EQUITY AND JUSTICE: BENDING THE ARC OF THE TECHNOLOGY CURVE TOWARD VULNERABLE POPULATIONS

“Storage needs to compete on economics, and there’s no getting around that. But the industry could gain from forging new alliances with stakeholders that have overlapping interests.… Environmental justice is a logical place to start, because storage is well equipped to tackle the environmental damage that often falls more heavily on poor or minority populations.” Julian Spector, Greentech Media¹

Early adopters of innovative, disruptive technologies are typically the well-to-do and, so far, battery storage is no exception. Most of the economic benefits of storage are now realized by commercial utility customers who are saving money from these systems through electricity bill reductions. Very few of these projects are in disadvantaged communities; ironically, low-income customers need the benefits of solar and battery storage systems the most. Advocacy and policy must be directed to ensure that all communities benefit from these technologies now, not ten years from now.

Issues

While natural disasters and associated grid outages affect everyone, not all communities are equally harmed. Often, it is the poor, the elderly, and the disabled who are hit hardest, because they are less mobile, less able withstand the dangers from an outage, and less able to recover from a disaster.

Disadvantaged communities have fewer resources; they may not be able to re-locate to a hotel or temporary housing during or after a storm. And they tend to be under-insured, so it is more difficult for them to recover from property losses. If power outages disrupt the ability to go to work, the resulting disruptions in income hit harder in communities that have fewer economic resources.

In cities, low-income communities are often located in low-lying areas, making them more vulnerable to flooding. Evacuation is harder on the poor, who may have nowhere to go; and on the disabled and elderly, who may not be able to move safely.

And for those dependent on electricity for the refrigeration of medicines and for powering medical devices, the loss of electricity can have much more severe consequences than simply being left in the dark (2).

Also, many poor, elderly, and disabled people live in buildings with electric bills that include the same kind of high utility “demand charges” for electricity facing large, private companies.

Solar PV and battery storage (solar+storage) can reduce demand charges on facilities that house and provide essential services to the economically or physically vulnerable (3). Taming utility demand charges (which are on the rise) makes for a good strategy for helping affordable housing owners to manage their energy bills.

In addition to these direct economic benefits, solar+storage can power essential services during extended power outages. Such clean energy equity provided by solar+storage systems could ensure that all communities have access to the economic, health, and resiliency benefits that these technologies can provide.

Solar+storage systems are also possible drivers of local economic development. Savings from systems can be reinvested in affordable housing and community buildings. Local groups can own or lease solar+storage systems, leading to more community-led investment.

More installations of such systems in low-income communities and communities of color also can provide a semblance of equity in the energy system. Vulnerable populations should be first, not last, in line to obtain the benefits of new clean energy technologies.

The key challenge is this: how can we bend the arc of this solar+storage technology trend toward public purposes now, not as a last resort but as a matter of market design and social justice? To capture this opportunity, we must first fully understand the drivers and limits of these emerging energy storage markets.

Opportunities and Challenges

It is important to understand that installation of solar+storage technologies can serve building owners of affordable housing and community facilities mainly because batteries do a great job of reducing demand charges on their utility bills. Clean Energy Group’s report, “A Resilient Power Capital Scan: How Foundations Could Use Grants and Investments to Advance Solar and Storage in Low-Income Communities,” provides examples of the energy savings of solar+storage; see Figures 6 and 7 from the report.

Demand charges are the fees that utilities charge commercial customers (affordable housing owners and many community facilities are on the same rates as commercial customers). These charges are based on their highest peak power use over a billing cycle (usually a month or so), regardless of how much electricity they use.

It’s like a charge on the highest, single power spike—about as popular as Uber’s congestion pricing. In some places, demand charges can comprise over half the bill; and for an affordable housing complex or a senior center, that can be a lot. That makes reducing demand charges a huge savings opportunity for people who need to reduce their electric bills.

It is important to know that most solar PV systems are not usually configured to run independently from the grid—when the grid goes down, the PV systems do too. PV systems need battery storage, so they can island from the grid and continue to provide power when the grid isn’t available.

While focusing only on solar in affordable housing or community facilities may offer some benefits, it is not enough to keep a facility powered during a power outage. Solar-only systems might bring about some reductions in energy bills due to less consumption of grid power, but they will do nothing to reduce demand charges or provide resiliency if the power goes out.

While energy efficiency and solar can reduce energy consumption, they do relatively little to reduce the demand charges that can be upwards of 30 percent to 70 percent of a total utility bill. And apart from the economics, it would be unfortunate to convey to that solar-alone systems will provide power in the next blackout. They will not.

To ensure that solar+storage technologies are deployed in low-income markets, advocates need to: 1) understand how energy technologies become mainstream and to leverage those trends, 2) address complex market dynamics in an early stage technology market, 3) provide sound analytical information, to support an informed environmental justice and philanthropic community, 4) create an interested and educated customer base in affordable housing sector (for both public and private building owners) and among state and community leaders, 5) advocate support policies to accelerate these individual efforts, and 6) to create new finance models to enable market development.

