roberts


So, barriers, we've got the obvious one. Finance and funding got
physical site suitability, meaning like, the actual buildings
themselves might need work before they're even ready for ... One
that springs to mind always when I think about these communities
is just who's reaching out to them and talking to them and
educating them. Is awareness a big barrier?


Vero Bourg-Meyer


Big time. And I would say those kind of behavioral barriers exist
both on the developer side and on the customer side. On their
developer side, they just will not market to them, right?


David Roberts


Right.


Vero Bourg-Meyer


They just viewed as not good customers, which is definitely not
the case. There are studies out there showing about the same kind
of default rates as ODA loans, right?


David Roberts


Oh, really?


Vero Bourg-Meyer


Good enough. Yeah. So if it's good enough for a giant trillion
dollar industry, I think it should be good enough for solar. And
there's nothing as boring as an ODA loan. So I think we could do
this. But on the developer side, that's really just a perceived
risk kind of issue. And on the customer side, there are trust
issues as well. Right?


David Roberts


Yes.


Vero Bourg-Meyer


Lots of fly by night action.


David Roberts


Yeah, I was going to say scams are quite common. These people
tend to be targets of a lot of scams.


Vero Bourg-Meyer


Yeah. So one that you hear about and I don't have specific data
on this, just kind of stories, but one that you hear about all
the time is developers coming in and then promising a big
government subsidy because they're thinking about the tax credit,
and then a homeowner will just go for it and then realize oh,
wait. I can't monetize this at all. This is not working for me.
I'm not getting the money. This money is just paper and I don't
have anything to apply it to. So, yeah, that's dishonest.
Business practices are also out there.


So all is to say it requires a lot more effort for customer
acquisition and you can't just sit and expect those customers to
come to you. And obviously, as a developer, if you have the
choice between targeting that group over here that you think is
going to be much better at paying, which it isn't, but you think
it's going to be the case, and also naturally trust you more
versus a population that trusts you less and it's harder to get
to. Well, the choice is easily made.


David Roberts


Right, there's all these sort of like, I don't know what to call
them, soft costs, I guess. Just like developers tend to be in the
socioeconomic bracket of a certain type of customer and then
everything becomes easier. Communication, right. Like they
understand one another, et cetera, et cetera.


Vero Bourg-Meyer


And then you have other things like language barriers, obviously.


David Roberts


Right.


Vero Bourg-Meyer


And that can be a big one in some communities.


David Roberts


So it's not just effort, it's who is going to talk to them. Like
choice, finding someone that is trusted within those communities
to communicate absolutely is a big deal.


Vero Bourg-Meyer


Yeah.


David Roberts


So we're going to get a little bit into how states are doing this
later. But just I want to start with the IRA because obviously
everything in the energy world is different now. We're in a new
world. We're all discovering this new world. So what specifically
did IRA do for LMI rooftop solar?


Vero Bourg-Meyer


Lots.


David Roberts


Of course.


Vero Bourg-Meyer


I would say lots, but lots in ways that aren't necessarily fully
clear at this stage. I mean, the way I think about it is because
I work at the Clean Energy States Alliance, right? I look at it
from a state policy maker perspective. How can they build
programs around what the federal government put together and that
kind of funding? So the three big buckets and I'm not telling you
anything you don't know, obviously, but just to organize my
thoughts, the three big buckets are the tax credits, the
Greenhouse Gas Reduction Fund, and the Loan Program's office.


And I'll start with the least obvious one, which is the Loan
Program Office, the innovation ... so there's something called
Title 17 that offers clean energy loan guarantees, right? And
that up to IJA. So that's pre-IRA, until IJA, someone applying
for this, was required to show some sort of innovative element,
right?


So the loan program's office wasn't going to say, "Oh sure, I'll
guarantee your solar thing over there, that looks great." No, it
has to be something a little bit more exciting than that.


David Roberts


That's sort of the point of LPO, right? Seed innovative things.


Vero Bourg-Meyer


Yeah, well, since IJA that's not the case anymore.


David Roberts


And by the way, we. Should say IJA is the hell I don't know what
it stands for. The infrastructure ... the Infrastructure Act.


Vero Bourg-Meyer


The Bipartisan Infrastructure law. So what does I stand for?
Infrastructure and Investment and Jobs Act or something. So the
kind of the first big piece of climate legislation passed in this
new era that we are in the projects that are supported by a state
energy finance institution can access loan guarantees now from
Title 17 from LPO without having to show that they're super fancy
and innovative. And the funding then for LPO was also expended
through IRA. The IRA really put in a lot more cash into this
thing that they started doing. I'll give you an example to show
you how this relates to low- and modified-income solar.


