Leveling the Energy Playing Field for Low-Income Households: Community Solar - Power to the People
The Inflation Reduction Act (IRA) is a game-changer that's set to transform our state's energy landscape and make a positive impact on both our environment and our wallets. In a moment we're diving into how the IRA is about to shine some serious light on community solar arrays and individual home systems, with a particular focus on the advantages it brings to low-income households.
But first things first, let's talk about what the IRA is all about. In a nutshell, it's a legislative effort aimed at boosting local economies, curbing inflation, and promoting sustainable practices. One of the key aspects of this act is its potential to supercharge the adoption of community solar arrays and home-based solar systems across Ohio. Now, you might be wondering, what's in it for us, especially for those of us who may be struggling to make ends meet? Great question, and one the IRA put a lot of effort into answering.
Low-income households with limited resources grapple with rising utility bills every day in Ohio. Here's where the IRA comes into play as a potential game-changer. The act, with its focus on clean energy initiatives, is set to open doors for these households to tap into the power of solar energy without the hefty upfront costs. How, you ask? Let's break it down.
Community solar arrays, also known as solar gardens or shared solar, have emerged as a beacon of hope for communities seeking to harness solar power without the need for individual rooftop installations. These arrays enable multiple community members to collectively benefit from a single solar installation, allowing them to access clean energy and reap the economic advantages of solar without the need for personal ownership. For low-income households, community solar means they can benefit from solar energy without installing panels on their roofs or worrying about maintenance.
Increasing access to solar is exceptionally important for low-income households, especially considering that 35% of census tracts in Ohio are designated as disadvantaged due to income, energy burden, age of housing, or other similar markers. A recent study completed by UNPREDICTABLEcity found that in Ohio, the average adoption rate for disadvantaged communities is half that found in census tracts not experiencing a disadvantage. Community solar can be a quick and easy way to provide communities with solar access.
The IRA also has provisions that incentivize local governments to collaborate with community organizations and energy companies to develop more of these arrays. This creates a win-win situation: communities get access to affordable clean energy, and local job opportunities get a boost as these projects require manpower for installation and maintenance.
Expanding the Investment Tax Credit (ITC), the IRA has created multiple “adders” to ensure these projects are developed where they are needed. In addition to the 30% tax credit for the cost of the system, projects may also claim an extra 10% for using American made products, another 10% for siting the project in a designated Energy Community, another 10% for locating the project in a low-income community or on tribal land, and another 20% if the project is sited on a qualified low-income residential building or economic benefit project. So some solar installations will see a 50% tax credit just for making sure it benefits the households that need it most.
And on top of that, the IRA introduced elective pay (also known as direct pay) so community-based nonprofits and local governments could also take advantage of the tax credit, even if they don’t pay taxes as an organization. And if for some reason they can’t use the tax credit? They can transfer it to someone who can.
These incentives can significantly reduce the upfront costs and make going solar a realistic option for families that might have otherwise thought it was out of their reach.
Sure, the Inflation Reduction Act is enhancing solar access, but what's the payoff? Well, it's pretty clear-cut.
First off, the environment comes out ahead. Solar energy is a clean, green alternative. No emissions, no air pollutants—just sunlight converted into electricity. By promoting solar energy uptake, we're taking substantial steps towards reducing our carbon impact and establishing a more sustainable future for forthcoming generations.
Now, let's address the financial aspect. Solar panels might seem like a significant initial investment, but they offer a long-term return. Once those panels are operational, your electricity expenses start dwindling. With solar energy, you're producing your own power, which translates to less reliance on the grid. Over time, this accumulation of savings can be quite substantial—a welcome financial advantage.
But the IRA isn't just about individual gains. It's about fostering stronger communities and powering up our state's future. When low-income households have access to affordable clean energy options, it creates a more inclusive energy landscape. It means families can redirect the money they would've spent on higher utility bills towards other essential needs, like education, healthcare, or even a little extra breathing room for family outings.
Moreover, increased adoption of solar energy translates to local job opportunities. From the technicians who install the panels to the engineers who design the systems, solar energy creates a web of employment opportunities that strengthen our local economies.
So, whether you're living paycheck to paycheck or just keen on doing your part for the planet, the IRA is something worth celebrating. By shining a light on community solar arrays and individual home systems, it's ushering in a future that's cleaner, more sustainable, and fairer for all.
As the sun sets on this blog post, remember that the dawn of a greener tomorrow is just around the corner. With the Inflation Reduction Act on our side, we're powering up our communities, our homes, and our lives – all while leaving a smaller carbon footprint. It's time to tap into the energy of change and ride the solar wave towards a brighter, more sustainable Ohio.
About the Author
Jon-Paul d’Aversa, AICP
Senior Energy Policy Advisor, PCFO
Principal, UNPREDICTABLEcity
UNPREDICTABLEcity provides climate planning and strategy services in the US and internationally, assisting communities, government agencies, and organizations with developing context-specific solutions at the intersections of our natural, built, and social environments.
As principal and founder of UNPREDICTABLEcity, Jon-Paul d’Aversa develops strategies for long-range energy development and emissions planning. Jon-Paul has served as a trusted and objective resource for over 100 local governments here in Ohio, as well as the US Department of Energy, Interstate Renewable Energy Council, Rocky Mountain Institute, National Renewable Energy Laboratory, the Energy Foundation, the Electrification Coalition and Power a Clean Future Ohio.
Keep Up to Date with the Latest News and Resources About the Inflation Reduction Act
