There’s a perception in some parts of the marketplace that distributed energy storage is a luxury item aimed at wealthy households. Call it the “Tesla Effect,” since that company’s batteries have been positioned largely as accessories to charge the company’s luxury EVs. If storage is an add-on to an $80,000 car, then it has to be aimed at the wealthy – even in a state like California, where the median household income is $65,000.
The reality is very much different for the 3.8 million low-income households in California. In fact, distributed storage can provide significant benefits to low-income residents, who spend a disproportionate amount of their income on energy from the grid. Far from being a luxury, in California storage should be considered a necessity, especially in light of recent changes in the structure of electric rates.
The outsized “energy burden” for low-income families is significant. US households with median incomes of $25,000 pay 7.2% of their income for energy, compared to just 2.3% for households with median incomes of $90,000, according to a study by Energy Efficiency for All and the American Council for an Energy-Efficient Economy.
As a result, California subsidized the installation of stand-alone PV installations on affordable dwellings across the state. Those systems have helped both the owners and the tenants of these buildings realize significant savings on their electric bills.
The new state rates, though, negate most of the savings, according to an important new study. According to a report from the Clean Energy Group, the changes will decrease the average savings for affordable housing owners by 56% to an average $3,320 a year. Tenants face a net economic loss of 29 percent as a result of this savings reduction.
The same study concluded, however, that adding “smart” energy storage to those PVs not only restores the original savings, but by offsetting higher rates and demand charges, can double or even triple the savings. It estimates that by adding a modest level of storage, affordable apartment buildings would save nearly $9,000 a year – more than the total solar savings before the rate changes. Add more storage capacity, enough to make it possible for the ratepayer to move to a lower rate tier – then storage could result in an annual savings of almost $28,000!
We’re seeing this kind of benefit already in places like the Hawaiian Gardens Apartments, a 280-unit, low-income complex in one of the most disadvantaged communities in Los Angeles County. By adding solar panels and Sunverge storage units, tenants have lower utility bills, while the owners have decreased tenant turnover.
Even better news for low-income households: California’s State Senate just passed SB700, which creates a separate program to help fund distributed energy storage through 2027. The bill, authored by State Sen. Scott Wiener (D-San Francisco), sets aside 30 percent of its funding for placing storage systems in low-income residential housing and disadvantaged communities, as well as for job training and workforce development.
At Sunverge, we have long believed that the intelligent storage future needs to be available to everyone. That’s why we see the “Tesla Effect” as so troubling. The reality is that storage can offer savings, reliability and clean energy whether you own a top-of-the-line EV – or can’t afford a car at all.