Affordable Solar Program
As part of its solar incentives program, the New York State Energy Research and Development Authority (NYSERDA) established the Megawatt Block Incentive (MW Block), a rebate program which includes a carve out for residential households. The rebate is based upon the amount of solar installed, location, and how much solar capacity has already been installed by the program. At the beginning of the program, rebates were set at $1,000 per kW. However, with most of the available open capacity already claimed, the rebates have fallen to between $300 to $350 per kW, depending upon location, with the rebate no longer available in some parts of the state.
The rebate is paid directly to participating contractors who have agreed to meet certain state standards, who then pass on a portion or all of the savings to the property owner. Funding for the program comes from the state’s Clean Energy Fund, which gets money from a surcharge paid by utility customers.
The Affordable Solar Program, within the MW Block, specifically targets low income households by offering increased rebate amounts to single family households with incomes 80% or below the Area Median Income. The current low income household rebate is $800 per kilowatt of installed solar. To participate, the program also requires homeowners to install several minor low-cost energy efficiency upgrades.
NYSERDA, via a partnership with Energy Finance Solutions, also offers homeowners two reduced interest rate loan products to finance the installation of solar panels. Smart Energy Loans are traditional loans repaid via monthly payments. The amount loaned can be from $1,500 to $25,000 with loan terms of 5, 10 or 15 years.
On-Bill Recovery Loans are very similar, but payment is built into the customer’s utility bill and if the home is sold the balance of the loan can be easily transferred to the new owner. As part of the Affordable Solar Program, reduced interest rates are offered to households with incomes 120% or below the Area Median Income, with current rates 3.5 percentage points below market rates.
Is New York’s Affordable Solar Program successful?
New York’s Affordable Solar Program is laudable in many ways via its efforts to provide rebates to incentivize installers to target low income households and its support of more affordable loans for the same. By including both rebates and low interest loans in the program, it has been able to effectively increase low income household solar installation by sharing the costs between the program and the homeowner. However, the programs structure also limits its effectiveness in helping those in the state the most in need, an issue that has increased over time.
For example, though originally the low income MW Block rebate totaled $2,000 per kW, it has steadily decreased over time to the current rate of $800 per kW. Despite the fact that the low-income rebate was initially tied to the overall rebate amount, NYSERDA has told us that the current amount will be ongoing for the life of the program. The more the low income rebate has dropped, the less it has helped those most in need, increasing the share of installations for households on the upper edge of low income eligibility.
This issue is further exacerbated by the setup of the reduced interest loan portion of the program. While lower interest rates certainly help make financing more available to low income households, helping to solve the common available capital issue, it does not help those with bad credit. In fact, credit is one of the measures used to decide whether or not a low income household is eligible for a low interest rate loan.
Last modified: August 13, 2019