So imagine a community solar developer wants to develop some
solar that benefits LMI communities and they go and get some
grants from the state to serve a specific area. The developer now
has access to an LPO loan guarantee and they could say, I need a
construction loan. Go out, find that construction loan is
typically the most expensive part of the process in terms of
capital cost. And now they can talk to their private lender and
say, hey, I got this grant from the state. That means I can apply
for this loan guarantee. How about you give me a lower rate
because DOE is going to be there and guarantee that I'm a good
bet for you. Right?


So that's a really interesting kind of piece of the equation that
I guess doesn't really get talked about much unless you work at
LPO.


David Roberts


Federal loan guarantees can basically lower the cost of capital
for developers.


Vero Bourg-Meyer


And it doesn't have to be that the state participates in the way
of grants. They could be doing things like a loan loss reserve or
straight up loan. They could invest in however way that they
want. They just have to support the project, at which point the
project becomes eligible for an LPO guarantee. And that's as long
as that support is being done by this state energy finance
institution. Which can be a big number of things, but it could be
a state energy office. So the folks I work with.


David Roberts


Or a state green bank.


Vero Bourg-Meyer


Yeah, absolutely. So that's one pocket of money in the IRA. The
next kind of pocket of money that can really have an impact on
LMI communities in terms of solar deployment would be the
Greenhouse Gas Reduction fund. So that's an EPA program in total.
So it's got a bunch of buckets, it's got a $7 billion bucket that
they're calling it Solar For All. Actually, the implementation
framework came out yesterday from EPA, so it's all very new and
exciting. This was the talk of the town this morning. So there's
a $7 billion bucket for cold solar for all that will only apply
for the benefit of LMI communities.


And that's $7 billion that the states can apply to, in its
states, municipalities, tribes. But essentially what EPA wants to
see is they want to see solar, rooftop solar, community solar
distributed storage and upgrades. And the really cool thing about
that and the rules that we just learned about yesterday is that
electrical panel upgrades, roof repairs, they are covered under
that.


David Roberts


This addresses the site suitability stuff we're talking about so
you can get some money to prepare your house for solar.


Vero Bourg-Meyer


Absolutely. And hopefully you can enjoy the benefit of a well
built solar program that your state are going to put together.


David Roberts


Right. So states put together some kind of program and then go to
the EPA and say, hey, we have this program, give us some money to
fund it.


Vero Bourg-Meyer


That's the idea. That's the idea. And then there are two more
buckets in there that could apply to solar. I mean, solar is part
of it, but then it's open to kind of different types of
applicant. There's a $14 billion bucket that focuses on kind of
clean investments. So that's going to go to two to three national
non-profits. So the point there is to leverage funding and
private sector lending or investment, generally speaking, at a
national level. So do things really big, essentially. And 40% of
that is as part of the justice 40 framework, is going to go to
LMI communities and the remaining $6 billion is to capitalize
organizations that are directly lending or providing financial
assistance and technical assistance to LMI communities.


So the $6 billion bucket and the $7 billion bucket are all LMI
and the $14 billion bucket is 40% LMI.


David Roberts


That's a lot of billions.


Vero Bourg-Meyer


Yeah, that's a lot of billions. Exactly. And I think the fun part
of this is when you work in and around state government is
everybody is super excited but no one knows what's going to
happen. And there's a lot of like, how are we going to do this?


David Roberts


Yeah. I guess it goes without saying that these monies have not
started dispersing yet, right? We're just figuring out the rules
for them. So no state has yet gotten this money?


Vero Bourg-Meyer


No, not yet. But then at CESA we are actually going to be working
on trying to build some sort of a template program for states
that they can use and replicate. Because the key here,
particularly with the $7 billion bucket, is that it's going to go
quick. I know it sounds ridiculous, it's a ridiculous thing to
say, but they are opening in the summer and then the money has to
be out of EPA within like a year, essentially.


David Roberts


No s**t.


Vero Bourg-Meyer


Yeah.


David Roberts


Wow.


Vero Bourg-Meyer


Yeah.


David Roberts


So there's like a bunch of we're hurting toward the trough here.


Vero Bourg-Meyer


Yep.


David Roberts


And once you divide that up among 50 states, I guess it's maybe
not as big as it looks on the surface. So I guess the other
bucket is the tax credit which ...


Vero Bourg-Meyer


Yes, the tax credit. And so the tax credit is a fun one because
... I mean, they're all fun.


David Roberts


Nothing like money. Nothing like money for the study.


Vero Bourg-Meyer


Yeah, exactly. Going to solar for LMI communities to get us
excited. But the tax credit is really big, right?


