The Middle Class is Driving the Solar Revolution

Chances are the first thing you picture when the topic of solar power pops up is a set of panels atop a modest suburban roof. Yet according to those who aren't so enamored with these symbols of distributed energy – ahem, certain backwards-looking utilities – solar panels are only found on top of the absurdly large mansions of the nation’s wealthy. (Admittedly, there is one truly elite homethat recently installed a few solar panels.)

In fact, there has been rapid growth of residential solar in recent years, from just a single megawatt installed in 2000 to 488 megawatts installed in 2012. So who exactly is installing all of these solar panels on their roofs?

According to some fascinating new research by the Center for American Progress, the American middle class is overwhelmingly driving the solar revolution.  After looking at certain demographics of households that installed solar panels in Arizona, California and New Jersey (the three top solar states), the analysis found three common trends:

  1. At least 60 percent of homeowners are installing solar panels in zip codes with median incomes ranging from $40,000 to $90,000. (In Arizona that figure jumps to 80 percent.)
  2. The distribution of solar installations across income levels lines up closely with population distribution. In other words, households of all income levels are going solar, from those in lower income neighborhoods to the wealthiest zip codes.
  3. The share of solar installations within middle class neighborhoods – those in the $40,000 to $90,000 income range – continues to increase, meaning that solar installers are relying less on wealthier customers to drive growth and more on middle income customers. (Case in point, the most solar growth in New Jersey took place in areas where median income was between $30,000 and $40,000.)

One of the biggest reasons that rooftop solar panels have become much more than green status symbols for wealthy customers is net metering, a policy which allows solar panel -owning homeowners to see their electric meters spin backwards – and their utility bills shrink – as they generate their own electricity.

Even with the rapid growth in the number of residential solar installations, rooftop panels are still only providing one quarter of 1 percent of all electricity produced in the US. Nevertheless, the Center for American Progress analysis reports that many utilities see in their future the ominous-sounding "utility death spiral." Their theory goes like this: Homeowners install solar panels, which reduces the amount of electricity they buy from the electric utility, thereby reducing the amount of fees that customers pay for grid maintenance, which then causes the utility to raise rates and, ultimately, encourages more and more customers to go solar which… causes rates to soar.

This makes many utility companies nervous, and some are going as far as to suggest they repeal solar-friendly incentives and policies like net metering because they are, as the Center for American Progress quotes Southern Company CEO Thomas Fanning,  "a de facto subsidy of rich people putting solar panels on their roof and having lower-income families subsidize them."

It may all sound logical, but there are some big flaws in the industry's fear mongering narrative. Distributed generation like solar causes less strain on the grid and reduces grid maintenance costs for all. Further, even some utilities have found that when all the benefits provided by solar energy to the grid are tallied up – like avoided fuel costs, emissions-free energy and lower transmission and distribution costs – they are actually higher than the retail costs of electricity. Finally, these same solar energy benefits are enjoyed by all homeowners connected to the grid, regardless of income level.

The mindset of much of the utility industry is exactly why the findings of this analysis are so useful. Yes, the wealthy were early adopters of solar panels, but clearly all income levels are now joining in, and a combination of solar policies and rapidly decreasing costs of solar technology are allowing the middle class, not just the wealthy, to push the renewable energy revolution forward.