Shared renewable energy arrangements allow several energy customers to share the benefits of one local renewable energy power plant. When the power is supplied strictly by solar energy, it is sometimes called “community solar.” The shared renewables project pools investments from multiple members of a community and provides power and/or financial benefits in return.
The next five years will see the U.S. community solar market add an impressive 1.8 gigawatts, compared to just 66 megawatts through the end of 2014.
Effects of Community Solar Programs provided by a panel of surveyed utility participants:
- Potentially meet policy requirements at lower costs: A community solar program may be a way to help meet Renewable Portfolio Standard (RPS) goals or requirements at lower costs relative to customer-sited systems.
- Improved customer equity: Community solar can potentially address the issue of subsidization of distributed solar customers by non-participants, under circumstances where there remains an imbalance in credits and charges to customers with distributed solar. A program can be designed so that participating customers support the full cost of the program and non-participating customers are held neutral.
- Potential distribution system benefits: If strategically located, community solar arrays could provide distribution system benefits.
- Economic Development: Supporting regional solar PV industries and keeping financial benefits local insures economic development.
- Lower and more equitable incentive requirements: Larger-scale community solar systems are more cost effective than individual; the result may improve the ability of rate payers to deploy more solar for a lower total investment.
- A broader pool of customers can participate in solar: community solar programs can help their customers overcome both physical and financial barriers to install solar on their property, including rental properties, properties limited by shading, customers with lower credit scores, customers with lower incomes and properties with unsuitable roof orientation or design.
- Customer satisfaction and engagement: A community solar program can get customers more positively engaged with the utility and thereby, enhance customer relationships and the customers’ solar experience. Additionally, community solar programs enable customer choices in their electricity sources with similar benefits to third-party or customer-owned systems.
- Provide other customer services: Utilities are energy organizations not tethered solely to solar and are able to bundle community solar with other services such as demand response and energy efficiency. However, this is a largely untapped market.
Market Research Conclusions
As of the end of August 2015, SEPA was tracking 68 community solar projects in operation across the country, and 13 states and the District of Columbia have enacted legislation to promote community solar development. About 80 percent of these projects are under 1 megawatt (MW).
About 73 percent of the organizations responding to SEPA’s community solar survey charge subscribers an upfront fee to buy into a project; but as solar costs have dropped, so have upfront fees, from $5 per Watt in 2011 to $3 per watt in 2015.
Initial market research shows that consumers are interested in community solar, but are looking for programs with flexible commitments — such as short-term contracts and transferability. Some would also prefer the projects be located at remote locations where they don’t have to see them.
“Utilities increasingly see community solar as a low-risk way to gain experience in integrating solar onto the grid while meeting customer demand for clean energy,” said John Sterling, SEPA’s Senior Director of Advisory Services.