And it seems like every other week there is another study that
comes out and says, "Hey, this is going to be this big. No, it's
just kidding. It's this big."


David Roberts


Right? It's uncapped. Which means we've been over this on the pod
before, but just for listeners who don't know, these tax credits
are not ... there's no upper limit set. So how much money the
Feds are going to spend on these tax credits depends entirely on
demand just how many people apply for them. And so, as you say,
we keep getting these new analyses saying, "It's going to be a $3
billion program, no, $5 billion, no, $10 billion." The estimates
of how much of this is going to be demanded keep going up and up.


Vero Bourg-Meyer


Yeah. And it's really big. There's one piece. So the part of it
that ... there are a couple of parts that are exciting. There's
one piece that's the structure, the change in the structure of
the tax credits that can make a huge difference in some
institutions that before the IRA did not have access to tax
credits, now can have access to tax credits. And then there is a
piece of it that actually is capped, but that we don't exactly
know how that's going to work. So let me start with this last one
first. There is a new LMI, what we're calling an adder.


So it's an allocation and it will be either 10 or 20% extra. So
20 percentage points or 10 percentage points extra on top of
whatever else you have. So either your 30% base or your 40% or
your 50% if you're meeting all of the criteria that the statute
has set. And that is capped at 1.8 gigawatt per year. So the way
this is going to work is not like the rest of the tax credits
where you just kind of go through your projects and your tax
credits work the normal way. This one is allocated after the
fact.


So it's a whole process that projects are going to have to go
through with treasury. And at this stage, it's a little bit
unclear how this is all going to work. There are some rules that
were just issued, I want to say about a month ago, but don't
quote me on that just recently, let's say. And the way this is
working for 2023 at least, is that we're only going to have about
60 days, depending on the category. You find yourself in 60 days
to apply for the tax credit within a whole year.


David Roberts


After your project is done.


Vero Bourg-Meyer


Well, no, that's the kicker. That's the kicker. You can't apply
retroactively. You have to wait. You can't place in service your
project before those 60 days. So that's the part where we're not
too sure how this is going to work. And then DOE, treasury are
going to have to figure this out because it doesn't quite fit a
traditional residential solar business model.


David Roberts


This is sort of like where non-profits like CESA come in, right?
Like you figure this out, hopefully you set up some sort of
template, right, some sort of template that businesses can use so
that every project doesn't have to sort of learn all of this from
scratch.


Vero Bourg-Meyer


We can help find the information list. But yeah, at this stage,
we're not sure how that's going to work, but it's potentially
still very big. And then on the structural front, so direct pay
and transferability are those new two fancy things that we can do
with tax credit. So direct pay being you go through your project,
you finish your pleasant service, et cetera, et cetera, and
instead of receiving tax credit at some point, so after you file
taxes and request all that, at some point you get direct payment
from the government. So that's really exciting for all the
non-profits that previously did not have access to that.


And I'm talking there's so many non-profits, I think maybe that's
something that people don't necessarily see. There are a lot of
non-profits working with and for and organized by as well, LMI
communities, right?


So we're talking affordable housing, we're talking health
clinics, we're talking homeless shelters, all sorts of stuff.


David Roberts


So just the shift to direct pay alone is sort of an equity is a
justice thing, right, because it's mostly going to be
non-profits.


Vero Bourg-Meyer


Yeah, I mean, it's too bad that they didn't want to just when
we're talking about kind of giving money directly, I think tax
credits are way that the government kind of gives out money
directly, right? And they decided when they passed the IRA,
Congress decided, "We're going to do this only for non-profits."
Why not for people? I don't know.


David Roberts


Yes, you do know, though. His name is Joe Manchin, right? Let's
not pretend we don't know why all the flaws in this bill are in
there.


Vero Bourg-Meyer


Yeah.


David Roberts


Okay, so there's buckets and buckets of money in the IRA of
various places for LMI communities, LMI developers, non-profits
who want to work with LMI communities to go get so let's talk a
little turkey then about what these programs look like. What are
the sort of tools that states use to reach these communities? And
maybe if you want, you can use Connecticut as your sort of
standard bearer, because as I understand it, they have the top of
the line program.


Vero Bourg-Meyer


Yeah. But I should say they had because it's finished. It
terminated. The program terminated.


David Roberts


Oh, it was like a set amount of money they dispersed and then ...


Vero Bourg-Meyer


No, they were looking for a specific megawatt capacity and they
reached out and then the legislature was like, "Yeah, you're
done. You're moving on to solar, to solar and storage." So now
they're doing solar and storage with justice instead of just
solar with justice, which is also really exciting. And I should
say part of my work at CESA is working as part of the Scaling Up
Solar project, which is a DOE funded project. So my salary, part
of my salary comes from DOE. We tried to help states replicate
the Solar for All program from Connecticut, and it was a really
successful program.


