Low-income New Yorkers are getting left out of incentives to shift to solar power, according to a report released on Sunday.
Homeowners with incomes over $50,000 are two-and-a-half times more likely to have rooftop solar panels than those who earn less than that, according to the report by the think tank Win Climate and Columbia University. Additionally, only 5% of the state’s tax credit subsidies for solar panels have gone to households earning less than $50,000, according to the analysis of data from 2010 to 2022. Nearly a quarter of all households in the state earn less than $50,000. Researchers said legislation could ensure lower-income people have access to the solar tax credits, which would benefit them the most.
“The overwhelming majority of that money is going to wealthier people, but it’s actually bypassing the people that need it most,” said Juan-Pablo Velez, executive director of Win Climate. “Rooftop solar can often cut people’s electric bills.”
In New York City, rooftops provide plentiful space for solar panels. The city has set a goal of 1 gigawatt of sun power by 2030. In order to meet these goals the city must double solar capacity by 2026 and triple it by 2030.
Established in 1998 and amended in 2006, the solar tax credit offers homeowners who install rooftop solar panels a credit covering 25% of the cost, or $5,000. The goal of the credit was to increase the use of a sustainable energy source and make solar more affordable to the most energy-burdened households. The new report shows the latter goal is not being met.
“Ultimately, you’re excluding the people who need rooftop solar the most,” Velez said.
The incentive program’s design leaves out low-income people, who can’t get the full credit if it exceeds the taxes they paid.
The Residential Solar Tax Credit Reform Act, a bill introduced last year, aims to make the subsidy fully refundable and double the eligible amount to $10,000.
The New York Solar Energy Industries Association, which promotes solar policies, submitted written testimony to the state Senate in February calling the current credits “inaccessible to low-income families and retirees.”
The new report estimates that legislation reforming the credit could assist more than 60% of the state’s 1.4 million energy-burdened homeowners. These energy-burdened households spend more than 6% of their annual income on energy.
The reasons for the large gap go beyond the disparity created by the tax credit structure. The upfront costs for panels are high. The average installation runs around $20,000. These significant costs can be a barrier to households who don’t have the money in hand or do not have the credit rating to obtain a loan. Supporters say that reform of the credit would help low-income people defray those costs.
“Right now because of the way the subsidy works, it’s making the rooftop solar gap bigger when it could be making it smaller,” Velez said.
The inequity of the solar tax credit is at odds with the state climate law, which requires New York to spend 35% of its sustainable energy funding on disadvantaged communities. In the case of the solar credit, only 5% is going to disadvantaged communities, which is a clear violation.
“As we electrify everything, it [rooftop solar] would absorb a good amount of all that extra power – we need to have panels everywhere,” Velez said. “It’s good for the grid, too, because it just means we have to build fewer solar farms out there and less transmission and less everything in between.”
Reps for Gov. Kathy Hochul, who is in the midst of negotiating the state budget with state lawmakers, did not respond to inquiries.