Income and racial disparities in financial returns from solar PV deployment

Transitioning the U.S. energy system towards renewable sources of energy generation is critical to reducing global CO2 emissions. Solar photovoltaic (PV) technology is a promising source of renewable energy. Federal and state mandates, incentives, and subsidies increase solar PV adoption and hasten the energy transition. However, these policies are designed with adoption as the main metric of success and fail to consider differences in the stream of financial returns that accrue to households depending on the mode of adoption. Our research investigates financial returns to solar PV adoption by system ownership status (leased or owned). We examine the relationship of total and average financial returns to income and race using data on solar PV systems installed as part of the Massachusetts Solar Renewable Energy Certificate (SREC) program from 2014–2018. We find that financial returns that accrue to households for owned systems are over 300% higher on average than for leased systems. We also find that neighborhoods with more low-income and non-White households receive lower financial returns compared to neighborhoods with higher income and more White households, mostly because these households tend to lease their solar panels. Our results illustrate that the form of participation in the solar PV market (leasing or owning) has significant implications for the distribution of financial returns. Policymakers interested in prioritizing equity in the energy transition should account for this difference in financial returns when designing solar adoption programs, especially those targeted towards low-income and non-White communities. •Ownership of solar PV yields 300% higher financial returns compared to leasing.•Low-income and non-White neighborhoods receive lower financial returns from solar PV.•Disparities in financial returns can be attributed to greater ownership of solar PV.