I like to talk about it in terms of how much of the savings that
people get, because that always blows people away. So there is a
VIC study that kind of shows the kind of savings that the
customers from the Connecticut Solar for All program received.
And we're talking $1,300 a year. That is ginormous.


David Roberts


Per household.


Vero Bourg-Meyer


Yes. That's not chump change, nothing. And then within that, you
have about $700 worth of solar and then you have efficiency
stacked on it. So what they did that was really smart to start
with is that they looked at all the incentives that were
available in their states and there was part of it, the
efficiency part, that was really just managed by the utilities,
and they were like, well, let's make sure that we do those two
things together.


And solar plus efficiency in general, it's a winning combination.
I want to say, in terms of savings for anyone, not even just for
LMI communities, but if you stack your incentives and you stack
your products, solar and efficiency together works really, really
well. So you remember at the beginning when we're talking about
how this upfront cost is really an issue and there is no access
to financing that's available for you if you are in a certain
income bracket. So the program is really a lease program. So it's
third party ownership, TPO. And I should mention that there is a
bit of a debate in the advocacy world out there on the kind of
the value of TPO versus direct ownership.


So some people are really married ...


David Roberts


Yeah, I've been tuned into this for a long time and I heard
debates about it. Not only like, financial debates, like, which
is better financially, but also which is better for the homeowner
and obviously third party ownership, which, just to explain to
listeners who don't understand it's, just a company owns the
solar panels on your roof and what you're buying from them. You
buy the power from them, basically. So you as the household do
not have to pay for the panels and the installation. The company
pays for that, they own it, and you're just basically buying the
cheap power.


So that's what third party ownership means. So what is the
debate?


Vero Bourg-Meyer


So the debate is, when you're using third party ownership, some
people will say, well, you're not getting all the benefits, all
of the wealth creation that happens with solar, which if you're
looking purely financially that's true. Yes, that's correct. I
don't think there is any need to debate that. Anyone who's ever
looked at a solar model can tell you that's true. But the issue
there, I think, is that what I personally think is that we can
walk and chew gum at the same time. We can utilize third party
ownership models for what they're really good for, which is
giving access to solar, to families, so that they can get savings
right now, right?


Not tomorrow, not in five years, when we figured this out, not
hypothetically, once a project magically comes online, maybe
potentially, perhaps mayhaps in the future, but like right now.
Right. And in most of the programs that I can think of, state
programs that focus on third party ownership, there is some
aspect of trying to convince the developer that there needs to be
a pathway to ownership. Right?


And I think that's actually been folded now into the greenhouse
gas reductions fund solar for all competition that we were just
talking about.


David Roberts


Isn't it standard in these TPO arrangements that you can buy the
panel at the end of whatever the lease period is?


Vero Bourg-Meyer


Right. Yes, it is very standard. I think what we're talking about
here is accelerating that. Right. So how do you make a pathway so
that at the end of, let's say six years? Because that's about
when tax credits or tax equity investors would get out of that
investment. In about six years or seven years, is there some way
that you can help that customer actually purchase the panels
directly? Straight up. Right. And I think there are developers
out there thinking through this. There are states out there
thinking through this. And I don't think we need to be married to
one system or one deployment model over another.


I think they all are good for some things and less good for other
things.


David Roberts


So you can get a little bit of a hybrid, then you can get some
sort of benefits of TPO and then maybe ownership in the longer
term.


Vero Bourg-Meyer


Yeah, absolutely. And then to go back to the Connecticut, because
I kind of went astray there to go back to the Connecticut model,
it's a public-private partnership between the Connecticut Green
Bank and a company called PosiGen. They are a developer that was
born out of Katrina, essentially, and that really was born in New
Orleans to try to help folks get over the consequences of Katrina
and really bring some resilience benefit to customers. So what
they do is that they stack up efficiency and solar incentives, as
I was mentioning earlier. And what the state of Connecticut also
did with the Connecticut Green Bank did, is that they created an
elevated incentive.


So an extra amount of money if you met some income qualification
criteria. So if you are meeting those criteria, you're getting
extra money, PosiGen comes to your house, and then no matter
what, you have to go through what's that called? An efficiency
test, essentially.


David Roberts


Efficiency audit.


Vero Bourg-Meyer


Thank you. So you go through your audit and then the company will
tell you, okay, well, here are the things we can do kind of on
the cheap, the minimum we can do. Or here are some extra kind of
much deeper retrofits that we could do on your house that will
bring you much deeper savings.