There are some promising new programs that will help low-income communities pay for solar+storage systems. For instance, in March 2018, San Diego Gas and Electric (SDG&E), a major California utility, proposed a $2 million pilot program to incentivize behind-the-meter energy storage at facilities serving low-income residents. The justification and design of SDG&E’s program relies heavily on materials produced by Clean Energy Group in cooperation with other equity groups in the state.

From SDG&E’s testimony on the pilot program,

As outlined in a report by Clean Energy Group, California Housing Partnership, and the Center for Sustainable Energy, additional incentives for storage are needed, and without them low-income customers will not be able to obtain energy storage and the benefits of resiliency…. (4)

According to SDG&E’s calculations, the proposed incentive of $1.20/watt represents the full cost of installing and maintaining the system for 10 years, and such storage systems must be paired with existing or new solar systems.

Today, new affordable housing complexes have begun to install solar+storage systems to reduce electric bills and provide resiliency. Marcus Garvey Apartments is home to the first solar+storage microgrid at an affordable housing property in New York City. A new battery system, which began operation in early 2017, stores power from solar panels, a fuel cell system, and low-cost, off-peak power purchased from the utility, Con Edison (5).

When grid outages do occur, the microgrid will be able to island itself and provide up to 12 hours of power for several critical building loads during power outages, including outdoor lighting, the management office, security systems, and a community room. In the community room, the system is designed to power lighting, heating, refrigeration for medicines, and cell phone charging.

The Marcus Garvey project is expected to result in savings on both electricity and heating bills, as well as performance payments from Con Edison for participation in the utility’s demand management program. The money saved on energy expenses will be used for programming that supports quality of life activities for the tenants of the 625-unit housing complex.

These new programs and projects are just a start. The magnitude of this challenge must be understood. NGOs and foundations have never created an advocacy movement to ensure equal access to a new clean energy technology that was just entering the marketplace. Instead, typically, arguments for equity and equal access come around years after a technology already has been established in the market, such as with energy efficiency or stand-alone solar.

Solar+storage must be widely adopted in the broader markets, while at the same time ensuring that its early markets are equitable and accessible to low-income communities. We need to tackle these two challenges at the same time.

Actions

Federal, state, and local governments should provide more funding and policy support to deploy resilient power for public safety and community resiliency. Policymakers at the state level should set aside portions of battery storage incentives for low-income communities, as California has done. They should ensure that solar+storage incentives are targeted to benefit low-income communities. And they should expand their housing and energy programs to include solar+storage applications, as a cost reduction and resiliency measure.

Organizations advocating for vulnerable populations (and those populations themselves, to the extent possible) should demand equal access to these new clean energy technologies. This requires working on finance strategies, developing analytical software tools, creating a growing list of resources, providing leadership grants to community groups, and awarding technical assistance fund grants to planners and developers.

Banks, foundations, and socially responsible investors must find creative ways to finance solar+storage technologies to serve critical public needs (6).

Solar+storage companies should aggressively expand their customer acquisition strategies to include solutions for affordable housing and buildings that serve seniors and vulnerable populations, as well as solar+storage applications for critical public facilities. Targeting battery storage benefits only to corporate savings will shortchange the technology’s social promise.

Works Cited

(1) Spector, Julian, “The Key Trends Shaping Energy Storage in 2018,”Greentech Media, December 8, 2017, www.greentechmedia.com/squared/read/trends-shaping-energy-storage-in-2018#gs.8Siejfk.

(2) Milford, Lewis, Robert Sanders and Todd Olinsky-Paul, “Evolution of a New Clean Energy Strategy to Meet Severe Weather Threats,” Clean Energy Group, September 2014, www.cleanegroup.org/cegresources/resource/resilient-power-evolution-of-a-new-clean-energystrategy-to-meet-severe-weather-threats.

(3) Clean Energy Group and California Housing Partnership and Center for Sustainable Energy, “Closing the California Clean Energy Divide: Reducing Electric Bills in Affordable Multifamily Rental Housing with Solar+Storage,” Clean Energy Group, May 19, 2016, www.cleanegroup.org/ceg-resources/resource/closing-the-californiaclean-energy-divide.

(4) Direct Testimony of Maya Bandy on behalf of SCG&E, Sempra Energy, February 28, 2018, www.sdge.com/sites/default/files/regulatory/Chapter%206%20-%20Customer%20Programs%20-%20Mayda%20Bandy.pdf.

(5) Clean Energy Group, “Marcus Garvey Apartments,” www.cleanegroup.org/ceg-projects/resilient-power-project/featuredinstallations/marcus-garvey-apartments.

(6) Ibid, Background, n.8.

Return to Project Page

Download this report as a pdf here.

Contact

Follow Us on Twitter

Follow Us on Facebook

Upcoming Webinars

QuEST: Optimizing Energy Storage Tool