In our newest Yardley Voice article the idea that lower and middle income homeowners represent 83% of solar energy adopters may surprise some people. It shouldn’t. A solar investment is one of the few home improvements that give a homeowner immediate as well as long term financial returns. As noted in the earlier post , “Why Consider Solar Energy This Spring?”, solar power is rare in its ability to deliver immediate savings but also longer term home value increases. That is very important to all buyers, but it is especially critical for families with tighter budgets. And that means the study findings about family income and solar are worth digging into further.
The earliest snapshots of solar adoption and homeowner income were created in California, the state that pioneered policies that helped catalyze the residential solar energy market. Research in the state was made easier because the California Solar Initiative program that administered the policies made data collection possible. As recently as 2015, the local studies found over a decade of trends were still holding strong:
Over three 5-year periods starting in the year 2000, the average income of those adopting solar has dropped a total of approximately 15%, or around $17k a year. The last 5-year period accounted for most of that decrease.
Over the same 15 years, the average value of a solar home in the state has dropped over $240,000, or nearly 30%. The average value is still above the California median, which is also higher than most of the U.S.
This very strong trend in the last 5 years in the most mature market might be repeated across the country. GTM Research began a new study to examine California in conjunction with 3 eastern states – Massachusetts, New Jersey, and New York. The four states were chosen because collectively they represent 65% of all residential solar installations in the country. That results in nearly 900,000 solar homes. To make the study somewhat more manageable, data from around 540,000 (or 60%) of those were included. The most impressive findings include the fact that lower income solar investing is increasing in all states, and in particular New Jersey and Massachusetts. Some of the key findings are impressive:
At 13% of all the analyzed solar homes, lower income residents are well represented. Most agree more work may be needed to facilitate more opportunity.
At 70%, middle income homeowners are by far the majority taking advantage of solar benefits. Looked at another way, 83% of all rooftop solar investment in these states are attributed to hard working lower and middle income families. Only 17% might be rightfully labeled “the rich.”
To facilitate the analysis, the study authors established 7 income brackets. Four brackets represent annual income of less than $55,000, and 3 brackets represent income of $65,000 and greater. The analysis compared the representation of each income bracket within all homeowners in each state, and the portion of the 540,000 solar homes they represent. A very interesting observation is shown in this chart.
Families in lower income brackets going solar are approaching their portion of the home ownership population, but there are still some small gaps.
At $65,000, there is a pronounced jump in activity. From that level upward, a higher percentage in each bracket are choosing to go solar than are represented in the population at large. In other words, in these four states people earning this amount or more are just as likely or more likely to go solar than to just own their home.
Many factors are increasingly more favorable to make it possible for middle and lower income families to help themselves to lower energy costs and long term value benefits. As noted in the earlier post referenced above, lowering costs and better financing are driving the solar revolution. And it is a self-perpetuating cycle. As more homeowners, businesses, and utilities install solar, the pricing trends will continue downward. The fact that companies which operate with tight profit margins like retailers Target and IKEA are escalating their solar investments proves that it is a financially sound business choice. And as they expand solar capacity, everyone benefits from positive market impacts on price and on technology.
Want to know more? Click on the button to the right to download our more detailed mini-white paper on this topic.