Which one do you want? And they give them a choice. And in
addition to that, you get your solar. So the other thing that the
Connecticut Green Bank did at the time, which is not necessarily
required for that kind of a project to work or that kind of a
program to work, but that was really helpful in the context and
that's something that states have to think about was to support
the company in a different way financially as well. So they
offered subordinated debt to the company because at the time
PosiGen was a new company, the market was untested.


They were like, "Okay, well, if you need to be successful serving
these customers, if you need an extra bit of support over here,
we'll provide that and that money goes back to the state." So
it's just an investment like any other investment. And that
really helps that developer be motivated to serve those customers
really well. So these are kind of just on the financial side and
on the behavioral side ...


David Roberts


Just pause here on the financing. So the idea here is PosiGen
comes to your door and says, we'll give you an efficiency audit.
We'll figure out what you'll need, you'll stack it up and we'll
do it for no money down.


Vero Bourg-Meyer


For no money down, right.


David Roberts


From the homeowner or the building owner's perspective, this is
just a no brainer, right? Does anyone say no to this?


Vero Bourg-Meyer


The no money down is just the first piece, I think it's no money
down and cash flow positive, right?


David Roberts


Right. So you're making money off it from the word, from the word
go.


Vero Bourg-Meyer


From the get go, you got to make a certain target. And the way
that they access those customers as well and how they decided who
to enroll in the program, they did not use FICO scores. So as a
company, just generally speaking, they do what's called
underwriting to savings. So they look at how strong of a saving
they can give a customer and then they essentially bet that it's
going to work and that it's going to be strong enough for them to
be able to recover their money. So if the customer doesn't make
money, they don't make money.


David Roberts


Okay. So that seems to me to overcome or at least substantially
overcome the funding barrier. And then if you're not using FICO
scores, you're sort of overcoming or getting around the kind of
credit score barrier. What about just the sort of like education
and community engagement piece? How did Connecticut approach
that?


Vero Bourg-Meyer


So they did a lot of community based marketing and that's been
shown to work really well to sell solar in general. And there's
been actually also studies looking at the type of messaging that
works in LMI communities versus non-LMI communities and turns out
the messages need to be about the same. People want savings.
People want something fancy and new that works really well, and
they want environmental benefits.


David Roberts


Let me put something cool on your house and you'll make money
from the second yeah, you don't have to fine tune that a lot for
different audiences. It seems like a pretty universal appeal
there.


Vero Bourg-Meyer


Yeah. But one of the reasons that really worked is that the
Connecticut Green Bank was super involved in selling the program
really hard. Right. So no one wakes up in the morning and says,
oh, I'm going to figure out how to put this expensive piece of
infrastructure on my roof.


David Roberts


Not these households, right? That's probably not the top of mind.


Vero Bourg-Meyer


Exactly. And even without that, I can't remember when that was
exactly. But a few years ago there was some study about
priorities in spending for people. Energy was like the last one.


No one wants to think about it, basically.


No one wants to think about it, just people interested.


David Roberts


So Connecticut was aggressive then at sort of like very
aggressive reaching these communities.


Vero Bourg-Meyer


Yeah. And that means going to fairs and running solarize
campaigns, which are bulk purchasing campaigns for solar and
co-branding stuff. Right. So you talk about this trust issue
question if the state is there to say, no, seriously, this is a
good program, we stand behind it, we picked these people. And
then in addition to that, they also vetted all of the contractors
that were being used. So it's more believable for a customer that
has trust issue than if some guy came to your door and said, yes,
trust me, I'm totally going to put something free on your house.


It's going to be great.


David Roberts


So it has official state backing, right?


Vero Bourg-Meyer


Yeah, absolutely. Which I think is really important.


David Roberts


Are there other pieces of the Connecticut program that are
particularly that other states should.


Vero Bourg-Meyer


If you're looking at purely the lease program? Well, I should
also mention it's a lease, right. It's not a PPA, so as opposed
to a PPA where and there are pros and cons to using each of
those. But a PPA, a customer's bill will go up or down depending
on how much the sun is shining that particular month, right. And
if you're very low income, that could be a problem for you.
Right. Seasonality could be an issue. If it's the summer and I
don't know, if you're not in a state that has good net metering
policies, you could end up paying more than you anticipated.


And that's problematic, obviously. A lease the big difference is
that the payment is stable. It's always the same thing every
month. So it's nice that kind of being able to see over the
horizon and say, yeah, this is how much I'm spending for energy.
And so there are lots of other things that they did on the
financing side and on the kind of the state programming side that
are, I'd say, a little too complex to explain without a paper
support. But they're really cool programs at the Connecticut
Green Bank. I encourage anyone who's even just a little bit
interested in kind of state level policy innovation to really go
and look at the annual report is a great place to start because
they do really cool stuff.


