Credit Metric score for Community Solar
Community Solar (CS) allows broader and more equitable penetration of solar energy. Several CS programs specifically target Low and Middle Income (LMI) households. During a six-month pilot program in New York, all new Community Solar project applications required 20% LMI inclusion in their subscriber base. Unfortunately, only one project was approved and the program ended. The perceived risk of the LMI market is currently based on FICO credit scores and related equivalents. This risk perception is fed by lack of historical knowledge of consumers and renewable energy systems. The successful expansion of community solar depends on the development of a more accurate measurement of repayment risk, the SunScore.
A subscriber’s SunScore is calculated using multiple key metrics, including 12-month utility payment history, length of residence, length of employment, public service employment, household size, number of dependents, and annual income, among others. Based on the SunScore, LMI candidates who show low repayment risk are identified as promising candidates for CS and those with high repayment risk are provided educational tools.
Participation in the SunScore Program offers several benefits in addition to allowing a larger community to participate in CS than otherwise would. Greenhouse gas emissions are reduced. Participants are educated in both renewable energy and credit scores, with opportunity to build and improve their credit score through participation. By lowering the energy bills of LMI households, subsidies such as the California Alternate Rates for Energy Program (CARE) can also be reduced. In 2015 alone, CARE spent over 6 million dollars to provide energy to low income homes.
The idea is to make lenders more comfortable financing community solar projects knowing that essential electric utility service payments have a low degree of repayment risk.