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How FICO Keeps Clean Energy from Poor Communities

by Forrest Watkins
September 4, 2020

This interview with Forrest Watkins, a program manager at Solstice, was originally published in February 2019. The piece as been condensed for clarity

What does Solstice do? 

Solstice was founded to get as many people to access clean energy as possible.

At Solstice, we don't develop solar projects ourselves, but we work with those who develop and finance solar projects. We help them get people signed up for the projects, then manage people’s experience, and their allocations, on an ongoing basis. 

We work with community solar, which are solar arrays that are installed in a centralized location where local residents can enroll at no additional costs. It allows people to see credits on their energy bill as if they had the array on their own rooftop, without the hassle.

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We typically use a subscription model, allowing people to participate without any upfront payment. We look at your utility payment history, and how your energy bill has fluctuated over time, and us to adjust the allocation size from the array for your energy needs. 

Once that energy project's turned on, you will start seeing credits on your utility bill. Those credits will more or less zero out your energy bill, and you pay for that energy, but at a discounted rate. The typical discount that we see is about 10%. We advocate for contracts that let the customer pass the subscription on to another customer, should they have to move, or have to cancel their subscription for whatever reason. That just allows for everyone to participate, whether they're renters or other people that have higher levels of mobility.

For us, energy democracy is really about giving power over our energy systems back to everyday people. 

Why is energy democracy important?

For the whole history of the energy industry, the benefits and the impacts of energy systems have been very unevenly distributed. Low-income communities and communities of color have confronted the worst impacts of pollution – to the extent that a 2017 study showed that the very structure of our cities has been informed by which sectors of the city are downwind, where the pollution will blow and have the most impact. At the same time, the same communities that are generally confronting the worst impacts of pollution are also the ones that don't see equal access to the benefits of our energy systems.

To this day, there are millions of people that lack access to electricity. 

Even in places of having robust electric grids, like the U.S., low-income households frequently experience energy poverty. They don't have the money to adequately heat their homes. 

And this has real impacts on people’s health and livelihoods, especially those of children and families. We want to empower people to have a voice in the energy resources that serve their community, and the energy decisions that have an impact in their community

What does that look like on a practical level, and within your company? 

When we're building out solar and wind energy infrastructure, we need to make sure that low-income communities and communities of color are included in the benefits of those energy projects. Equally importantly, they need to have a say in the development of those projects. Whether it's a solar project or a gas pipeline, these communities need to have a say in how that develops, and whether it's developed in the first place.

It's worth calling out that movements for clean energy and environmental protection have pretty consistently undervalued the needs and objectives of communities of color, low-income communities, and other marginalized people. But movements for energy democracy and environmental justice have been led by these communities, from Afton, North Carolina in 1982 to present-day groups like PUSH Buffalo, Greenlining Institute, and campaigns like the Portland Clean Energy Initiative.

SolarWhiteHouseCarter

What role does moving towards a more sustainable system?

Solstice does a lot of direct engagement in getting people signed up for local, community-shared solar arrays. We see that people have different motivations for supporting renewable energy. For some people, it is a climate motivation - they want to move to a more sustainable energy system. 

For other people, it's not that. Some people say, "I don't believe in climate change," or, "I don't believe that humans are even having an effect on the climate. But solar just makes sense, because it's less expensive, and it gives us more independence in your energy supply.” For some, it's about that, the cost savings of energy independence.

I think for us, when we’re thinking about our impact, we really want to engage with everyone in the transition to renewable energy, regardless of their specific motivations for it. When it comes down to it, I think people have heard this is the right way to go economically as well as environmentally. When we get on the phone with them or are at the town hall events with them, it's not something where we have to do a tremendous amount of convincing.

The real barriers we see are on the policy and finance side of things. 

Can you speak more to that?

There's also a whole set of barriers on the financial side. There are a lot of people who want and could get solar panels, but who don’t have the upfront savings to be able to participate, or they don't have the FICO credit scores to qualify for a loan. 

We focus on financial and policy innovations that empower those communities to participate. We are working under funding from the Department of Energy to develop an alternative to FICO, that's more specific to the needs of community solar. We talk to people every day to try to get them connected to projects and so many have been paying their energy bill on time for decades, and just don't quite have a FICO credit score of 650 or 700 that they need to sign up. The people who are putting up the money for the projects would rather keep their risk low, and they see people with a FICO score below 650 or 700 as potentially too risky.

The issue is that over half the country doesn’t have a credit score high enough to qualify for solar financing. We’re never going to get to 100% renewable energy by relying on the FICO score. 

What we need to do is gather the data to show them otherwise, to show that someone who pays their bill on time every month is likely to pay their bill on time every month with a 10% discount. 

We want to make something more accurate in saying, not can we rely on you to pay your mortgage, but will you pay your community solar bill on time? So we’ve come up with the EnergyScore, a machine-learning algorithm based on over half a million customer utility records. As I said, we've taken that aggregate data and made it into something that is both more accurate, in predicting people's future utility bill payment behavior, and more inclusive of low-income communities. We’re now testing it out in pilots in New York, and proving it out in a real-world context and using the data we collect to improve it, and we’ll be scaling it across the country in the coming years.

 There is a version of a move towards clean energy where the power structures won’t change. Why is discussing power, when talking about energy, important?

In many states, a lot of the wind and solar deployment is being driven by big, investor-owned utilities.

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US National Archives - The first independently owned solar panels.

It can be argued that this is the most economically efficient way of rolling out clean energy, but we also know from a few centuries of hard data who benefits from an energy system that’s built that way - and who is marginalized. When we build at a scale that serves a community, and we create spaces for input on the project from the community, that’s how we fit the project to their needs and priorities, and make sure that it’s developed in an equitable way.

When you're building at that scale, it also increases the resiliency of the grid. If you have a more decentralized system with more local power generation, that's a way of reducing the risk for local communities, and making them more resilient to larger impacts. As we're looking at cases like California and Puerto Rico, if our goal is to get the power back on sooner for communities regardless of their economic or racial makeup, inclusive, community-scale solar is a great path to creating an energy system that is resilient not just for the people able to invest in a rooftop array, but also those who aren't.

We want to give people an opportunity to say, "Yes, I want the choice to participate in this renewable energy program." There are lots of ways we can take the incredible public support for renewable energy, and translate it into smart policies that shape the future of energy.