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Affordable Solar Power for Low-Income Families: Colorado

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Part 2 in a series of articles about affordable solar panels in the USA.

Note: the low-income solar program described below currently exists in Colorado, but with limited funding, it appears as though it won’t be helping any more homeowners install solar on their homes. That’s too bad, because for the 300 households it covered, the program was quite successful.

If you are unable to afford the upfront cost of solar panels in Colorado, there are solar financing and leasing options available.

We dive into more detail on affordable solar in Colorado below. Our hope is that Xcel Energy and the state can find a way to keep this promising program going!

Low Income Solar Rooftop Program Overview

In 2016, Colorado became the first state in the county to receive authorization from the U.S. Department of Energy to integrate solar panels into its federally funded Weatherization Assistance Program (WAP), which helps low income homeowners improve the energy efficiency of their homes by financing the installation of insulation, replacing older appliances, and other such services. This allowed the Colorado Energy Office (CEO) to use federal funds to subsidize the installation of solar panels on single family houses via its network of local weatherization assistance program service providers, with the actual installation being carried out by private contractors.

In order to qualify for the program an individual must own and live in a single family home, and either have a household income 200% or below the federal poverty rate or be already enrolled in a federal low income program; such as Temporary Assistance for Need Families, Aid to the Needy and Disabled, Old Age Pension, Supplemental Security Income, Low Income Energy Assistance Program, Supplemental Nutrition Assistance Program, or Social Security Disability Insurance.

As established by federal guidelines, in order for WAP funds to be utilized for installing solar panels the project must be shown to result in a net benefit over costs and the total size of a system cannot exceed 3.5 kW. In addition, no more than $3,545 of WAP funds can be utilized for any one project, requiring the remaining costs to be covered by private investment or other sources of public funds.

In 2016, the Colorado Public Utilities Commission (CPUC) and various other parties entered into a settlement agreement with Xcel Energy, the largest energy provider in the state, regarding the regulation of solar energy within the state. As part of this wide ranging agreement, Xcel agreed to pay an incentive for low income households utilizing the WAP to install solar panels using funds collected via the Renewable Energy Standard Adjustment (RESA), which is a portion of the distribution charge paid by all ratepayers and set by the CPUC. This incentive included $2.00 per installed watt upfront and a 3.4 cent subsidy for each kilowatt-hour the panels put on the grid. However, this incentive was limited to the three year period of 2017 through 2019 and for only up to 300 households. This limit has since been reached.

What’s next for affordable solar in Colorado?

By all reports, Colorado’s combination of WAP funds and the Xcel incentive payments was quite effective in installing solar panels on 300 low income households across the state. By partnering with private contractors, the CEO was not only able to get panels installed at open market prices, it was also able to further reduce costs by helping minimize the soft costs faced by contractors. According to a 2018 article, while the state was originally paying installers around $3.60 per watt for installations at the beginning of the project, they were able to reduce costs by up to $1.00 per watt largely by reducing the soft costs that installers would typically have to cover. The only significant limitations during the three year period of the dual incentives was that the WAP requirements tended to focus projects on homes in rural areas with high solar capacity factors and higher than average electricity use.

Unfortunately, the largest limitation to the widespread success of the program is funding. Without the Xcel Energy incentive payments the use of WAP funds alone is likely insufficient to meet the WAP requirements to install solar panels. Most low income households lack the cash on hand or credit necessary to cover the gap, and state and non-profit funds have become mostly focused on larger community solar projects. As a result, Colorado’s Low Income Rooftop Solar Program is effectively dead in the water, though it could be easily revitalized with additional incentive funding.

Last modified: August 7, 2019

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