**FILE** Solar panels on a home in northwest D.C. (Roy Lewis/The Washington Informer)
**FILE** Solar panels on a home in northwest D.C. (Roy Lewis/The Washington Informer)

Second of a Two-Part Series

In the District, more than 60% of solar energy adopters make over $100,000 annually, a national Berkeley Lab study found. That isn’t necessarily surprising – D.C. homeowners pay an average of $14,195 to $19,205 upfront to install panels, according to EnergySage, an online solar marketplace. 

But because of racial wealth inequalities caused by generations of racist policies and continuing discrimination, the high cost of purchasing solar panels disproportionately affects Black and brown homeowners. 

“The connection between these issues is the wealth gap and the fact that the wealth gap is institutionally maintained,” said Bill Washburn, a member of the NAACP D.C. Branch’s Environmental & Climate Justice Committee. 

Washburn, who has solar panels on his own roof, secured their installation for free through the District government in 2017. Now called Solar for All, D.C.’s no-cost solar program offers low- and moderate-income residents access to solar energy. Homeowners like Washburn can get panels on their roof and renters can join community solar projects to get energy from shared facilities around the District. 

Prior to his retirement the year before, though, Washburn said he likely would not have been income-eligible for the program. 

“Many D.C. residents do not qualify for the Solar for All program and also do not have $20,000 to $30,000 on hand to invest in purchasing solar panels,” said Akosua Ali, president of the NAACP D.C. Branch. “We then have an equity issue, where the middle class within our city is not in a position to benefit from solar power.”

The first part of this series explored Solar for All and other options for community solar, which allows renters to access solar power even if they do not own a roof where they can mount panels. For middle-class Black homeowners interested in lowering their energy bills (and helping save the planet) using solar energy, this piece looks at a few options that include: solar co-ops for third-party ownership and solar loans.

Purchasing Solar Panels with a Co-op

Price-conscious homeowners interested in buying panels outright can get up to 30% of the installation cost back in a tax credit, thanks to the climate change law Congress recently passed.

Some D.C. residents have also saved money by joining a solar co-op, which brings together people interested in buying solar panels to approach a single installer as a group. 

“It works on what I call the ‘Costco model,’ or a bulk purchase price,” said Sukrit Mishra, DC Program Manager for the nonprofit Solar United Neighbors, which runs the co-op. “It’s usually 10 to 15% below the market price, on average.”

Sanwaree Robinson and her husband, David, joined last year’s Capital Area Co-op and went all-in, covering the entire rooftop of their home in Northwest’s 16th Street Heights neighborhood. 

The Robinsons, who spent more than $30,000 for their 34 panels, expect to break even in just over five years, between energy bill savings and money made from Solar Renewable Energy Credits, or SRECS. 

Utility companies buy SRECS to show which percentage of their grid’s energy comes from solar energy. Because DC’s goal to switch to 100% renewable energy by 2032 counts as so ambitious, these credits are worth a lot – solar owners can make thousands of dollars per year from Pepco. And D.C. has the best market for SRECs in the country. 

“An average system in D.C. has a payback period of five to six years,” Mishra said. “After that, those remaining 20 years of that solar system’s lifetime, you’re making money out of it.”

Third-Party Ownership Avoids Upfront Costs But Misses Some Benefits 

Even with the co-op “bulk purchase” model or other discounts, buying solar panels outright isn’t always a possibility. Some homeowners choose to avoid the major upfront cost and still benefit from lower energy bills by installing solar through a third-party ownership model. 

The two, main kinds of third-party ownership include solar leases and power purchasing agreements. In a solar lease, homeowners pay a monthly fee to a developer, who installs and maintains the system. The developer owns the solar panels but the homeowner benefits from lower energy bills – the savings should outweigh the monthly payments. A typical solar lease contract lasts about 20 years. 

Power purchasing agreements (PPAs) are similar to solar leases in that a homeowner pays a third party, in this case usually a solar finance company, that owns the panel. But in a PPA, the resident pays for the energy generated. Generally, the rate someone pays per kilowatt-hour of energy under a PPA is less than what they would pay directly to Pepco, so homeowners can start saving money right away. 

As with any contract, residents should read all agreements closely. The Department of Energy and Environment’s District Solar Consumer Financing Guide lays out things to consider in third-party ownership agreements including: escalator clauses and any fees or penalties that might increase payments above the amount saved on energy. 

In both leases and PPAs, the third-party owners are usually responsible for most of the system’s operations and maintenance costs but they also take on the incentives and credits offered by the federal or city government. 

Solar Loans Offer High Potential with a Negative History 

In order to keep hold of those incentives, including a system’s SRECs, some homeowners may take out a loan to finance their solar panel installation. These work similar to other home improvement loans: the resident owns the system and pays for it in monthly installments, with interest.

Depending on the loan’s term length and interest rate, as well as the solar system’s energy production, it’s often possible to cover loan payments with the savings on your energy bill, according to the DOEE solar financing guide. And owners can make significant money from selling SRECs to Pepco. 

In 2018, D.C. established its own Green Bank with the purpose of financing loans for energy efficiency and clean energy projects. Many other institutions offer solar loans, too, including solar manufacturers, commercial banks and credit unions. 

But Washburn said without government oversight, solar loans may actually make energy inequity worse, not better. The lending industry has a long history of predatory loans and racially discriminatory practices including inherent racism built into the credit scoring system. 

“Someone needs to be pushing the banks, the commercial lenders, to be more assertive in offering prime rate loans for black homeowners,” Washburn said. “I think it’s the responsibility of the government that we pay taxes to, and responsibility of the lending industry that makes money off of our businesses, to do something to right these inequities.”

Kayla Benjamin covers climate change & environmental justice for the Informer as a full-time reporter through the Report for America program. Prior to her time here, she worked at Washingtonian Magazine...

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