David Roberts


Are other states taking note? I know Rhode Island. I've seen in
your work that Rhode Island sort of learned, seems like learned
from Connecticut and more or less kind of took those lessons. Are
these things actively spreading in states or other states?


Vero Bourg-Meyer


Hopefully, if we do our job right. Hopefully. And in Rhode
Island. So the format that was followed was pretty much the same,
except that we didn't have efficiency there. As an added piece,
the main difference is that Rhode Island, the Rhode Island
program, so the Affordable Solar Access Pathways, or ASAP, that
came out post IRA. So that means the low-income adders, the ITC
adders, are folded into the program.


David Roberts


So it's sort of built around the IRA money.


Vero Bourg-Meyer


Yes. And then the way that this is going to work so they also
just selected they ran an RFP and selected a vendor, which also
happens to be PosiGen. That's going to be the first. So that's
brand new information. I think it's public for PosiGen, but I'm
not sure whats fully public yet. But I cleared it with them. I'm
allowed to say it. The big thing there is that when the RFP was
launched, we asked the private sector, what level of incentives
do you need to get to this level of savings for a homeowner? And
then not only that, but what levels of incentives or what kind of
money are you going to send back to the consumer or to the
program?


Whichever you choose. If you get access to extra incentives
through the tax credits. Right. So now you have not 30%, but
maybe 40%, maybe 50%, maybe 60%. How is that shared with the
customer, with the ultimate customer? So that's one of the
questions that was being asked in the ...


David Roberts


Yeah, I guess you do want to take care to design these things. So
you're not sort of like inadvertently just using public money to
make a particular solar company richer, super rich.


Vero Bourg-Meyer


Yes. Because, I mean, it's great that they're motivated to do
this and you do want the private sector motivated to do this, but
ultimately it's got to create benefits for the LMI consumer.


David Roberts


Right.


Vero Bourg-Meyer


That's the most important piece of this.


David Roberts


So if I'm a state and I am looking at Connecticut and saying,
"Hey, that's cool what you did. You created enormous savings for
these households. You installed whatever megawatts of new solar.
Our state wants to do something similar." It strikes me that this
is, among other things, just administratively there's a lot of
pieces of the puzzle here. There's a lot of sort of so what are
the kinds of things that if I'm a state that wants to replicate
this or do something similar, what do I need in place before I do
this? And then one of the questions that always comes up for me
is a simple one, which is just sort of how do you identify LMI
communities?


Is there a common national metric or is every state sort of every
state kind of bespoke figuring it out on their own? And just in
general, if I'm a state, what do I need to do to get ready if I
want to do something like this?


Vero Bourg-Meyer


So on the question of what the states have to do to get ready, I
think that probably the most important thing. If you wanted to do
the same thing as Connecticut, would be make sure that your
legislation enables third party ownership very clearly because
there's nothing that turns off a contractor or developer quite so
quickly as telling them. So we're not too sure, we're not
entirely sure what the regulatory context is like. But just
before you can enable LMI solar, you have to have a friendly
solar policy, just generally speaking. Right?


So do you have net metering enabled? What I'm going to say is not
relevant to the Connecticut program, but do you have community
solar enabled? Is it authorized in your state? Can everybody do
it? Or is it something that only the two utilities that are in
the state can do and oh, by the way, they don't want to do it, so
it's just not happening. So these things are good places to
start. But in terms of how you figure out where your low- and
moderate-income communities are located, there's tons of
different ways of doing it.


There are states that have gone through very lengthy process
stakeholder processes and regulatory processes you can think of.
California is one, New York is another, to try to figure out what
constitutes a disadvantaged community or low- and moderate-income
community. There are lots of different terms floating out there.
And those states have gone through the process and they've talked
to people whose livelihoods are really directly touched by these
things, right. Not just policymakers, but people in communities.
And then the federal government kind of stacks on top of it and
says, well, I'm going to define low-income community for this
program this different way, and then for that other program a
different way.


So it's a bit of a mishmash of all sorts of definition. Often
you'll have for the state definitions, a mix of ethnic and racial
kind of threshold, foreign languages. You'll have poverty levels,
essentially. You can have sometimes unemployment levels. But
yeah, this mapping question is complicated.


David Roberts


Well, the IRA has a ton of adders and sort of set asides for
justice communities. So it seems to me like this is a national
concern. You need some common metric because there's so much
money at stake here, it really matters how these things get
defined.


