Turning Energy Efficiency into Economic Opportunity

Turning Energy Efficiency into Economic Opportunity

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Last week, I had the privilege of participating on a panel in San Diego that discussed financing energy efficiency devices and programs for low income households. We’ve seen or heard of energy efficiency devices by now. You know, the cool looking light bulbs that look like soft-serve ice cream in a cone. Or the heat pumps, refrigerators, or other energy efficient devices that you see with the little yellow and black stickers. The challenge for these programs that offer a financing solution for getting energy efficient items into low income households is, in my opinion, two-fold. First, the household’s risk aversion regarding credit. Second, particularly on the case of minority households living in low income communities, the impact gentrification has on receiving information on credit programs.

I live in a low-income zip code, the 30310 zip code that includes Atlanta’s West End community. Ninety percent of the area is black American. The average adjusted gross income for the areas 29,152 residents is $24,101, way below Georgia’s average of $56,131. Sixty-one percent of households are renters, much higher than Georgia’s estimated 38%. Unemployment, in 2012, was estimated at 16.9%. And while Georgia’s poverty level is estimated at 17%, poverty in the 30310 zip code was estimated at 35.3% in 2015.

This is not a group that will clamor to finance light bulbs, microwave ovens, or refrigerators via a credit plan. And given that the majority of the residents in the 30310 are renters, landlords will have to be persuaded to invest in the appliances, and if a renter perceives the benefits to her as being short term versus longer term benefits to the landlord or next tenant, there will be even less incentive for making the investment.

Second, for minority households in low income areas, gentrification threatens the information conduits that provide knowledge about energy efficiency programs. Neighborhood churches are one of the primary conduits for information flow into black neighborhoods. As my West End neighborhood further gentrifies, I see black churches shrinking in size as parishioners move either as a result of higher rents or selling a property. Either way, blacks move further away from potential community sources of information as a result of gentrification.

One strategy that should be considered for addressing both problems is one where Black Americans leverage current educational and financial infrastructure to design, produce, and distribute energy efficient technology within their communities. For example, just north of the West End are Clark Atlanta University, Morehouse College, and Spelman College. With financial banking of black owned banks, churches, and civic groups, the black community could address the energy efficiency issue by cutting out the middlemen outside of their community and pricing these products such that entering the credit markets to finance them would not be necessary. Also, not necessary would be state involvement in creating credit market access schemes or utility involvement in coming up with and administering energy efficiency programs. A community approach would also be a market approach.

Is a university-backed scheme to deliver energy efficiency to minority neighborhoods a pipedream? Far from it. Larger universities have spun-off companies that provide research and product in the energy space. Black universities have the same capability. The positive impact such an endeavor can have on Black communities should give all stakeholders the will.

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