Jessica PirroMay 20, 20191190
A community solar project, sometimes referred to as a solar garden or a shared renewable energy plant, is a solar power plant that has it’s electricity shared by more than one household.
Community solar can refer to community owned projects as well as third party owned plants whose electricity is shared by a community.
The sole purpose of community solar is to allow homeowners or renters in a community the opportunity to experience the benefits of going solar when they cannot or prefer not to install solar panels on their own property.
People who participate in the solar benefits from the electricity generated by the community solar project, they will have to pay less than the price that would have to pay for their usual utility bill.
Community solar allows people to go solar even if they don’t have a solar system installed on their property.
What community solar is not
Community solar is very similar to but also very distinct from a number of other methods that allow individual investors, household and businesses to get involved in the clean energy community.
There are a few approaches that people often mistake for community solar. Group purchasing, green power, crowd funding/online solar investment platforms.
Group purchasing: This is when a large number of households or businesses to buy their own individual solar systems at bulk rates due to negotiations with solar installation companies. Group purchasing does nor result in a community sharing the benefits of solar panels. Once the project is completed each businesses/persons who are participating in this purchase will benefit individually. Where as, with a community solar project, all of those who are participating, benefit from the same systems. These community solar systems are usually on a piece of property that isn’t necessarily owned by any of those who are participating.
Green Power: These arrangements allow a utility’s customer to buy electricity from renewable energy generation plants, these plants are usually hydro and wind. The people who sign up for Green Power usually don’t do it to save money on their electricity bills, but do so in order to do what is considered the ‘right thing’. They have to pay the premium price for electricity that is created by solar or wind farms. Those who are participating in green power are aware that it does not necessarily result in the building of additional power plant facilities, as electricity may be sourced from preexisting facilities. The majority of these solar gardens are developed with a primary purpose of saving those who are participating on their electrical bill.
Crowd funding/Online solar investment platforms: Firms have opened up renewable energy investments to the masses with online platforms that allow anyone to invest into new solar power system installations. Under these arrangements, there are buy-ins that are set up solely as an investment and the power that such a system generates is not associated with those who are participating electricity bills in any way and it may not be located in the same utility region, state or even the country. The returns from these projects may be taxable, where as community solar is not taxable.
Community solar securities and taxes
In order to avoid securities and laws and the possibility of taxation, community solar project developers and administrators work from early stages to make certain that their solar projects are distinct from conventional, taxable investments.
Those who are participation in community solar are not viewed as investors. Savings that come from any energy bill savings, that are earned by households through the community solar garden are not considering income.
These are the reasons that there are rules that are usually governing community solar project participation. Households that are located within a city, town or the utility service area. Each household will only be able to get enough power that would meet their annual power needs.
Community solar is a newer concept, there are new groups, companies, and even utilities that are joining the community solar industry and building community solar projects.
This is the reason it is very important for anyone who is interested in signing up for community solar program compare all of the available offers, to find what ones offer the best value for them.
A large part of the reason to community solar power option that is gaining popularity thanks in a large part to Virtual Net Metering. This solar power option helps those who aren’t on the market for rooftop systems to still get the benefits of solar power.
Like Net Metering and solar power, Virtual Net Metering allows for households and businesses to get net metering credits that are associated with a renewable energy project that they don’t share an electricity meter with.
These credits are worth just as much or close to as much as what they would be paying for electricity from their utility.
Community solar projects and programs are available for participation:
Ownership:This allows for the participants to own some of the panels or for them to own a share in the project. The owners get to benefit from the power that is produced by their panels or their share in the solar system.
Subscription: In this case those who are participating by subscribing to pay lower prices for the electricity that comes from the community solar as opposed to electricity that is coming from utilities. They don’t own the panels they are just buying the power at a reduced rate.
Is Community Solar Right for You?
Shared solar projects often appeal to people who are interested in saving money by switching to solar but for various reasons cannot install solar equipment on their property. As the solar industry is expanding, community solar is becoming increasingly more popular; however many people are not aware that this option is offered in their area. Even if shared solar is not available for you yet, if you have a public or jointly-owned property in your neighborhood, chances are there will be a way to start such a project.
Here are a few examples of reasons to consider going solar through a shared public solar energy system.
1. You are renting your property and are prohibited from installing solar onto the roof.
2. Your roof is too small or otherwise physically unsuitable to fit the necessary amount of solar panels you need in order to power your home.
3. Your building is surrounded by trees, tall buildings, or other obstructions that create too much shade.
4. Your roof is needs rapair/replacement in the next few years, but you would rather save money with solar right away, instead of waiting until you replace your roof.
5. You do not have the freedom to install solar onto your property because of building codes, zoning restrictions, homeowner association rules or aesthetic concerns.
6. The cost of community solar in your area is lower than the cost of owning or leasing your own solar panel system.
Community Solar Models and Options
Utility-Sponsored Solar Farm
Many utilities provide their customers the option to purchase electricity from a shared solar farm. The customer may purchase a set amount of electric power at a fixed rate for a long term, such as 15 years. A fixed rate may provide protection from the annual utility rate hikes.
On-bill Crediting Model
This community solar model involves enabling residents and businesses to invest in a portion of a shared solar farm, and receive a credit for that portion of the energy production from the facility on their utility bill. This on-bill crediting, also known as "virtual net metering" reduces a participant's power bill on a one-for-one basis. For example if a participant's share of the plant produces 3kWh of electricity, they will receive 3kWh of solar net metering credits on their monthly electric bill.
Special Purpose Entity (SPE)
With this model, individuals can join in a business enterprise to develop a shared solar project.
Non-Profit “Buy a Brick” Model
In this model, donors contribute to a shared solar installation owned by a charitable non-profit organization.
If you are looking for additional resources to help you start or join a community solar project, or if you want more information about the costs/benefits and legal considerations of community solar, we encourage you to take a look at the following:
Interstate Renewable Energy Council (IREC): Develops and promotes shared program model rules to ensure that shared renewables become more prevelant in the U.S.
Shared Renewables HQ: The central information center for shared renewable energy projects and policy across the U.S.
National Renewable Energy Laboratory's Guide to Community Shared Solar: This guide is a resource for those who want to develop community shared solar projects, from community organizers or solar energy advocates to government officials or utility managers.
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