Although total solar installations don’t compare to more developed solar states, Philadelphia is the fourth fastest growing solar market in the nation, according to a study by Ohm Analytics. This growth can be credited to a number of factors and there is an effort across Philadelphia to catalyze this rise in solar energy.
Philadelphia Energy Authority (PEA) started in 2010 as an independent municipal authority with the goal of spreading clean energy and increasing energy efficiency. In 2016, PEA launched the Philadelphia Energy Campaign to leverage $1 billion to foster a cleaner Philadelphia, drive down energy costs, and create 10,000 jobs in clean energy and energy efficiency in 10 years. In the first year (2017), PEA helped launch $53 million of projects, created 225 jobs, and reached almost 200 households.
Through a Kleinman Center grant, I had the privilege to intern at PEA, where I collaborated on a range of projects. Specifically, I worked on PEA’s initiative Solarize Philly.
Solarize Philly is a group buying model that helps cut prices for residential solar, for example, through bulk purchasing power. With the completion of two phases, Solarize Philly helped more than 363 homeowners transition to solar and save on their electricity bills. Participants saved on average $2,000 on solar installation. Since its launch, Solarize Philly has become the largest solarize initiative in the nation. Despite great success, this program tends to attract a wealthier population base. To unlock significant growth in Philadelphia’s solar market, PEA designed an innovative way to reach the 26 percent below the federal poverty line.
In order to break the assumption that residential solar is reserved for the affluent, PEA developed a low-cost lease option for low-to-moderate income households. While low-income residents can benefit the most from the cost savings potential of solar, they are the least able to access these benefits. Many loan products typically consider FICO credit scores and debt-to-income limits that exclude many low income households from being able to go solar. Without an innovative financing option, the cost of solar remains unaffordable for many.
The special financing lease lifts the burden of high up-front costs and creates a lease option that provides energy savings from day one. The lease considers utility bill payment history in lieu of FICO scores unlike competing solar lease options. PEA designed the lease to leverage the benefits of the 30 percent Federal Investment Tax Credit with the help of a tax equity investment and reduces a households’ monthly lease payments. Homeowners will receive rooftop solar with no upfront cost and lease payments are structured to be 20 percent less than a customer’s monthly electricity bill. Homeowners will save immediately over the course of the 15-year solar lease. At the end of the lease term, the homeowners will have the opportunity to own the system, and witness even further cost savings over the 25+ year life of the equipment.
This low-cost lease strives to include all Philadelphians by utilizing an alternative way to check creditworthiness. The special financing lease was piloted for 36 qualified homeowners during Phase 2. PEA has plans to expand this pool to 1,000 low-to-moderate income households in years to come.
To supplement the growing demand for solar in Philadelphia, PEA also developed a training program to prepare high school students for a meaningful careers in clean energy. Clean Jobs Pennsylvania found that the state now has more jobs in clean energy than oil and gas combined. According the U.S. Bureau of Labor & Statistics, “solar installer” is the fastest growing occupation in the country with employment projected to grow 105 percent until 2026. Recognizing this growth, PEA has trained three cohorts of high school students and was recently awarded a $1.25 million grant from Department of Energy to expand solar and clean energy training in Philadelphia.
PEA uses a model that is scalable due to the program’s self-funding approach. While still ensuring significant savings on solar panels, PEA charges a small program fee to each Solarize Philly market-rate solar contract. This fee is used to fund the job training programs and the special financing pilot. Without having to rely on donations or subsidies, PEA is sustainably stimulating the Philadelphia solar market and ensuring that all Philadelphians have an equal opportunity to contribute toward the fight against climate change.