TODAY’S STUDY: Rooftop Solar Is NOT Just For Rich Folks

Income Trends of Residential PV; Adopters An analysis of household-level income estimates

Galen Barbose, Naïm Darghouth, Ben Hoen, and Ryan Wiser, April 2018 (Lawrence Berkeley National Laboratory)

Objective: Describe income trends among U.S. residential solar adopters, highlighting trends related to low- and moderate-income (LMI) households

Unique features of this analysis – Household-level income estimates: Experian* address-level income estimates allows for more-precise characterization of PV-adopter incomes – Relatively extensive coverage of the U.S. solar market:

Based on Berkeley Lab’s latest Tracking the Sun (TTS) dataset, covering ~82% of the total U.S. market (with street addresses for ~63% of the market)

Scope – Rooftop solar on single-family homes: Underlying data consist primarily of single-family rooftop PV, but later work may extend analysis to multi-family homes and also to community solar subscribers – Systems installed through 2016 in 13 states: Focuses on states in latest TTS dataset with address data available for large fraction of the market; later work may evaluate more-recent adopters and additional states – Basic descriptive trends: Focus here is on establishing basic trends, but later work may examine underlying causal factors more directly, using more-sophisticated statistical methods

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This work seeks to refine and expand upon prior analyses of PV adopter income trends

• Prior analyses have examined PV-adopter income and other demographic trends: – Kevala, Center for American Progress, GTM and PowerScout, UC Energy Institute, CT Green Bank, Energy+Environmental Economics, SolarPulse, NREL, others

• Though their data and methods vary, these prior studies generally: – Focus on somewhat limited geographies (single states or several larger state markets) – Rely on median incomes at the block-group or zip-code level as proxies for individual PV-adopter incomes (or, in limited cases, survey data from a sample of households) – Are somewhat dated

• These studies have yielded mixed results and messages: – Some show that PV adopters tend to be more affluent and educated than non-adopters, while perhaps highlighting an attenuation of this trend over time – Others emphasize that middle-class adopters are most common and that their numbers have risen over time – Varying conclusions about the role of TPO in driving LMI adoption

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Experian household income estimates Used to characterize income of PV households…Census data Used to characterize income of broader population…A note on defining the “reference” population

• Throughout the analysis, PV adopters are compared or characterized relative to some “reference” population

• These reference populations can vary according to their geographical scope – Our analysis uses reference populations based on MSAs, states, and the collection of all states

• Reference populations can also be defined in terms of sub-populations within a given geographical area – We consider reference populations based on:

(a) all households (HH) as well as

(b) just owner-occupied households (OO-HH) – Ideally, we would also use reference populations based on just owner-occupied, single-family households (as most PV adopters fall within this group), but Census data do not provide income segmented by single vs. multi-family

The median income of all PV adopters is notably higher than other HHs, but difference is much smaller when compared to just OO-HHs

• Median income of all PV adopters in the sample is $32k (54%) higher than all HH

• But more than half of that difference is associated with home ownership – Home ownership rates much higher for HHs above state median income (77%, on average) than below (44%); see slide 31 in appendix for additional details – Standard “split incentive” barrier endemic to distributed energy resources generally, including energy efficiency

• Median income of PV adopters is $13k (17%) higher than that of all OO-HH • Gap is amplified by the concentration of PV adopters in relatively high-income states – Pulls PV median upward, while medians for all HHs and OO-HHs reflect distribution of broader population

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Similar trends exhibited in most states, with greatest PV-adopter income disparities in states with relatively low statewide incomes

• PV-adopter median incomes across the 13 states in the sample are ~$20k$30k (30%-70%) higher than for all HH • Differences consistently much smaller when comparing to just OO-HH

• Gap between PV adopters and all OOHHs vary with overall statewide income levels – Gap is smaller for high-income states—and is even inverted for the three states (DC, MA, CT) with the highest statewide incomes – In states with relatively low statewide incomes, PV-adopter incomes are also lower, but not to the same extent as the overall population of OO-HHs

PV-adopter median incomes converging toward broader population

• Prior results focused on all PV adopters cumulatively, but annual trends show that PVadopter median incomes have been trending downward in recent years

• PV adopters converging toward median income of all OO-HHs: PV-adopter median income 10% higher than all OO-HHs in 2016 ($87k vs. $79k), compared to 27% higher in 2010

• Figure here focuses on period since 2010; later slide contrasts these trends with the earlier era

• Aggregate PV-adopter median income across all states is driven heavily by CA, but most states show similar downward trend

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Most states show a decline in PV-adopter median incomes over time…2016 PV-adopter median incomes in most states were greater than other OO-HHs, though four states have reached “income parity”… Even if often under-represented, “moderate-income” households nevertheless constitute a sizeable share of cumulative PV adopters

• 43% of all PV adopters in the sample (33%-50% across individual states) fall within the lower 3 income quintiles

• 48% of all PV adopters (47%-60% across individual states) fall within Pew’s definition of “middle class” (see notes)

• Even low-income groups are represented, with 15% of all PV adopters below 200% of the Federal Poverty Level: a common benchmark used in low-income programs – Though some questions exist about income estimates at the lower end, discussed later

• Cross-state differences largely driven by more-general income differences across states.

PV adoption has generally been trending towards more-moderate income HHs in recent years, in contrast to earlier trend…Most states also trending toward more-moderate income adopters With some exceptions, depending on the set of income quintiles considered…Estimating LMI Adoption Rates…

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Conclusions

• The choice of data and metrics clearly matter: For example, results and associated take-away messages can differ significantly depending on use HH-level data vs. Census BG medians or zip-code average incomes; and depending on whether PV adopters are compared to all HH or just OO-HHs

• Home-ownership is a key driver for differences in PV adoption among income groups: Reinforces importance of business models and programs aimed at renters

• PV-adopter incomes are diverse: While PV adopters as a whole are higher-income than the population at large, it should not be overlooked that “moderate-income” or “middle-class” households are already a significant beneficiary of existing solar markets

• The income profile of residential PV adopters is dynamic and evolving: Suggests some value in periodically re-assessing PV-adopter income trends, and raises questions about the underlying drivers for recent trends and about how those trends may evolve going forward

• Local and regional factors impact the income characteristics of PV adopters: Though much of the cross-state variation in PV income trends is a function of more-general statewide income differences, other market and policy drivers likely play a role as well, and could become more significant in the years ahead…

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