Published on May 23, 2022 at 1:15 p.m.
Bennito L. Kelty
Tucson plans to support loans to low-income residents who want to install solar power in their homes. A local solar company suggested the city take steps to create a “solar empowerment program” that would help residents access small loans needed to install energy-efficient equipment.
The city council voted unanimously Thursday to ask staff to research the possibility of a program that would reduce the risk for banks and credit unions to lend to low-income homeowners who want a solar system. At a study meeting, Kevin Koch, co-director of Technicians for Sustainability, floated the idea of setting aside funds to offset potential losses due to defaults on small solar loans.
Solar power for middle-income homes is significantly supported by tax credits, but most low-income homeowners don’t qualify for those credits, Koch said. Instead, they must have access to loans for the facility, but many don’t have the credit scores to qualify.
Koch suggested the city create a reserve fund to cover losses. More loans for low-income households seeking solar power have become available over the past decade, Koch said, and a reserve program would cost less than providing subsidies for solar installations.
Technicians for Sustainability provides grants to cover the cost of solar energy for households that fall below the federal low-income cut-off based on the area’s median income, and they offer loans and plans that spread monthly payments to match what residents are saving with their solar system.
A loan loss reserve, however, would allow the company to set aside money without having to spend it, unless a bank needed to cover losses from an energy loan. solar. The city of Tucson could do the same and may have other options, including offering to take out solar loans, Koch said.
Koch previously presented a solar loan loss reserve to former mayor Jonathan Rothschild, leading a credit union to pilot a now popular loan program. This experience has led some local lenders to view solar loans as a less risky product, Koch said.
Many solar loans are predatory, Koch said. Plans offered by door-to-door sellers often promote monthly repayments that cost less than electricity bills, but have terms of up to 25 years and interest rates of up to 8-9% masking much lower interest rate.
TFS is now working with a local credit union to offer $150,000 in loan loss reserves to fund approximately $300,000 of home solar energy systems. TFS came up with the idea after working with a solar company in Boulder, Colorado, Koch said, and the idea has been effective in building creditworthiness for low-income households “based on the fact that the pool of money we have sitting inside the credit union is available to cover any defaults.”
A loan for a home solar power system is typically around $10,000, Koch said.
Koch suggested on Thursday that the city consider a similar program, although it’s only a small step forward, he said. For every $100,000 the city invests in the reserve, it could help fund the installation of 15 residential solar power systems.
“It’s a small number, but it’s not an insignificant small number,” Koch said. “Right now, we’re in a place where the industry and the community really haven’t figured out how to support low-income solar, at all.”
“Once you start a program, bigger foundations start to take an interest in it,” he said. “There are a lot of people nationwide who want to address this issue of equity in solar adoption.”
A single program can also “trigger programs in other communities,” Koch said, and “catch the attention of foundations that have invested millions of dollars in it.”
About 30% of the solar power systems that TFS installs on homes are financed through loans, Koch said. That’s a smaller margin than most. For other Tucson solar companies, about 90% of the homes they install with solar power pay with loans. Some companies only install after a home has taken out a solar loan, Koch said.
Koch told the City Council that getting solar power to low-income communities has been one of the hardest parts of bringing it to Tucson, saying they are “one of the stakeholders who has been more difficult to integrate into the adoption of solar energy. ”
An aerial view of Tucson would show there are rooftop solar panels all over the city, he said, but fewer in areas like the South Side. Equity has been discussed in the solar industry for more than a decade, and there’s a myth that solar power is for high-income households, Koch said.
“We do systems all over town for all kinds of people,” he said. “I started when solar was really not accessible. Nobody even knew if it even worked, the equipment was very limited and nobody knew what you could use to install it.
“Since then, I’ve definitely seen a lot of people who don’t make a lot of money set aside enough money to work on solar power,” he said.
The city council has given staff 120 days or less to review a loan loss reserve program and come back with a plan for approval.
Mayor Regina Romero, who installed solar panels in her home with the help of TFS and a City and County of Pima program, said, “Tucson is absolutely thrilled about the opportunity to create a solar empowerment, which we see in other cities.
The city, however, is limited in the type of program it launches, she said. The city would need to take action and come up with a plan if it wanted to work with TFS, but she said it’s good that the city council is discussing policies specifically focused on equity and climate action.
The mayor said she is championing increased federal funding for community block grants focused on energy efficiency and conservation as a way to improve climate action at the household level.
The city has given out these kinds of grants before, but the mayor said now would be a good time to at least take a look at a low-income solar program as they begin to work on their “recovery plan.” climate action” to be carbon neutral. by 2030. The mayor said she sees the possible “solar empowerment scheme” as a “piece of the puzzle” for a successful climate plan.
“I think it would be timely and appropriate for us as a city to start looking at a solar empowerment program,” she said. “That would be on top of all the work we do (energy efficiency and conservation block grants) and that makes a lot of sense.”
Bennito L. Kelty is the IDEA reporter for TucsonSentinel.com, focusing on stories of inclusion, diversity, equity and access, and a member of the Report for America body.
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