5 Things You Need to Know About Community Solar

1. What is Community Solar?

As defined by the U.S. Department of Energy, community solar, also known as shared solar or solar gardens,[1] is any solar project or purchasing program, within a geographic area, that shares the benefits of the project among a range of consumers, including individuals, businesses, non-profits, and other groups.[2]

Community solar can help consumers enjoy the benefits of solar without having to install their own solar systems because of:

  • Insufficient solar resources
  • Roof conditions that won’t support a rooftop photovoltaic system due to excessive shading, roof size, or other factors
  • Lack of homeownership or apartment ownership
  • Inability or unwillingness to install on-site solar for financial or other reasons

2. What are the benefits of Community Solar?

Community solar projects can benefit customers, utilities, and other third parties by:

  1. Stabilizing electricity rates and creating savings for program participants
  2. Providing a broad range of electricity consumers access to solar, including low-income customers
  3. Siting projects in locations that can benefit from the grid
  4. Promoting renewable portfolio standard compliance by increasing renewable energy generation
  5. Helping utilities recover a larger portion of program costs from participating customers rather than nonparticipating ratepayers, which may occur with other incentive programs

3. How does Community Solar work?

There are different business models for community solar.

In most cases, the customers benefit from energy generated by solar panels at an off-site solar array. They can either buy or lease a portion of the solar panels in the array, typically receiving a credit on their electric bills for electricity generated by their share of the system. If subscribers move to a new home within the same utility service territory or county, they can typically continue to benefit from their share in the community solar program.

For apartments and condominiums, occupants can benefit from an on-site multifamily community solar model that produces energy from a rooftop array.

Several existing clean energy policies promote community solar, including:

  • Virtual net metering, which credits customers for generation from off-site solar energy systems. Community solar depends on virtual net metering to help customers offset their electricity loads.
  • Net metering, which credits distributed generation owners for the power that their systems contribute to the grid. Community solar participants can be credited through net metering or other arrangements like value of solar tariffs, group billing, or joint ownership.
  • Tax credits, like the federal investment tax credit for solar photovoltaic systems, may apply to participants depending on the structure of their community solar program, i.e., whether the participant owns the panels or output and if a participant claims an individual or commercial tax credit.

4. Who owns a Community Solar program?

Utilities and third-party developers typically own community solar projects, which can be located on public buildings, private land, brownfield sites, and other suitable areas. Common ownership models include:

  1. Utility which owns or operates a community solar array to which customers may subscribe.
  2. Individuals who form a business enterprise to develop a community solar project, which allows the business entity to take advantage of state and federal tax incentives.
  3. Non-profit entity which administers a community solar project to benefit members or donors.

Community solar projects and programs are typically offered in two models:

  1. Ownership model, in which participants purchase a number of the panels or a portion of the community solar project. Participants who buy into a community solar project receive electric bill credits/savings from all of the power produced by the solar panels they own.
  2. Subscription model allows participants to become subscribers and pay a lower price on their monthly electric bill. Instead of owning panels or a share of the project, participants purchase electricity at a lower rate than would pay their electric utility.

5. How prevalent is Community Solar in the U.S.?

According to the National Renewable Energy Lab, as of December 2020:

  • There are community solar projects in 39 states, plus Washington, D.C.
  • 22 states, plus Washington, D.C., have policies that support community solar.
  • Community solar projects represent 3,005 megawatts alternating-current (MW-AC) of total installed capacity.
  • 74 percent of the total market is concentrated in: Minnesota (663 MW-AC), Florida (593 MW-AC), Massachusetts (555 MW-AC), and New York (410 MW-AC).

Community Solar in Pennsylvania

As the Pennsylvania General Assembly seeks to reduce the state’s greenhouse gas emissions, legislators are reviewing policies that will promote renewable energy innovations, including solar. As some neighboring states have shown, expanding the Alternative Energy Portfolios Act of 2004 (AEPS) solar requirements can increase private investment in solar. Similarly, community solar has the potential to help democratize access to renewable energy for all.

Although many of the proposed bills have sponsorship from both political parties, no meaningful progress was made in recent legislative sessions. The Pennsylvania solar industry remains hopeful that the state will join its neighbors in expanding access to clean renewable solar power for all.

Next Steps

There are many things to consider when thinking about solar power installations. We can help you make sense of the entire picture.

To learn if solar is the right move for your organization, contact us for a free solar feasibility report.

[1] https://www.nrel.gov/state-local-tribal/community-solar.html

[2] https://www.energy.gov/eere/solar/community-solar-basics