If we are fortunate to get a Clean Power Plan implemented in Minnesota, it is important that energy equity be prioritized in addition to carbon reduction. The renewable energy revolution has to be done in a way that helps promote economic and racial justice if we are to fulfill goals of moving our state toward 100 renewables.
The system we have in place makes it very difficult for families with a lack disposable income or without credit scores over 700 to invest in energy efficiency improvements, weatherization and clean energy through community based solar and wind sources.
Let’s remove these barriers so that all customers can improve their homes and save their families energy dollars regardless of income or credit score.
When we clear an easy path for low and middle income families to take action on climate change, they also gain the double benefit of saving money on utilities, and building a green job-creating economy of locally circulating wealth.
In other words, we have to avoid a situation that Van Jones calls “eco-apartheid” where only wealthier households and households deemed "credit worthy" can afford these investments or else too many will be left out of the transition to a clean energy future.
It is well known that the availability of Community Solar Gardens allows us to make the benefits of clean energy accessible for those who cannot afford to install their own individual solar household systems. As long as the Public Utilities Commission maintains rates for community solar that allow for a net financial savings, we have a powerful tool to shift the market in an overall favorable direction and to tell a new story of renewable energy as a pathway out of energy poverty.
However, here are three additional policy asks which would help meet a more diverse range of needs:
1) Promoting workforce training programs that bring in low income communities and communities of color.
Minnesota has the highest racial employment gap in the nation and we have to be conscious not to grow the renewable energy economy in a way which reinforces this gap. Companies and programs could always use better clarity about barriers to minority employment along with incentives for meeting state goals on minority employment. However, what is most necessary are State Bonding dollars for multipurpose renewable energy job training facilities that are accessible to areas of concentrated poverty & unemployment and communities of color, particularly North Minneapolis. This is how we will lower the racial equity gap in qualified applicants to high-demand jobs in growing fields.
2) Supporting a lower price per Kilowatt hour for people who consume less energy, known as "an inclining block rate structure."
The IBR structure is supported by the Energy Cents coalition, an organization devoted to protecting the lowest income Minnesotans from losing essential energy. Or course, a lower electricity rate for lower energy users would shift the cost burden toward a higher rate for higher energy users. Such a price signal would encourage upscale high-energy users to undertake conservation, energy efficiency improvements and energy self-generation. In addition, the inclined block rate would mitigate the effect of rate increases on lower-consuming and presumably lower-income customers.
Even though lower-income Minnesotans might use more energy per square foot (often due to older appliances) they use less electricity overall due to lower square footage. It is important that those who need home medical equipment and use electric heat get a waiver from IBR.
Xcel energy's justification for wanting to reduce the compensation their customers receive for subscribing to community solar, is that the program:
“allows developers to offer this product at a discount to participating customers while the non-participants pick up the increased cost”. If these equity concerns are genuine, then Xcel should also support inclining block rate.
3) Advocating for tariff-based on-bill repayment mechanisms for energy efficiency and renewable energy projects, so that every Minnesotan will have access to the benefits and wealth building potential of the new energy economy
Over a time period of 5-15 years, successful home energy efficiency improvements and (more recently) solar installations eventually pay for their own install costs by displacing the energy dollars that the customer would have otherwise paid to the utility company. Unfortunately, most residents and small businesses do not have to up-front capital or easy access to financing to pay for that initial up-front cost. This up-front barrier particularly prevalent for people with low credit scores, who tend to be lower income. The sheer complexity of tackling those up-front costs are perhaps the most frequent barrier to doing home energy improvements to those who could theoretically afford it.
Fortunately, tariff-based on-bill repayment is a possible pathway to drive down energy costs at no upfront costs or risks of personal debt. The utilities would have to charge the OBR customer a monthly tariff rate so that that the monthly energy savings from the energy improvements is greater than costs of the improvements per unit of time. The simplicity of OBR will increase what has been a disappointing amount of participation in energy efficiency improvements and renewable energy. OBR can be done without a bank loan or a new bill so regular people could save money and produce wealth. As OBR increases the amount of capital flows into new energy projects, it will create local jobs that help cut carbon emissions.
Once a customer identifies energy saving opportunities, they select the best financing option from participating investors. Once an energy improvement contractor completes the project and receives payment, the OBR administrator evaluates their performance on how effectively it saves money and energy. In order to protect the finances of consumers, only cost-effective energy improvements are approved for OBR. In other words, you have to save money to qualify for on-bill-repayment.
It is important that OBR be tariff-based as opposed to loan based so that the OBR option is accessible to those without a stellar credit score because the improvements are financed in the utility bill rather than a loan. Tariff-based OBR can provide renters with a pathway to sign up for energy improvements like home air sealing and insulation with landlord permission. This type of financing stays with the property rather than the person which eliminates the transient nature of residents from being a barrier to investing in home energy improvements.