Community Solar, also known as shared solar, is a solar energy generating system/plant shared or owned by a community. The Community Solar concept is several solar panels owned by multiple community members or neighborhood members in a shared space within a localized region. The one caveat to this is that members of the community solar project can’t install solar panels on their property.
Community Solar Is Growing
According to NREL [1], Community Solar projects are located in 39 states, including Washington DC. At the end of June 2020, around 2.625 gigawatts of community solar projects were in operation in the United States, just a sliver of the country’s overall 76-gigawatt fleet of solar plants. Of the 2.625 GW of community solar projects, 74% is concentrated in just a few states, led by Minnesota (663 MW-AC), Florida (593 MW-AC), Massachusetts (436 MW-AC), and New York (243 MW-AC). But 2020 marked the fourth consecutive year of 500 megawatts of installations or more. In addition, new state markets such as Illinois and New Jersey are opening up. Minnesota, which accounts for more than one-third of the total U.S. market, utility Xcel Energy reports about 16,700 unique residential subscribers for the state’s community solar program. It is estimated that 49% of residential customers cannot install a rooftop solar system, excluding renters, high-rise buildings, and multi-unit housings without enough roof space or homeowners who don’t have adequate roof space. Separately, community solar could serve the 49 percent of commercial customers who have insufficient roof space to support a PV system.
The Real Works
The Solar panels are normally installed on public land owned by the community or leased by the community. The solar power generated is made available to the members of that community solar project. These kinds of community solar projects are built with one purpose in mind: to provide access to solar power for renters, homeowners with shaded roofs, aesthetics concerns, or those who cannot install solar on their home for financial or other purposes reasons [2]. This is a membership-based program but a voluntary program for people who chose to sign up.
So how does the Community solar concept work in the real world?
- Solar Panels are installed in a large open area, where there is maximum exposure to sunlight with no trees or shade, and possibly within the community area where solar is being served to its residents.
- The most important thing to note is that the community solar farm is built close to an area where the solar energy can be transferred to the grid.
- Members within that community can sign into the program and receive the same benefits as a homeowner who has installed solar on their own properties. In addition, the members receive the utility bill credits in proportion to the size of their solar energy purchase.
The community solar farm typically starts from 400KW up to to 2 MW megawatt and sometimes even bigger. This farm produces the electricity and sends it to your local power grid, managed by the utility. During the process, the community that is serviced by the utility signs up to get solar electricity. As a result, you receive credits on your electric bill using the process of remote net metering or virtual net metering. So what is Net metering exactly?
NET METERING
For Residential Customers, installing rooftop solar and generating electricity, utilities implement Net Metering, a billing system that is a rate contract between the utility and the residential customer. It’s a system that pays you for the electricity that is produced by the solar energy system. So anything excess produced by your solar energy system is actually sent back to the grid, and the utility company uses the net metering system, which is part of the utility rate structure you’ve signed up to pay you for the excess power sent to the grid.
Virtual Net Metering is another net metering, but it’s applicable for community solar member participants. With virtual net metering, the solar energy system is not directly connected to the electric meter of the residential property. So the panels never provide direct power to the homes but instead use this remote billing system to get credit for all the electricity produced and goes into the electric grid, which shows up as credits on the electric bill. E.g., if you decide to sign up for a 25% share of a community solar system offered by the utility. You would receive an equivalent of 25% of kwh produced by the community solar project, which will be automatically applied as credits to your electric bill, and if that covers your entire usage, your electric bill would be zero,
In general, customers who move within the same utility service territory or county can retain their community solar share, or options for selling or donating program subscriptions may be available.
COMMUNITY SOLAR MODELS
There are different types of Community Solar programs that are being offered [3].
- Utility Sponsored Model.
- Special Purpose Model or Private Party Model.
- Non Profit Model
Utility Sponsored Model
In the utility model, the utility company owns and/or operates the community solar project. This project is open to the customers of the utility on a voluntary customer participation model. In this process, utility customers who have signed up for the participants receive a payment or credit on their electric bill based on their contribution. One of the important things to note is that the customer participating in the utility-sponsored model doesn’t have any rights over the Community solar project; in other words, the customers do not have an ownership stake in the solar energy system. Instead, the utility or a third party owns the system, and the customer buys the right to take advantage of the solar energy produced by the system.
