August 27, 2020

Applying the PAYS® System to On-Site Solar to Expand Access for All

By: Jenna Barron

Too many people are effectively locked out of the economic opportunity that on-site solar investments present. Access to on-site solar is determined by the ability to either pay cash upfront or arrange financing for a 20 year investment, and most households in the U.S. can’t do either on their own. While solar leases have surged in popularity among those who can qualify, the systematic disqualification of those who don’t has contributed to the clean energy divide.

To address these barriers, Clean Energy Works, with our partners in the LIFT Solar Everywhere* project are conducting research that will accelerate access to solar for low- and moderate-income (LMI) homeowners and renters by identifying finance and customer models for each regulatory and utility service territory type, addressing both residential rooftop and community solar. 

Clean Energy Works is proud to release a new report for this project entitled Applying the PAYS® System to On-Site Solar to Expand Access to All. The report is a product of collaboration with partners that bring deep domain expertise to open questions at the frontier of inclusive investment solutions, including Energy Efficiency Institute, Inc., NextResource Advisors, and Nancy Brockway, former New Hampshire Public Utilities Commissioner. 

This three-part report explores the applicability of PAYS for energy efficiency to on-site solar, the regulatory precedents for PAYS at the state level, and possible financial structures that would enable tax-exempt utilities such as rural cooperatives to adapt PAYS to monetize the federal solar tax credit for their members.

Current energy market and regulatory conditions necessitated the study, which delivers clear, detailed recommendations for utilities and policymakers who want to support low and moderate income energy consumers. 

The number one recommendation? 

“Reforming the investment tax credit to be a direct payment would enable lower upfront capital requirements for on-site solar” across the board – and it would eliminate much of the financing complexity and expense required to serve low and moderate income households.

Building on the insights emerging from many questions asked and answered in the first phase of this research, Clean Energy Works will continue its collaboration with partners through the LIFT Solar Everywhere project and engage leading utilities on their opportunity to accelerate deployment of grid-edge assets in an inclusive way.

Part 1 – The Potential for the PAYS® System to Make On-Site Solar Photovoltaic Systems Accessible to Low- and Moderate-Income Customers and Renters authored by Energy Efficiency Institute, Inc. (pp. 26-69)

Part 2 – Precedents for the Regulatory Treatment of PAYS® for On-site Solar authored by Nancy Brockway (pp. 70-113)

Part 3 – Limited Technical Review of Tax Structuring for PAYS® for On-site Solar authored by NextResource Advisors (pp. 114-150)

* LIFT Solar Everywhere, and Applying the PAYS® System to On-Site Solar to Expand Access to All, is supported by the U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy (EERE) under the Solar Energy Technologies Office Award Number DE-EE0008567.

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