Vero Bourg-Meyer


So you do need some common metric, but also states are very
different, right? So a state like Vermont, which is very rural
and very white, is going to be different from a state like, I
don't know, California, which has a lot of urban spaces and a lot
of people of color, big Hispanic population. So you can't quite
blanket define everything. But I think some at least definition
of what the factors need to be. Right?


So states maybe need to have a definition that fits those four
criteria that include race and ethnicity, that include poverty
level, that include XYZ with kind of flexibility, and what those
need to be might be helpful. One of the things that we're trying
to do that we're working in Colorado on a community solar program
and on a community solar project or pilot project for
manufactured homes. And Colorado does a lot of work with the
Weatherization Assistance program WAP. They've been doing a lot
of work on that for a long time. And they were the first state to
use federal dollars to be authorized to use federal dollars from
the WAP program to install solar.


They're moving away from that at the moment because it's too
complicated. But they still want to coordinate the WAP program
and the solar program. The Web program is going to use whatever
the WAP program uses, which is a percentage of the federal
poverty level, whereas the other programs that they're going to
build are going to be using their local flavored, definition of
income and race and ethnicity and et cetera, et cetera. Right. So
it's all a big mess, but a big beautiful mess.


David Roberts


Big, beautiful mess. Oh, one thing I wanted to double back on, I
meant to ask you this when we were talking about Connecticut,
specifically about the renter issue, because this is something,
this is something I get questions about all the time, like I
rent, like what can I do?


Vero Bourg-Meyer


Community solar.


David Roberts


Is this how I mean, you mentioned that Connecticut doesn't have
community solar as a big piece.


Vero Bourg-Meyer


No, they do have community solar.


David Roberts


Is this the primary way of overcoming this sort of landlord
tenant split incentive?


Vero Bourg-Meyer


I think it is. I think it is, although so there are some programs
there's a program in Hawaii, for instance, through the Hawaii
Green Infrastructure Authority that's allowing renters to
participate in leases, essentially, and they have on bill
financing that's enabling that with the Hawaii Electric Company.
And that's working, I think hopefully it will work really well.
That's a new program. It's called the Gems Energy Services
program. But yet, just generally speaking, outside of exceptions
like that of Hawaii, community solar is definitely the way to go.
I mean, it's the way to go not for renters only, but also if you
just have trees around your house and you can't access the sun.


David Roberts


What if you want to get solar panels on a big apartment building,
an apartment building, say, that is occupied mostly by LMI
people? Is there anything in these programs that can work with
landlords or get around that?


Vero Bourg-Meyer


Yes, so I think the SOMAH program in California would be one that
applies to that. And it applies to affordable housing, really. So
the way that it's structured, and I'm not super familiar with it
because it's not what I focus on. But one of the interesting
pieces is, so heard, the way that they define the Department of
Housing and Urban Development, the way that they provide funding
for folks is that they request that the rent and the utility be
kind of lumped into one payment, which is good for a number of
things. But then when you start installing solar on something, it
makes it more difficult because any changes to how much you pay
in utility will trigger an increase in your rent.


So that's not super helpful. And they worked with the program in
California. They worked with HUD to kind of get rid of that. So
that was a good piece of the puzzle. And they are renters.
They're renters. But you got to work directly with the
non-profits that own the affordable housing. And that's not easy.
They have lots of things to figure out and lots of other issues
to figure out. Right?


David Roberts


Yeah. That seems like an area where, like a super simplified
model that you could just replicate across would be helpful.
We're running out of time. And one of the big things I wanted to
ask you about was the reason that this whole conversation was
prompted in the first place was a new report that just came out,
which is specifically looking at how non-profit foundations can
sort of enter this LMI solar space induce, help, support. We
don't have a ton of time, but maybe you could just say a few
words about if I'm a foundation and this seems like a good thing
that I want to do, are there models?


How do I get involved?


Vero Bourg-Meyer


Yeah. So first you should read the report.


David Roberts


Of course, always read the report.


Vero Bourg-Meyer


Energize your impact. It's on the CC website. But what I'm going
to say is true, I think, for states, it's true for the federal
government, it's true for the foundations, it's true for the
green banks. If you are building or looking interested in
supporting LMI solar, you need three pieces. You need the
capital, you need the customers, and you need the capacity, the
capital. There are tons of different ways for foundations to
provide capital. That's what the report is about. And we focus on
really we go in depth in some of the fancier ways, the
guarantees, the equity investments.


David Roberts


There's grants, there's loans, there's loan guarantees.


