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Solar energy is growing rapidly in the United States, with one report projecting 16 gigawatts (GW) in new solar installations for 2016, more than double the amount installed the year prior. This will bring U.S. solar capacity to over 40 GW, or about 2 percent of total U.S. power capacity. Much of this surge has come from large-scale utility-owned solar arrays and individual rooftop systems. Community solar systems are an increasingly common third, midsize option that is helping to propel the solar revolution.
Community solar (or shared solar) refers to individually-owned interconnected systems or to a group-owned centralized system up to 20 megawatts (MW) in size. By connecting and aggregating multiple individual rooftop systems, a community can create a shared “microgrid,” which can be integrated with a larger grid. A community-owned centralized solar system (typically ground-mounted) provides electricity to participants that have bought (or been given) panels or shares.
Community solar projects are an important tool to expand renewable energy access. These systems incorporate renters, people living in multi-family buildings, those living where rooftop solar is prohibited; and those with rooftops that do not get adequate sunlight. According to a DOE report, at least 49 percent of U.S. households are not currently able to host a rooftop system for various reasons.
Growing Fast
Community solar has grown rapidly in the past few years. Only 20 MW were online in 2011. Systems totaling 65 MW were installed in 2015, pushing the total installed capacity to more than 100 MW. An industry report forecasts that community solar could reach 1.5 GW by 2020, then grow fourfold by 2025. The majority of installations are concentrated in a few states: Colorado, Minnesota, California, and New York. All four states have legislation that supports community solar.
Embraced by Co-ops
Rural electric cooperatives (co-ops) and their members have been the primary drivers of the recent growth in community solar. Co-ops administer more than two-thirds of U.S. community solar programs, though co-ops only provide 13 percent of the country’s electricity. According to the National Rural Electric Cooperative Association (NRECA), 71 distribution co-ops and four generation and transmission (G&T) co-ops have current or planned community solar projects, with many more expected. In Minnesota alone, 10 co-ops currently administer 13 community solar programs.
Community Solar and On-Bill Repayment
An upfront payment system is the most common formula for utilities when developing a community solar project. In this model, the co-op member or utility customer opts into the program by paying the total cost of the solar panel/share upfront – often before the system is even built. Once the solar system is operational, participants receive a monthly bill credit for the electricity output of the system. A typical projected payback on the initial investment is roughly 20 years.
The upfront payment model is limited to those with the available cash. To broaden access to community solar, some programs now offer a payment plan or “pay-as-you-go” option. With this model, participants pay the utility for the panels over time through their monthly electric bill – no upfront payment needed. This is a form of the “on-bill financing” or “on-bill repayment” model, which has been used by many utility-run energy efficiency programs.
“Pay-as-you-go” participants receives their solar bill credit at the same time, partially offsetting the payments. Payments plans vary from program to program, ranging in length from one to ten years. Longer payment plans reduce monthly payment amounts and increase accessibility, but cause additional complexity for the utility.
About one in four community solar projects offer an on-bill financing option. EESI has case studies on three of these programs:
How EESI can help
EESI provides free support to co-ops and public utilities to develop on-bill financing programs, both for energy efficiency improvements and community solar systems. EESI can help review if such a program is a good fit for the utility, as well provide assistance with program design and implementation planning. To learn more, contact OBF@eesi.org or 202-662-1883.
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