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September 28, 2021
Eva Govan, a manufactured home resident in rural South Carolina, has always struggled with her energy bills to keep cool in the summer and warm in the winter. “My bill skyrocketed,” Govan said. “It got to the point that I could barely afford it.”
Manufactured homes represent an affordable housing solution for many families, but often these structures are old and inefficient, leading to high energy bills and energy burdens. There are more than eight million manufactured homes in the United States, representing about 6.5 percent of the housing stock—the largest unsubsidized affordable housing stock in the country. While a large portion of families living in manufactured homes are low-income, they are not eligible for federal housing subsidies. Additionally, while families can take out a mortgage to finance their homes, most rely on chattel loans, or property loans, which typically have less favorable terms and fewer consumer protections. This adds to the financial burden that families living in manufactured homes have to endure.
Formerly called mobile homes, manufactured homes are structures built in factories and then moved to a semi-permanent location. These homes do not have a foundation and are different from modular homes, which are built on-site and have to abide by local and state standards. Manufactured homes, on the other hand, need to conform to federal standards set by the U.S. Department of Housing and Urban Development. Because they can be mass-produced, manufactured homes are cheaper than site-built homes. In terms of cost per square foot, manufactured homes are generally 55 to 65 percent less expensive than site-built homes. Low- and moderate-income (LMI) families tend to disproportionately live in manufactured homes.
Manufactured homes are prevalent in rural areas, making up 15 percent of rural housing. In fact, 70 percent of manufactured homes are located in rural areas. Despite using about one-third less energy than site-built homes due to their smaller size, manufactured homes still use 70 percent more energy per square foot. Indeed, LMI households spend a higher share of their income on energy, so they have more to gain from making their homes more energy efficient and switching to renewable energy. However, LMI families have traditionally faced barriers to afford and access clean and efficient energy upgrades due to the high upfront costs that often come with these upgrades and because they tend to have low or no credit scores, and so cannot meet the underwriting requirements for energy upgrades.
The Clean Energy States Alliance (CESA) recently released the Solar for Manufactured Homes report, a two-volume compendium looking at how to accelerate solar development for LMI households. The report dives into renewable energy for manufactured homes, a subject with little previous research, and focuses especially on how solar energy can reduce energy burdens for these households. The report highlights nine promising operating projects and programs that are helping families living in manufactured homes install energy efficiency and solar panels to reduce energy, lower energy bills, and relieve high energy burdens. Among these case studies is the Help My House on-bill financing program, run by six rural electric co-ops in South Carolina, which helps families in these homes install energy-efficient upgrades. While Help My House is not focused on solar energy, it provides an example of how on-bill financing programs could be adapted to finance solar panels for manufactured homes.
An example of an innovative financing program for energy efficiency measures and manufactured homes from the report is in South Carolina. The Help My House program received $15.5 million in zero-interest capital from the USDA’s Rural Energy Savings Program (RESP) and helps finance solar panels and energy efficiency retrofits for manufactured homes.
Traditionally, manufactured homes have been ignored by solar marketers because they are perceived as a “hard-to-reach” market. Solar marketers perceive LMI families living in these homes as not having sufficient resources to overcome the upfront cost barrier for the panels and lacking sufficient credit scores to qualify for a traditional loan. Because of the complex structure of land leasing, and the fact that manufactured homes can be moved to another spot, solar leasing has not developed as a commercial market. Double-wide homes are the most suitable to host solar panels, given their large roof space, but most manufactured homes are single-wide. Some manufactured homes also face other physical barriers to solar installations, like the inability to support the size and weight of a solar panel system. The report revealed significant socioeconomic barriers to solar for LMI households. These barriers include the unaffordable upfront costs of solar panels for such households without assistance or flexible low-cost financing, the inability of these households to benefit from the federal solar tax credit to lower installation costs because their incomes are too low, and families’ unfamiliarity with solar energy.
However, “installing solar on manufactured homes is essential for equity reasons and, in the long-term, to increase public support for solar energy and to reach LMI households,” said Nate Hausman, CESA’s project director and one of the report’s authors. “Because manufactured homes are a significant portion of the housing stock, installing solar on these homes can help meet states’ climate goals and address the issue that solar is not just for the wealthy.”
“Before adding solar to manufactured homes, it is essential to perform an energy assessment to the home to have an accurate understanding of energy usage and possible energy inefficiencies,” said Warren Leon, CESA’s executive director, and lead report author. “Adding energy retrofits before installing solar can help with solar panels’ paybacks and can provide lower energy bills than just solar in isolation.”
Retrofitting manufactured homes, including insulation and duct sealing, can help families reduce energy costs and lower energy burdens. The U.S. Department of Energy is proposing new energy efficiency standards for new manufactured homes. Energy efficiency requirements for these types of homes have not been updated since 1994. With more than 100,000 new manufactured homes rolling out from factories every year, new energy conservation standards would have a major impact and result in more air-tight manufactured homes, lower energy bills for families, and reduced carbon emissions.
Fortunately for Govan, her utility provider, Tri-County Electric Cooperative, offers the Help My House program to help its members save energy on their utility bills through energy efficiency improvements with no money down. An independent energy audit determined that Govan’s manufactured home was eligible for the program as energy savings created by the installed upgrades would be greater than the repayment costs. Through Help My House, the co-op helped Govan finance $12,500 in energy upgrades, including a more efficient air-source heat pump, air sealing, and duct sealing, to be repaid over 10 years on her utility bill. With these upgrades, Eva Govan’s energy consumption is 38 percent lower than the prior year. Even with the repayment costs included, Govan is seeing net energy savings of $9 a month, or $108 annually.
“It’s working out fine,” says Govan. “Now I can set my thermostat to 70 and leave it there in the winter and summer. I would consider it a good deal.”
Inclusive on-bill financing programs help overcome the traditional capital barriers LMI households face by using on-time bill payment history rather than credit scores for participant screening and offering low-cost financing paid over time, with no upfront costs. These inclusive criteria broaden access to these programs and advance equity.
On-bill financing programs are one of the eight strategies the Solar for Manufactured Homes report identifies to advance solar to meet states’ climate goals and to increase access for LMI households to efficient and clean energy upgrades in manufactured homes.
EESI Senior Associate Miguel Yañez-Barnuevo was a member of the Solar for Manufactured Homes report’s Advisory Committee.
Author: Miguel Yanez-Barnuevo
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