Vero Bourg-Meyer


Yeah. And equity. I didn't know that before starting this
research. I had absolutely no idea that foundations could do
equity investments. It blew my mind when I thought that was
possible. So that's your capital. Then you have your customer
side. Where are you going to find your customer? How do you help
people find customers? That's the second big bucket. And the
third bucket is the capacity. And there are models in there that
kind of look through how you build capacity in LMI communities,
and particularly in either the LMI serving institutions or the
non-profits that kind of support these communities.


And one model I guess that I'd like to point out is called
Technical Assistance Fund from our sister organization, the Clean
Energy Group that's explained in the report is really about
finding that trusted third party advisor to help a community
figure out or a community institution figure out, like, what are
the options out there. To start with, if you want to build a
pipeline of projects, you need to actually help the projects be
born. And that sounds completely obvious to say, but you can have
all the capital in the world if there are no projects to apply it
to because people don't know what they need. Do I need a big
battery or a small battery?


Do I need a battery at all? Like, what kind of solar can I use?
Can I put it on my house? Can I put it on my hospital? Should I
put it in a field over there? How does this work? Just generally
speaking.


David Roberts


Who is that? Who is that? Who are those trusted? How do you find
those people? Who are those entities?


Vero Bourg-Meyer


They're contractors. And I think the fact that they're trusted
just means that they're not selling you the final products,
right? So generally speaking, developer will be the person that
tells you, this is what you need. Believe me, this is what you
need, and I'm going to sell you. Exactly. And that does not
necessarily inspire trust. So you really want kind of a third
party there to be able to help figure out what the options are.
And these are just essentially engineering firms that look at
your situation, look at your needs, and try to help you make
sense of it.


So that's a big thing.


David Roberts


So a foundation can just support and fund those?


Vero Bourg-Meyer


Yeah, absolutely. I think that's a really fundamental piece of
the equation. There's a piece, an editorial piece that was
written by Joe Evans, who works at the Kresge Foundation and who
is absolutely brilliant in all this stuff, but also wrote an
op-ed aptly named "It's the demand side, stupid." And I think
it's not subtle, but it gets to the point, right? It's like you
need all of it, right? You need the capital, the consumers, and
the capacity for this to be successful.


David Roberts


And you need to basically cultivate and educate customers. Like,
this is one of those kind of areas where you just can't rely on a
market in some sense because you're creating market demand by
educating.


Vero Bourg-Meyer


Oh, it's absolutely it's all about building markets. It's all
about building markets.


David Roberts


Right. This has been awesome. As a final question, I just was
wondering sort of what is the prize here? Say we just got low-
and moderate-income households up to parity so that they're
installing solar at the same rate, say, as other households. How
much power in terms of like megawatts and gigawatts, is this a
substantial amount of energy we're talking about, or is this
mostly about these sort of extra energy benefits for these
communities or is this really a substantial amount of it's big.


Vero Bourg-Meyer


Yeah, it's big. I was thinking earlier, if you don't care about
all the reasons why you would need solar on LMI buildings, if you
have no human there's not a human bone in your body that thinks
it's just fair and good and just and for some reason you only
think about the grid.


David Roberts


I know some people like this.


Vero Bourg-Meyer


Yeah. They're out there. There are some of them. The solar
potential of low- and moderate-income household is about 40%, 42%
to be precise, according to NREL, of the total US residential
potential, right. It's a pretty big chunk that's out there.


David Roberts


So it's almost half the rooftops.


Vero Bourg-Meyer


Yeah.


David Roberts


So that's not a small market too.


Vero Bourg-Meyer


No, it's not a small market. It's a big market. It can have a
huge impact in terms of the grid and the climate and obviously a
huge human impact for the people that are buying it.


David Roberts


Right. And it's worth saying, because I don't know if we
mentioned it earlier, but the households themselves get immediate
benefit in terms of their energy bills lowering, and they get
positive income to start off with. But over time, this stuff also
accrues right. These benefits also accrue to the next generation.
Air pollution lowering affects children. So these benefits are
...


Vero Bourg-Meyer


Compounding.


David Roberts


Compounding over time.


Vero Bourg-Meyer


Absolutely.


David Roberts


Vero, thank you so much for coming and decoding this area for me.
It sounds like lots is happening.


Vero Bourg-Meyer


No, thank you.


David Roberts


The money is raining down and we're all dancing around.


Vero Bourg-Meyer


Yeah, we're all dancing around trying to figure out how is this
all going to work? This is a very exciting time. And if there is
one thing that I would want people to remember, is that LMI solar
really matters. It can make a huge difference in people's lives.
And it doesn't happen by accident. It needs to be designed. So
get out there and design stuff.


David Roberts


Awesome. Thank you so much for coming on.


Vero Bourg-Meyer


Thank you so much. Bye.


David Roberts


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