Navigant Research Blog

Energy Storage Access Issues for Low Income Customers

— June 1, 2017

The total cost of ownership of distributed battery energy storage systems (BESSs) has gone down significantly in the past several years. Given the anticipated continuance of this trend and the emergence of energy storage financing asset classes, Navigant Research expects the global market for residential Li-ion BESSs to reach $310.70 per kWh and commercial and industrial (C&I) Li-ion BESSs to reach $413.90 per kWh by 2026. The drivers behind the growth of this market will encourage the adoption of new technologies like rooftop solar PV + energy storage as well. However, the deployment of these technologies is often inaccessible to many low income customers who perhaps would benefit the greatest from the environmental and economic advantages of storage. Key barriers to the deployment of energy storage that low income households face include:

  • Lack of upfront capital resources
  • Limited appetite for tax credits
  • Poor housing conditions
  • Financing barriers

Energy Storage Providers Face Challenges in Serving Low Income Customers

The need and business case for low income customers for energy storage and other distributed energy resources (DER) is dependent on several factors (e.g., geographic location, housing type, regulatory structures, local electricity prices, and reliability needs). Historically, DER technology companies target suburban, middle- and upper-class customers partly because of favorable capital resource availability and financing credit scores. However, project developers are now focused on expanding their markets and are looking to develop the customer marketing and engagement strategies required to succeed in serving all their customers, particularly their low income contingent.

Community energy storage (CES) is an emerging new model for low income neighborhoods to overcome these hurdles while also lowering customer utility bills, reducing harmful emissions, and strengthening resilience in the face of potential grid disruptions. CES can meet customer needs and overcome barriers by:

  • Allowing co-ownership of energy storage assets through a utility-based customer subscription and cooperative financing structure, which shields project developers from the individual customer financial risks associated with typical project ownership.
  • Aggregating low income households across a diverse, regional customer base to enable larger, more cost-effective projects.
  • Providing subsidized loans, which gives low income customers the opportunity to prepay CES subscription costs at low interest rates.

Restrictions and Possibilities of CES

CES, like community solar, is an issue not only for low income customers, but also for those who do not own a house or have the correct building orientation (roof integrity, adequate room for battery, etc.). Both community solar and community storage vendors are working to educate building owners who rent to tenants to show the many benefits that having community assets could provide to its residents. Flexible ownership structures would help address the social justice of community solar and/or energy storage.

California’s proposed Senate Bill 700 (SB 700), known as the Energy Storage Initiative (ESI), is an example of how to properly incent the development of CES in low income markets. If passed, SB 700 would require the California Public Utilities Commission (CPUC) to establish an ESI to pair with its support of distributed solar generation, effectively creating an incentive program for solar customers to add storage to their systems. Additionally, SB 700 would require up to 25% of the money utilities collect from this initiative to be applied to the deployment of ESSs in low income neighborhoods and housing, along with programs to encourage job training and employment opportunities in the local community. If the bill passes, current ESSs that are eligible for rebates under the Self-Generation Incentive Program (SGIP) would be transferred to the ESI program.

Overcoming Barriers to Provide More Affordable Clean Energy

Barriers to accessing affordable clean energy are rooted in broader systemic issues that low income customers face, like lack of quality housing, education, employment, and healthcare. Community ownership of renewable assets can serve as recurring and long-term sources of revenue for residents. Proactive innovation will help ensure that low income homeowners and renters are not isolated from renewable energy technologies and their benefits.

 

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