Community Solar Finding its Place in the Sun

Blog Post

As solar panel prices plunge and collecting power from the sun increasingly makes both economic and environmental sense, despite the tariffs we wrote about here in February, most of us are seeing solar panels on rooftops of homes and commercial buildings with exponentially increasing frequency. Many of us (yes, even in Cleveland), see large arrays of ground-mounted panels which generate power on the scale of a small utility power plant, at least occasionally.

Even if we don’t know it, most people are familiar with the two traditional flavors of solar power facilities – “rooftop” and utility-scale. For clarity, “rooftop” is usually shorthand for any small-scale installation serving only one or a handful of local off-takers, regardless of whether the facility is actually located on the roof. But a third option is making its way into the market with astonishing pace. It’s called “community solar,” and it’s essentially a hybrid of the other two types.

Think of it like a community garden. Rather than everyone in the neighborhood digging, planting and taking care of their own individual gardens, everyone works together on one large, centrally-located garden with enough space for everyone to grow the same amount of vegetables as they would in their own yard. Everyone wins, because the larger garden takes advantage of economies of scale – everyone pitches in on bulk fertilizer and topsoil, for example. Community solar works the same way. Instead of mounting solar panels on each home, school and business that wants to participate, those owners all mount their panels in one location (or, alternately, buy the power from panels mounted in one location), which requires only one interconnection to the grid and is significantly more cost-effective to install. In addition, nobody has to worry about how much south-facing rooftop space they have or about zoning, structural issues or HOA restrictions. 

It’s easy to see why the total U.S. community solar capacity more than doubled last year, and state and local governments are taking notice, shaping their policies to accommodate and encourage this latest clean energy craze. For example, the Massachusetts SMART (Solar Massachusetts Renewable Target) program, likely going into effect this summer, is one of the first state policies to include specific incentives for community solar installations. Colorado’s GRID Alternatives program focuses on developing community solar installations to serve low-income communities. 

And Minnesota, the perhaps-surprising national leader in community solar, through its Public Utilities Commission, boasts a suite of groundbreaking incentives and arrangements to bring as many people into the community solar fold as possible. Those incentives, combined with enthusiastic Minnesotans, led the state’s largest public utility, Xcel Energy, to multiply its initial 2013 plans for community solar installation by a factor of 20. With over 1,000 community solar projects awaiting approval, Minnesota continues to set an example that commands the attention of other states. 

Importantly, in all three of these cutting-edge states, excess power generated by the community solar facility and sent to the grid is credited to the owners at retail rates (the same rate they pay for power when drawing it from the grid). In many states, the credit for excess power generated is calculated at “wholesale” or “cost-avoided” rates, typically a fraction of the retail rate. Mandating that a utility reimburse owners of solar power facilities at the same rate that it would charge their neighbors for using the excess power is proving to be one of the most important, though controversial, incentives for solar power development. See our post on Net Metering Trends for more on this topic, and stay tuned as we monitor the rise of community solar and what it means for the solar power industry. 

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