This is a story about how federal tax incentives and innovative thinking are helping some of those struggling to pay their electric bills – and at no cost to other utility ratepayers. The approach uses community solar, but not in the usual way.
Almost half of the US states now have community solar policies, and 83% of those target low- and moderate-income households. These policies make sense, given that community solar can reduce power bills by 5-20%.
But implementing the state policies isn’t always easy. The problem? Finding the low-income customers.
It’s not that they don’t exist. One in three US households forfeited necessities, like food and medicine, to pay energy bills last year, according to RMI. But no easily accessible repository exists to identify who they are, said Andrew Kvaal, president & chief operating officer of Ampion, in an interview with Energy Changemakers last week.
So community solar companies must resort to pre-digital age approaches.
Knocking on doors
“The principal tactic for almost everybody in the industry is the old-fashioned door-knocking, walking the streets and talking to people at their door,” Kvaal said.
Another approach is to identify where eligible individuals congregate.
“We did a campaign once with the Red Barn restaurant that’s pretty far up in Maine. And they just crushed it because it’s a local institution. It seems like everyone within 30 miles goes there. And so they promoted community solar and found a whole bunch of subscribers,” he said
The problem varies from state to state; for example, it can be more challenging to secure low-income electric ratepayers in states that already have a high number of community solar projects. Many eligible subscribers are already enrolled.
It’s not that lists of low-income electricity customers don’t exist. Utilities, of course, know who they are. However, for various reasons, they are not made accessible to community solar developers.
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Crossing borders with synthetic community solar
Ampion, which manages the customer-side of community solar projects, has developed a solution it calls Synthetic Community Solar, unveiled last week.
Usually, community solar subscribers must reside in the same utility territory or state as the solar array. Ampion’s new approach allows electricity customers to receive the financial benefits across state lines. So a community solar project may be located in one state but serve low-income customers in another, where they are more abundant or easier to identify.
The synthetic approach employs what’s known as the Category 4 Investment Tax Incentive (CAT 4 ITC), which survived a gutting of solar credits in the Trump administration’s One Big Beautiful Bill. The incentive offers a bonus for small-scale solar projects that serve low-income customers. If the community solar project lacks local low-income subscribers, the financial benefit can be applied elsewhere, including across state lines.
“You’re basically moving the benefit [of the tax credit] where it’s needed,” Kvaal said.
Free money for the utility customer
Ampion struck its first cross-state deal with Commonwealth Edison, the largest utility in Illinois, which is applying the tax incentive revenue from a 2.5 MW community solar project in Maine. Ampion transfers funds from the project to income-qualified households in Illinois by way of the utility. Subscribers receive a discount of up to 20% off the solar credits generated by the site.
The process is easy for the utility and doesn’t add any expense because it employs the utility’s existing functionality, Kvaal said.
“That was part of our design — to make this as lightweight on the utility side as possible,” he said.
For the utility, “it’s kind of like free money” that drives down the bills of low-income customers. “The low-income subscribers are just getting this benefit because that’s what’s dictated by the federal incentive. It’s pure savings that flow through.”
At least 50% of the tax credit revenue must be allocated to low-income customers. The remainder helps the community solar project pencil. The utility does not profit from the transaction and, at best, receives some small transaction fees.
Starting points
Ampion is initially offering community solar projects in Maine and Massachusetts, with plans to expand to other states, including New York, as a likely early candidate.
The synthetic tax credit program arrives at a time when electricity rates are rising twice as fast as inflation, and people are struggling to keep up with their bills. From January through September 2024, six major utilities collectively increased shutoffs by nearly 21% compared to the same period in 2023, resulting in 662,000 disconnections, according to a report by the Center for Biological Diversity.
