Electricity is an indispensable part of modern life. It enables essential services such as heating, cooling, cooking, lighting, and refrigeration, and it powers our phones, computers, and medical devices.
The cost for electricity is skyrocketing in the U.S.—up 15% from a just year ago. As a result, some 20 million American households have fallen behind on their utility bills—that’s approximately 1 in 6 households.
Energy insecurity—the inability to pay one’s energy bills—is a growing public health threat—most prevalent among low-income households. A household’s energy ‘burden’ is based on the percentage of gross income that households spend on monthly energy costs. The U.S. Department of Energy considers an energy burden as “high” when utility costs are above 6% of income, and “severe” when utility costs are above 10%.
New research conducted by the American Council for an Energy-Efficient Economy (ACEE) found that two-thirds of low-income households have high energy burdens, and 13% percent of households have a "severe" energy burden. On average, low-income households spend about 8% of their income on energy costs, while households with higher incomes only spend 2.3%.
Families of color also see a much larger burden than white families.
Black and Hispanic households, households with children, and individuals requiring electronic medical devices, are more likely to face utility disconnection.
Native American households spend 45% more of their income on energy costs than white households.
Black households spend 43% more.
Hispanic households spend 20% more.
A recent report from ACEEE revealed that energy insecurity can force people to engage in risky coping strategies. Low-income families may sacrifice nutrition, healthcare, and other necessities to avoid utility shutoffs. Not surprisingly, the report also revealed that energy insecurity is associated with adverse mental and physical consequences including increased incidences of death among children and the elderly.
Additional research linked low household income with a 9% drop in the average energy consumption per household between 1990 and 2020. The decline suggested that lower-income households needed to sacrifice heat and air conditioning to pay for other essentials.
What can be done?
1. Community Solar
Rooftop solar is a great option for reducing energy costs and carbon emissions. Unfortunately, nearly 75% of individuals in the U.S are unable to take advantage of solar energy—primarily because they lack the capital required and/or suitable roof space. This is especially the case for lower-income households. Community Solar offers one possible solution.
Community solar is essentially a purchasing program whereby the energy-saving benefits of a solar array project flow to multiple customers (households, businesses, nonprofits, etc.) within a specific geographic area.
Subscribers to the program generally receive a utility bill credit for electricity based on the amount of energy the array delivers to the grid.
Over the last 15 years, community solar in the United States has grown exponentially—with capacity increasing by nearly 700% between 2006 and 2019. By the end of 2021, there were at least 5,219 MW of installed community solar capacity in the U.S., with active projects in 40 states and DC. The current administration’s goal is for 5 million homes to be powered by community solar by 2025.
While community solar can help for low-income customers reduce their energy burden, participation among disadvantaged households remains low. Several barriers to entry (lack of capital, program awareness, etc.) need to be addressed.
To truly benefit low-income customers community solar programs must include targeted provision and programs spearheaded by multi-level partnerships including local utilities, local outreach organizations, local financial institutions, and developers.
To date, at least 20 states and the District of Columbia have included low-income provisions in their community solar programs.
And organizations such as Habitat for Humanity and MCE are forming the local partnerships required for success.
2. Weatherization and Energy Efficiency Upgrades
On average, residential and commercial buildings in the US waste more than 30% of the energy they consume. Weatherization and energy-efficient upgrades can significantly reduce both energy waste and energy costs. By some estimates, low-income residential units could reduce their energy costs by 33% simply by becoming more energy-efficient.
Policies and programs facilitating comprehensive energy efficiency upgrades for low-income families would benefit everyone by creating healthier and more sustainable communities across the nation. To this end, the EPA has produced a guide local governments can use to improve energy efficiency in affordable housing units they own and develop, and advance energy efficiency in affordable housing owned and developed by other public and private entities. The guide also includes detailed information on funding opportunities.
Energy efficiency programs should include:
Comprehensive weatherization services that provide air sealing, insulation, appliance upgrades, and efficient heating and cooling systems.
Installation of smart thermostats, upgrading HVAC and lighting, and replacing inefficient appliances.
3. Focused funding for low-income households
The federal government has established several programs that states and communities can use to help low-income residents reduce their energy burden. Key programs include:
The Department of Energy’s Weatherization Assistance Program
Under this program, regional DOE Offices award grants to state-level agencies.
States normally partner with local energy providers to administer the program.
Eligibility for this program varies by state, but households must meet certain eligibility requirements including income, household size, and energy use.
Weatherization programs operate in every county in the nation.
Low Income Home Energy Assistance Program
The Low-Income Home Energy Assistance Program helps eligible low-income households with heating and cooling costs, bill payment assistance, energy crisis assistance, weatherization, and energy-related home repairs. Strict guidelines establish eligibility. For example, a family of 4 people must have a maximum annual income of $41,625 to qualify.
The Inflation Reduction Act
Funding available through the Inflation Reduction Act (IRA) is helping with utility bill relief and climate disaster preparedness for vulnerable low-income communities. This includes:
Up to $1 billion in grants and loans for improving energy efficiency, water conservation, and climate resilience in HUD-assisted multifamily housing. All properties participating in HUD’s multifamily assisted housing programs are eligible for these facility retrofits.
Approximately $9 billion is available in rebates for high-efficiency electric appliances and for whole-home energy retrofits—of which approximately 50% ($4.3 billion) will be available through the High-Efficiency Home Electric Home Rebate program, which will enable roughly 1 million low- and moderate-income households to become more energy efficient.
The program provides rebates up to $14,000 per household, including up to $8,000 for installing Energy Star-qualified heat pumps, up to $4,000 for electrical panel upgrades, up to $1,600 for home insulation and sealing, and up to $2,500 for home electrical wiring improvements.
Eligibility and the rebate amount depend on household income.
Aside from these household savings, the IRA provides resources for a range of other community benefits, including pollution monitoring and reduction, monitoring environmental disparities, clean energy investments in disadvantaged communities, and engagement in environmental and community development improvements.
We believe that everyone, regardless of income, should have access to safe, clean, and healthy energy solutions. To that end, ABS is proud to partner with local governments, utilities, and organizations such as Green Tech and MCE in their efforts to ensure energy security for everyone in their community.