Today, many American households and businesses do not have access to solar because they rent, live in multi-tenant buildings, have roofs that are unable to host a solar system, or experience some other mitigating factor.
Community solar provides homeowners, renters, and businesses equal access to the economic and environmental benefits of solar energy generation regardless of the physical attributes or ownership of their home or business. Community solar expands access to solar for all, including in particular low-to-moderate income customers most impacted by a lack of access, all while building a stronger, distributed, and more resilient electric grid.
Community solar refers to local solar facilities shared by multiple community subscribers who receive credit on their electricity bills for their share of the power produced. This model for solar is being rapidly adopted nationwide.
- There are 43 states with at least one community solar project on-line, with 1,387 cumulative megawatts installed through 2018.
- At least 19 states and D.C. have recognized the benefits of shared renewables by encouraging their growth through policy and programs.
- The next several years will see the U.S. community solar market add as much as 3 gigawatts. A single MW of solar powers 164 homes, and 3 GW will be able to power almost half a million homes.
- The Coyote Ridge Community Solar Farm in Fort Collins, Colorado is one of the largest low-income community solar projects in the U.S. at 1.95 MW and benefits low-income households, affordable housing providers, and non-profits.
Community Solar projects may be located on public or jointly-owned property, and can be an easier way for customers to benefit from a local solar energy project. A 2015 NREL and DOE report estimates that nearly 50% of consumers and businesses are unable to host photovoltaic (PV) systems, but there are many reasons why community solar might be preferred for a home, business, or individual, such as:
- Renters may be prohibited from installing solar on the property
- The roof may be too shaded or will need re-roofing during the solar warranty period
- The size, type, or orientation of the roof may be improper
- Some commercial buildings have equipment on the roof, obstructing an installation
- Multi-tenant dwellings or businesses may not own their rooftop
- The customer is not able to afford the up-front cost of a residential system
Community Solar Models
There are various ways that customers (or “subscribers”) may participate and receive benefits from shared renewable energy. Successful models generally include a billing mechanism that allows subscribers to receive credit on their electricity bills for their share of the power produced. The most common models are the utility-sponsored model, on-bill crediting, the special purpose entity model, and the "buy a brick" model.
Some utilities provide their customers with the option to purchase renewable energy from a shared facility. The utility owns the array, then sells or leases shares to customers. The customer may purchase a set amount of electricity at a fixed rate for a term, ranging from as short as a kilowatt-hour block to as long as 20 years. The rate, while typically slightly higher than the current retail rate, may provide protection and stability against rising rates for grid electricity. Utility models generally limit subscription to within their distribution territory.
The on-bill crediting model enables residents and business to invest in a portion of a local solar facility, and receive a credit on their electricity bills for their share of the power produced. Credits may be provided in the form of kilowatt hour (kWh) offsets to the customer’s consumption, or monetary credits to the customer’s bill. Because of diverse state laws and regulations, the rate at which the energy is valued is dependent on geographical area.
Special Purpose Entity (SPE) Model
In this approach, individuals or companies join in a business enterprise to develop a community solar project. The business may design, construct, and own the facility, then work with the local utility to allocate benefits to subscribers. By using an SPE, organizations may be able to take advantage of incentives and tax credits that are unavailable to utilities. University Park Solar and the Clean Energy Collective are examples of this model.
Non-Profit “Buy a Brick” Model
In this model, donors contribute to a shared renewables installation owned by a charitable non-profit organization. The non-profit Grid Alternatives is actively and successfully pursuing this model.