Community Solar – Is it for me?
As much as I’d like to do my part to conserve, right now I don’t have the money to buy and install solar panels on my roof…
Trees surround my house, my roof faces north, and I doubt solar panels would work on my rooftop…
I’m a renter and since I pay the electricity, my landlord has little incentive to install solar panels…
I’d really like to find a way to reduce my dependency on fossil fuels and help fight global warming…
If any of these scenarios sound familiar, you’re in good company.
The Obama Administration initiated a program to increase solar opportunities for Americans, particularly for those who can least afford it. The initiative promises to unlock and expand access to community solar across the country with the help of ambitious goals, funding, and partnerships to scale up solar for renters, and those who lack information or startup capital to invest in solar energy.
A recent report published in April 2015 by the National Renewable Energy Laboratory (NREL) estimates that nearly 50% of households (and an equivalent percent of businesses) are unable to host solar PV installations for a variety of reasons. Opening the market to community solar opportunities could represent from 32-49% of the distributed solar photovoltaic (PV) market by 2020. This would lead to PV deployment growth between 2015-2020 of 5.5-11 GW of solar electricity.
Community Solar Basics
Community solar (also called shared solar or solar gardens) enables a group of individuals to pool their resources for the purchase of a solar PV installation and receive the benefits of ownership (either through energy or monetary value). The group of individuals might be renters or homeowners with too much shade or not enough roof space. A shared solar project reduces upfront costs for the individual, offers bulk pricing, and opens up new opportunities for the community to invest in renewable energy projects.
A shared solar project participant might purchase solar panels equivalent to the amount of energy needed, or pay for the kilowatt-hours (kWh) of electricity generated (similar to a leasing arrangement). Depending on the contractual arrangement and state policies, benefits of the solar purchase could then be credited to each participant’s electricity bill.
The Green Power Network (U.S. DOE) estimates that the average number of residential participants in a shared solar project is 280 but the installation may be owned by as few as two households. Depending on the contract structure, shares may be bought or sold or carried with the owner in the event of a move within the same utility district.
State and Federal Requirements
Several states (such as Minnesota, Colorado, and California) now require regulated utilities make available shared solar project opportunities to residents and businesses. To ensure that more customers can participate, some states limit shared solar ownership or require a percentage of low-income participation. For example, Colorado specifies that one investor may not own more than 40% of the shares, and 5% must be reserved for low-income community members.
To help Xcel Energy, Minnesota’s largest utility, meet state requirements, SolarCity is planning to build the largest solar garden initiative in the U.S. The plan is to install up to 100, 1 Megawatt (MW) projects in Minneapolis-St Paul and make this solar option available to renters, low-income housing residents, schools, and others qualifying for the program.
NREL has compiled a guide to understanding state and federal policy and regulations for shared solar installations. Among key considerations for these projects are net and virtual metering policies, limits to project size and ownership, securities regulations, federal tax credits or state-level incentives, and ownership of Renewable Energy Certificates (RECs).
Net metering allows owners of solar electricity generated onsite to be reimbursed for excess power spilling back into the grid. Currently 44 states allow net metering but 24 have adopted capacity limits either on the individual customer or aggregated system, technology type, demographics, or location.
Virtual net metering enables participants to subtract their invested share of solar electricity if it is generated at a different location than their own residence. Although the legislation is being discussed in a number of states, virtual net metering for community renewables projects is only allowed in about a dozen states including California, Colorado, Delaware, Illinois, Maine, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, Vermont, Washington, and Washington D.C.
The federal Investment Tax Credit (ITC) allows a tax credit for solar projects equivalent to 30% of the qualified installed costs (until 2017 at which time the credit drops to 10%). An NREL report noted that individual shared solar projects have faced challenges qualifying for residential tax credits under ITC. To find out about other incentives for solar, DSIRE provides a comprehensive database by state.
A few Community Solar Projects
There are a number of ownership models possible for shared solar projects such as joint ownership, member-owned model, non-profit, and group billing. The ownership model will depend on the state requirements such as availability of virtual metering, state incentives, and needs of the community.
Here are just a few examples of the many shared solar projects found during research for this article:
A group of 26 organizations and individuals made tax-deductible contributions to the non-profit organization Community Energy Solutions to install a 5.1 kW PV system on Sakai school on Bainbridge Island, Washington. In addition to the community donations, the school’s solar project received a $25,000 grant from the utility (Puget Sound Energy) and a production incentive of $0.15/kWh from the State of Washington.
In western Colorado, the Clean Energy Collective (CEC) enabled a group of individuals to purchase a 78 kW community solar farm. CEC funded the project through sales of solar shares to individuals, a 1603 treasury grant in place of the federal ITC, and selling RECs. CEC maintains the solar arrays, and works directly with the utility to track and pay on-bill credits to individual owners.
Residents of a multifamily low-income housing complex, San Diego Community Housing Corporation (SDCHC) are saving up to 30% on their energy costs. Due to a virtual metering arrangement, the building owner was able to reimburse energy savings to tenants (credited to individual residents by San Diego Electric & Gas) under the building’s energy load. A third party, Everyday Energy, installed and owns the 20-kWh system and was able to access the tax credit.
More Community Solar Resources
Although there are reportedly more than 100 shared solar projects around the country (and growing) it’s a challenge finding all of these project summaries or case studies in one place. In addition to the resources already mentioned throughout this article, here are a few more websites taking major steps in the right direction:
- The Green Power Network has one of the most comprehensive websites providing information about new community solar projects, links to reports, guides, tools, and updates to policy.
- The Shared Renewables website provides a map showing details of the state working on shared renewables policies.
- The Open PV Project is compiling information from businesses and organizations involved in PV project installations by state.
- Solar Energy Industries Association (SEIA) has a comprehensive list of ground-mounted solar projects 1 MW and above.
Author: Kathryn Thomsen
Founder of Hundredgivers, a nonprofit supporting and accelerating sustainability initiatives benefiting local and global communities. In addition to social entrepreneur, Kathryn is a consultant, researcher, writer, communicator and urban farmer. She collaborates with individuals, organizations, and businesses to evaluate and develop climate change, clean energy, and sustainability strategies and programs.