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.