Low Income Households and the Energy Burden

Posted on March 28, 2017

The current energy situation in the US is plagued with a number of challenges. The increase in economy brings huge improvement in the standard of living of people but at the same time involves much more use of energy. Which means unsustainable pressure on both renewable and non- renewable sources of energy. Apart from the concerns of global warming and reduction in C02 emissions energy reliability is also threatened by climate issues. The number, duration and severity of weather events has been growing steadily. Therefore there is a need of shifting towards clean energy production and use energy efficiently.

Low income households and their energy concerns

With a population of 325 Million, America is the third most populous country in the world. According to a report under the Working Poor Families project, the total number of people living in low-income working families stands at 47.5 million and is on a rise. Families are defined as low income if the earning is less than $30,000 for a family of three to four, or $40,000 for a family of five to eight people.

In today’s time ‘Energy Burden’ is a major and looming cause of concern As temperatures drop, utility costs typically rise, often creating a financial burden for low-income households leading to ‘Energy Insecurity’ or the inability to adequately meet household energy needs. According to a recent study by ACEEE, low income households spend almost 7.2% of their household income towards utility bills that comes around to be $1,700 annually out of $25,000 in median household income, as compared to 2.3% spent by affluent households resulting in meeting limited household needs.

There are not one but many reasons that do not allow low income households to overcome from this circle of high energy bills. Low income dwellers generally live in old buildings or households that were never build to conserve energy or keeping its residents warm during winters due to poor ventilations, outdated infrastructure, etc. There is a lack of sufficient or accessible policies and programs for bill assistance, weatherization, and energy efficiency for low-income households. On top of that, certain utility rate design practices, such as high customer fixed charges that limit the ability of customers to respond to high bills through energy efficiency or conservation.

Challenges and Solution

Traditionally, engaging low-income households in energy efficiency programs has proven difficult for utilities. People in the lower income group are also not that aware about bill assistance, energy efficiency programs and energy conservation measures.

For example- The Low Income Home Energy Assistance Program (LIHEAP) one of the largest energy assistance program available to low income households in the United States reaches less than a quarter of eligible households. Also the funding has not increased with the recent rising energy costs, high delivery charges and extreme winter conditions. Even utilities are to blame for not designing enough marketing communication campaigns to educate these customers and encourage them to utilize the benefits of energy efficiency initiatives to the full.

Promoting affordable energy bills and taking the energy burden off the low income group is a very important component to address the energy sustainability of the entire society. All is not lost yet, if the government, utilities and customers put efforts to fight the issue alike. The government on its end needs to focus on implementing energy efficiency programs across a spectrum of affordable housing types, promote energy efficiency initiatives to reduce energy spends and encourage bill savings. Utilities need to leverage new technologies such as analytics, IoT and mobility to put a tool in the hands of the consumer that enables them to capitalize on the first engagement, focus on awareness and education of the customers and at the same time manage customer data efficiently. It is also important to target the customers through the proper channel as there is a huge diversity in the low income group.

Going the solar way

Solar is the leading renewable source of energy production and is gaining much popularity among the customers. Expanding the use of Community Solar Garden (CSG) programs is one of the most effective solution to address the energy burden issue for the low income households as electricity from solar power comes at a lower cost than what utilities charge. CSGs are communally-owned solar installations that sell power to local utilities. They are able to secure low prices due to bulk purchaSEW and do not require rooftop installation, making them a valuable option for renters as well.

According to a recent report by the George Washington University Solar Institute shows that the 40% low income household in US, only account for less than 5% of solar installations. Thus there is a critical need now to begin deploying solar in low-income communities and make these projects scalable. As per the U.S. Department of Energy, solar energy could meet 14 percent of U.S. electricity needs by 2030 and 27 percent by 2050. Besides being beneficial to the low income group, community solar projects provide community based benefits as well like creation of local jobs, economic growth, private investment, and lower rates of pollution. Thus it is quite clear that solar provides significant benefits.

New technology to the rescue

The last tool that would be helpful in fighting the energy burden problem is the use of latest technology like- Mobility, Analytics, Big Data, and Energy Disaggregation.

Energy Disaggregation allows us to take a whole building (aggregate) energy signal, and separate it into appliance specific data. Imagine knowing exactly how much energy which of your appliances is consuming! Wouldn’t it become so much easier to identify high power consuming appliances, save energy on unnecessary activities and take energy conscious decisions ultimately reducing your electricity bills?

Several studies prove that mobility is on a rise even among the low income group. 13% of U.S. adults with an annual household income of less than $30,000 are smartphone-dependent, which makes it quite clear that mobility is the key to reach the low consumer households and help them address the energy insecurity problems.

SUS, the #1 Smart Energy and Water cloud platform, is focused on addressing core challenges of global energy and water utilities. We help create an energy and water sustainable future. Innovative solutions from SUS addresSEW the problems faced by the low income households allows low income customers to avail latest utility programs and assistance and at the same time provide forward-thinking utilities an opportunity to expand their market reach.

Fully customizable to fit unique requirements of utilities of all sizes; our solutions can also be tailored to support your needs. Let us help you improve the way you connect with your customers.