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Affordable Solar in Washington, DC: What’s happening in 2019

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Part 4 in a series about affordable solar panels in the USA.

The Capital’s Solar For All Program

First established in 2016, Washington D.C.’s Solar For All Program is a multifaceted set of programs with the goal of bringing the benefits of solar to 100,000 low- and moderate-income households by the year 2032. While a significant portion of the program is focused on community solar programs, segments do target single family residences as well. The program is managed by the D.C. Sustainable Energy Utility (DCSEU), an independent non-profit utility, and overseen by the D.C. Department of Energy and Environment (DOEE). The DCSEU also manages D.C.’s energy efficiency programs which are funded via a surcharge on electricity rates.

Solar For All is innovative in that it is evaluated and adjusted every three years to ensure that its regulatory framework remains in alignment with real world conditions. Rather than utilizing a specific regulatory framework, the Solar Power For All Program instead acts as a competitive grant program, wherein individual contractors and non-profits create bids which are evaluated by the DCSEU based upon the ability of each bid to cost effectively meet the overall goals of the program. Bids most often include guarantees to service a certain number of households, produce a certain amount of electricity, and/or also provide other services such as job training or improving energy efficiency. There are no specific carve outs for community solar or single residence solar programs.

All types of bids compete directly against each other. Grant funds can only be utilized on households that are 80% or below the Area Median Income or receive assistance via at least one of several low income government programs. In addition, funds must result in at least a 50% reduction in each household’s annual electric bill, and must not result in any installation or additional costs to the households.

The grant system utilized by Solar For All creates a wide variety of different program frameworks. Community solar programs tend to receive a larger amount of grant funds, but single family residence programs do receive some funding as well. These single family residence programs, depending upon the contractor, either involve the household being given ownership of the installed solar panels, or the solar panels being owned by a private firm via third party ownership (TPO) which sells the electricity to the homeowner via a power purchase agreement (PPA). In 2019, the DCSEU selected three contractors to install solar panels on 130 single family residences.

These contractors included Greenscape Environmental Services, GRID Alternatives, and WDC Solar. In addition, GRID Alternatives also oversees Solar Works DC, a solar installation job training program. Promotion of each individual program is up to each individual firm with some help from the DCSEU and DOEE.

Funding for Solar For All comes from the district’s Renewable Energy Development Fund (REDF), which is funded in turn via compliance payments by electricity suppliers for failing to meet the district’s aggressive Renewable Portfolio Standard (RPS). Additional funding is from the retention of ownership of the Solar Renewable Energy Credits (SREC) produced by the project in the first five years, after which time ownership reverts to the solar panel owners. SREC can be purchased by utilities on an open market to avoid compliance payments for not meeting D.C.’s RPS. Due to the district being quite aggressive with its RPS, 100% of all power used in the district must be renewable by 2032 with 10% coming from solar by 2041, SREC values in D.C. are significantly higher compared to other areas also utilizing such credits, currently trading at around $400 per MW. To mitigate risk, the rights to the five years of SREC are sold for an upfront payment below market value.

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Our take on the program

Washington D.C.’s Solar Power For All Program is a creative solution to many of the issues affecting other similar low income programs. By utilizing a competitive grant program, they have managed to create space for innovation and the flexibility needed to keep up with changes in the solar market over time. Though not something that can be replicated in markets not utilizing SREC, it has also managed to create a degree of partial self-perpetuation in its funding, at least so far.

The most significant limiting factor for almost every low-income solar support program is the availability of funding. Within D.C., this is mitigated to a certain point by the high value of the SREC market. However, this means that continued success depends upon that market remaining high into the future. As SREC supply approaches SREC demand, which it most likely will over time, the value of SREC will fall precipitously.

There is even a risk of market collapse if supply grows too quickly, as took place in New Jersey in 2012. So far D.C. has managed to avoid this issue via closing its market to outside sources of SREC in 2011 and progressively making its RPS more aggressive, raising the 2032 target to 50% renewable in 2016 and then to 100% earlier this year. However, with the target now at 100%, the only way to be more aggressive is by moving forward the target year. With Solar For All dependent upon the SREC market and the REDF, it is likely that at some point the program will have to find alternative sources of funding to meet its goals.

Another factor to consider is the effects of the RPS and SREC on low income households. In general, low income households pay a higher percentage of their income for electricity, due to their lower incomes, and higher electric bills in general, due to households being less energy efficient. This makes lower income households more sensitive to rising energy rates. Though programs like Solar For All are supposed to help mitigate this issue, they do not help all households immediately as even widespread programs so far have only managed to install solar on a fraction of low income households. While incentives to push utilities towards increasing renewables, such as RPS, do result in higher rates for everyone, the money raised can at least be targeted towards certain initiatives, such as programs to subsidize lower income households. In comparison, SREC uses those higher rates to subsidize everyone who installs solar panels, regardless of relative income. Given that most solar panels are installed by higher income households and groups, even with low income programs in place, this suggests that SREC is in effect regressive in nature.

Last modified: August 9, 2019

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