Nearly half of all households and businesses cannot host ordinary rooftop solar systems. This customer base needs shared resources in order to use solar energy. The concept of community solar is only a few years old.
It is also called shared solar or solar garden. Proponents of community solar compare it to a community garden, except instead of food, it produces electricity. I wrote earlier that it has great growth potential, and it has indeed grown since then.
Benefits of community solar
Community solar makes the benefits of solar energy available to people who couldn’t otherwise have it. Renters can’t very well install solar panels on a building they don’t own. A large apartment complex may not have enough roof space to provide solar energy to all its residents.
Even people who own their own houses might not be able to install solar panels. Their roof might be too shaded or not oriented in the right direction. Besides technical reasons, many homeowners can’t afford their own system. Also, some people move frequently and would not remain in one house long enough to recoup their investment in solar panels.
Utilities benefit from community solar. It’s easier to connect larger arrays than many separate rooftop systems to the grid.
So far, 43 states have at least one functioning community solar project. At least 19 states, along with the District of Columbia, have established policies to encourage the growth of community solar. Massachusetts offered incentives for community solar as early as 2014. Existing projects now power nearly 50,000 homes.
As of the end of 2018, 1,387 megawatts had been installed nationwide. One megawatt can power about 200 homes. Shared solar could see a cumulative deployment growth of from 5.5 to 11.0 gigawatts by the end of 2020. In fact, shared solar could account for as much as half of the distributed solar market by that time.
Varieties of community solar
Community solar is not the same thing as group purchasing, purchasing “green power” from a utility, or a crowdfunding platform. In fact, community solar developers work to ensure that the project won’t be classified as a security. That would add complications to an already complex operation.
Shared solar can refer to at least two related concepts. In one, a community bands together to create a shared resource and take ownership of it. In the other, some other entity—perhaps a utility—owns and operates a relatively small-scale solar installation for use by a particular community.
It also comes in two basic formats: ownership and subscription.
The ownership model can be difficult to organize and explain. Customers purchase the use of panels, up to 100% of the energy their home or business uses. They receive all the same tax benefits of owning their own rooftop system. Except, of course, the system is somewhere else.
Depending on how it’s structured, the ownership model could have some tax benefits. It can also prevent lower-income households from participating.
In the subscription model, participants subscribe to shared electricity in order to save money on their electric bills. They purchase power just as they would purchase from a utility. The economic model is simpler to understand and operate. It’s easy to opt in and opt out. On the other hand, subscribers have to pay administrative costs and receive no tax benefits. The project may require a fee upfront, but most do not.
Some disadvantages of community solar
Solar gardens are expensive to build. They take a lot of space. For that reason, they are usually built in rural areas. Generating one megawatt of electricity takes about 2.5 acres.
Servicing larger communities requires more land. Solar gardens alter the aesthetics of a landscape. The land they use can’t be put to any other purpose.
Marketing tactics and sales strategies can focus too much on the feel-good aspects. They might not offer customers clear answers to basic questions. Like any other investment, shared solar comes with risks. For one thing, it will probably entail paying one bill to the utility and another to the company that operates the system.
While shared solar has clear social and economic benefits, setting up a program can be complicated. I suppose it’s straightforward enough if a utility builds a community solar project. Otherwise, the developer typically makes a contract with the utility to sell electricity at a fixed rate.
It costs more to produce electricity from a shared solar array than from a larger grid-scale solar farm. So the developer necessarily sells electricity at a higher rate than what the utility charges.
All ratepayers pay the additional cost. Subscribers of the community solar project get a credit on their bills. So the project lowers their bill and raises everyone else’s. Charging a fee to subscribe can offset the difference. And put it out of reach for low-income households.
As with anything new, it takes a while to work the bugs out. Eventually, developers will find alternatives to digging up farmland. They will figure out more customer-friendly marketing practices. They will figure out how to simplify at least some of the organizational and financial complications.
11 prevailing solar farm pros and cons / Crystal Ayers, Vittana Personal Finance Blog.
Community and shared solar / Office of Energy Efficiency and Renewable Energy, US Department of Energy
Community solar / Solar Energy Industries Association
Community solar: the pros and cons / Andy Schell, Paradise Energy Solutions. March 14, 2019
Community solar: what is it? / Energy Sage
In Connecticut, the costs and benefits of shared solar are tough to calculate / Patrick Skahill, WNPR. March 18, 2019
My experience with community solar: excessively complicated and frustrating / Josh Garrett, Greentech Media. October 5, 2018
Community solar farm. Public domain from Wikimedia Commons
Community solar infographic. Solar Energy Technologies Office, US Department of Energy
Solar garden. Photo by Larry D. Moore. Public domain from Wikimedia Commons