Energy bills are becoming more unaffordable for millions of people who are spending more of their household income on electricity and fuel.
That’s according to the Rocky Mountain Institute, which found 1 in 7 people are living in “energy poverty.” Namely, the average energy burden is 14% for those households, while the energy burden for non-low-income households is 3%, RMI found in its analysis. Anything above 10% is considered energy impoverished.
Despite the rise in the issue, there is some relief on the horizon to ease the burden of high energy costs, particularly for low-income households. The Inflation Reduction Act, which has boosted the renewable energy market thanks to millions in funding and incentives, also allocates funding to increase accessibility and affordability of household electrification and efficiency upgrades.
IRA Opportunities
Specifically, the Home Efficiency Rebates and Home Electrification and Appliance Rebates can help reduce energy bills when they are used to boost a home’s efficiency. Low- and moderate-income households can seek rebates at the point of sale with the rebates, and more funding will become available as states design their programs.
The Home Efficiency Rebate program incentivizes whole-home retrofits for single-family and multifamily units with energy savings through improved efficiency and electrification. Low-income households also can see double the rebate amounts.
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The IRA also contains the Greenhouse Gas Reduction Fund, which will make grants to nonprofit financial institutions, states, and Tribes to target low-cost financing for climate and clean-energy projects. The fund is valued at $27 billion, with the potential to mobilize $250 billion over 10 years to decarbonize homes and small businesses.
State Work to Improve Efficient Energy Access
Beyond the IRA, some states are enacting their own policies for extremely low-income households. For example, Colorado has been working with community solar programs to reach out to low-income communities and has been successful at reducing energy costs. Meanwhile, California offers a percentage of income payment plans (PIPPs) to ensure households aren’t paying more than 4% of income on electricity costs.
“The transition to a clean energy economy — the largest infrastructure shift in our lifetimes — is also an opportunity to create a more just energy system,” RMI said in its report. “Shifting away from fossil fuels and toward clean and renewable energy sources should reduce the prices all consumers pay to electrify and fuel their homes.”
Beyond the IRA, there are other community-based programs for low-income households and others to take advantage of to save money on energy costs. These include energy efficiency upgrades, community solar with low-income outreach programs, energy assistance programs, and more. Targeting reducing carbon emissions while also addressing energy poverty is a beneficial strategy, according to RMI.