Special Purpose Model / Private Party Model / Third-Party Ownership
In this model, Individuals or businesses form a Community Solar Project to take advantage of the tax benefits offered to Commercial Solar.
This kind of model comes into being when utility partners with a third party to develop and/or administer the community solar program. Essentially the third party / SPE builds and maintains the array and manages the program, working with the utility to credit the customers for their offer choice; or the third party / SPM builds and maintains the array while the utility manages all aspects of the program, providing the program offered directly to the customers. Again, the utility
Third-party ownership can help navigate utility concerns involving integrating billing and credits and help the utility take advantage of the Investment Tax Credit (ITC), which the federal income tax-exempt utility cannot do alone. SPE / Third-party ownership models can take advantage of the rebates and incentives to buy down the project costs or pass the cost to participants that subscribe to the model
Non-Profit Model
Although this strictly doesn’t fall in the lines of Community Solar, there is a big element of Community Solar playing in this particular model. Non Profit organizations like churches and schools team up with certain individuals who will finance the system through donor contributions. Although financed by donor contributions, the community solar system is owned by a non-profit organization. Still, the Non Profits who host the community solar project aren’t eligible for Federal Commercial ITC because Non-profits are non-taxing paying entities. Although the system may not be eligible for Commercial ITC, non-profits may qualify to use incentives/rebates from the state/utility to decrease the project’s overall cost.
PARTICIPATION PROCESS
Capacity based structure / Ownership based process
In an ownership-based system, a group of people from the community come together to pay for the system upfront or take out a loan to purchase a share of the community solar array based on the number of panels or watts produced. The Utility system maintains the ownership of the assets, including the land, wiring, and inverters. This is akin to purchasing a Residential Solar energy system. Still, the fact is you’re not having the solar on your rooftop or your property, but rather it’s a specific number of panels from within the community solar. They receive a proportional share of power generated from the solar panels or the overall community solar project. If this structure is adopted, the participants/subscribers should be located within the utility service area with a cap on their total annual usage [4].
Rate based structure / Subscription based program
In a subscription-based program system, the system is owned by a utility or a third party. The customers who participate in the community solar project purchase the output in solar energy blocks, otherwise known as solar energy production units, based on the number of kWh produced. A rate-based structure is similar to a solar lease or a PPA agreement. The project administrator is responsible for the solar installation/maintenance cost and sells the electricity to the customer at a fixed or variable rate.
What is not Community Solar
A few false notions need to be countered about Community Solar. One, Community Solar is not a Group Buy. When people decide to form a solar group buys, the main purpose is to learn about solar alongside their neighbors with guidance and support provided by the local solar business owners and community leaders. The intent is to provide high-value education that informs people about the advances in solar technology and its potential long-term investment returns. And, because the more people who go solar, the lower the price for everyone.
The other is Community Solar means is signing up for green electricity plans. Green Electricity plans are electricity plans that produce green energy, either through solar, wind, or hydro. Although solar is involved in purchasing green plans, it’s impossible to tell which electrons were generated from non-renewable or renewable sources when electrons are on the grid. So unless you’ve subscribed for a program or decided to purchase in for community solar, you haven’t actually bought Community Solar.
How to Get Started
To get started with Community solar, the best place is to search is on the internet to understand if community solar is offered in the area. If it is, it’s best to reach out to your local utility company, who can provide you that information because, in places where there are choices to buy electricity, they can direct you to a specific region in the utility sector where community solar is being offered.
Utility companies are the best resources for this information because they are the ones who control the electric grid and know what electricity is added to the grid. Based on that information, they can issue your electric bill and decide who gets solar credits and in what quantity.
Final Thoughts
Community Solar is always a good option for those who always wanted to go solar and looks very promising since it requires little to no initial investment. You don’t need to worry about having an install a solar energy system. However, with that being said, it’s always wise to understand the advantages of rooftop solar versus community solar.