Energy Burden and Inequality in the U.S.

Energy burden is a percentage of gross income that households spend on monthly energy costs, such as electricity, gas, and heating fuel. The U.S. Department of Energy considers energy burden above 6% of income as “high” and above 10% as “severe.” A 2018 DOE study found that the energy burden was especially severe in the Southeast U.S. Low-income households pay a greater part of their income on fuel costs than higher-income families. Energy burden has increased in the U.S. since the COVID-19 pandemic. In 2021, 20% of Americans could not afford to pay their utility bills at least once, and 18% kept their home temperature at unhealthy or unsafe levels.

According to the DOE, 44% of total American households are considered low-income, and they spend an average of 8.6% of their earnings on energy. By contrast, higher-income households spend about 3% of their earnings on utilities. Energy burden can reach 30% in some areas of the country. It disproportionately impacts racial minorities and low-income families. The American Council for an Energy-Efficient Economy’s 2020 research presents stark findings: “African-American families spend 43% more of their income on utility bills, Hispanic households spend 20% more, and Native American households spend 45% more.” Expensive energy, high housing, food, transportation, and healthcare costs can be crippling to millions of low-income families in the U.S. In addition to being a financial burden, high energy costs contribute to increased rates of asthma, eviction, and mental health. 

Several causes are behind the high energy burden: expensive fuels, high electricity rates, energy-inefficient homes, energy-inefficient appliances, and low incomes. In an interview with SaveOnEnergy, Alycia Jenkins, a clean energy activist with the Sierra Club chapter in Hartford, Connecticut, said that it is expensive to be poor in the U.S. According to her, some low-income households in Connecticut live in unhealthy and unsafe conditions because landlords do not spend money on upgrading old heating systems and appliances. Nearly 60% of low-income families in the U.S. rent their homes. Because renters pay for the utilities and not the landlords, the latter can be less willing to spend money on such improvements.

Community solar

Solar panels provide renewable, emissions-free, and cost-saving electricity to consumers. They can reduce energy bills for low-income households, enhance indoor air quality, and provide greater comfort. One way to provide access to solar power to low-income families, particularly those living in multi-unit apartments, is through community solar. Multiple subscribers can use a shared solar facility and get credit on their utility bills for the generated power. Because community solar gardens are typically close to their customers, much less electricity is lost from solar panels than if it traveled through long-distance electric transmission lines.  

While the adoption of solar panels by the middle class has gone up by 48% since 2010, low-income households represented only 15%. Because most low-income families rent their homes, they do not have the opportunity to own their solar panels. The high cost of solar installation remains a major barrier to them. 

Successful community solar case study

A successful community solar project in Colorado is a good example of how solar power could help reduce energy burden and inequality. The Colorado Energy Office (CEO), a state energy agency, rolled out a pilot Low-Income Community Solar Demonstration Project in 2015. CEO partnered with eight non-regulated utilities to build six community solar models for 380 families across several counties in the state. CEO and participating utilities shared the cost of building the solar systems. The utilities gave credits toward subscriber energy bills.

As a result, every community solar facility has saved between 15% to 50% on subscribers’ monthly electric bills – or nearly $400 per household. The pilot project has grown to 1.4 megawatts of solar power. According to the National Renewable Energy Laboratory, renewable energy research and development of the federal government, state energy agencies across the US expressed interest in cutting the energy burden. 

Weatherization and energy efficiency

Alycia Jenkins told SaveOnEnergy that improving energy efficiency would lower energy bills and help low-income families. Such a measure includes:

• Home insulation
• Replacement of old appliances with energy-efficient ones
• Usage of smart thermostats to cut heating costs
• Changing incandescent light bulbs to more energy-efficient light emitting diode (LED) bulbs

Residential and commercial buildings in the US waste nearly 50% of their energy. Weatherization and energy-efficient appliances and light bulbs can significantly reduce energy waste and utility bills. Energy-efficiency of multi-family apartments could save $3.4 billion in utility costs. By some estimates, if low-income residential units became more energy-efficient, their energy costs would go down by about one-third.

Financial programs

The federal Low-Income Home Energy Assistance Program (LIHEAP) and Weatherization Assistance Program (WAP) have been around for many years to help reduce energy costs for low-income families. LIHEAP provides cash to low-income households to pay their heating bills. WAP improves the insulation and energy efficiency of eligible homes. But there are strict income criteria to qualify for both programs. Some customers in need of such assistance may not qualify due to slightly higher than required income. 

The rising inflation and cost of electricity have left many low-income households in the U.S. in debt. Many of them are 90 days or more past due on their gas and electric bills. There is more demand for energy assistance than available federal funding. Sometimes cash assistance to help pay for utilities is lower than the energy cost. In an interview, Alisha York, a single low-income mother on fuel assistance, told the author that the yearly lump sum of $800 to pay for heating costs in her rental unit in Massachusetts is not enough to cover her monthly gas and electricity bills of more than $300. 

Saltanat Berdikeeva  is a seasoned energy writer and analyst and a published author, who specializes in renewables, energy efficiency, and energy transition. Saltanat’s articles on energy issues and trends in Eurasia, the Middle East, and the U.S. featured in Energy Digital, Inside Arabia, European Energy Review, Environment Journal, National Geographic, Platts, Oil and Gas Journal, Jane’s, Insight Turkey, ISN, and local newspapers. Check out her podcast Reimagined Communities on energy transition in American communities.