What is community solar? And how can you sign up?
Canary Media’s guide through the dizzying landscape of community solar, a simple concept that can save you money.
8 July 2022
Eager though you may be to power your home or business with local, clean solar energy, you might not be able to install solar panels on your roof. Perhaps you rent your property or reside in a shady spot. Or maybe you can’t afford to invest in solar panels; the average cost of installing a home solar array in 2022 so far is a whopping $20,498. But never fear, a democratized alternative is here: community solar.
According to a recent report by Wood Mackenzie, community solar had a record-setting year in the U.S. in 2021. Here’s what it is — and how to get it.
What is community solar?
Community solar refers to moderately large solar projects — usually up to 5 megawatts — that a number of customers, which can include individuals, organizations and companies, subscribe to or jointly own.
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Instead of putting panels on their own roof or property, a community solar participant taps into the value of a solar system located elsewhere, like on a community center or in a field. The projects, also called community solar gardens or farms, generate energy that’s fed into the grid.
In most community solar projects, the power generated by a solar array is essentially divvied up among subscribers. (Grid Alternatives)
How does community solar work?
A community solar project can be owned and operated by a cooperative. More often, though, projects are owned by private companies or utilities, which offer community members the opportunity to subscribe to a share of the project, sized according to how much electricity they normally use. Once a community solar project is fully subscribed and comes online, its power is typically sold to the local utility.
For their share of the energy sold, each subscriber gets money credited to their electric bills, similar to the credits they would receive if the panels were on their roof. The credits fluctuate month to month depending on how sunny it is; as with all solar, you don’t get paid in the shade.
Those are the basics, but how community solar is implemented — and how much customers save on their electric bills — varies a lot, influenced by state policies and programs. Some states, including Massachusetts, Minnesota and New York, have figured out better systems for community solar than other states (ahem, California).
Will I save money by participating in community solar?
Ideally, yes, community solar subscribers will pay less overall for electricity. Different pricing models for community solar abound, with most promising you’ll save money eventually, if not immediately. Some projects charge subscribers an upfront or monthly fee. Other projects cost the subscriber nothing and offer guaranteed savings.
These latter kinds of projects are “like a reverse Netflix,” said John Moran, managing director at impact investment firm Lafayette Square and head of business development at its community solar venture Reactivate. “People subscribe to Netflix and pay. People subscribe to [these] community solar projects and, essentially, get paid.”
Moran signed up two years ago to subscribe to a project designed this way. “Why wouldn’t I?” he said. “I’ve saved 700 bucks.”
How, exactly, would community solar save me money?
The billing is where community solar gets a little perplexing. A community solar subscriber essentially pays for energy at a lower rate than the utility normally charges. The accounting gymnastics typically involves two bills: an electric bill from the utility and another bill from the community solar provider (or a third-party organization that interacts with subscribers).
The bill from the community solar provider tells you how much energy your subscription generated over the course of a month and thus how many credits you earned. You pay for those credits — usually at a discount of 5 to 15 percent below standard electricity rates — and then they get applied to your electric bill, lowering the amount you owe the utility.
Let’s walk through an example:
- Your electric bill says you used $56 worth of power last month.
- Your solar provider bill informs you your subscription generated $50 worth of credits to be applied to your electric bill.
- You buy the credits at a 20 percent discounted rate, which is $40.
- So you save $10 ($50 of credits minus the $40 you paid for them).
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The discount can be even deeper with some community solar projects catering to low- and moderate-income subscribers.
Moran predicts that the industry will move toward less confusing consolidated billing: Customers would receive a single bill from the utility with the credits already applied.
How is the customer experience with community solar?
The community solar industry, which began around 2010, does have kinks, at times creating a less-than-ideal customer experience. Subscribers might not know when a project actually starts generating energy since customers typically sign up before the projects are built. Solar energy credits might lag behind utility bills — for example, a credit issued in June might not show up on an electric bill until September. The utility might even miss the fact that you have credits at all, as one Canary staff member has personally experienced.
Or the credits might not be applied correctly to bills. Earlier this year, Moran didn’t see credits on his electric bill for three months. Then a backlog of credits appeared en masse, pushing his balance into the negative, meaning he wouldn’t need to pay his utility for months.
“I’m in the industry, so I understand that we’re working through the hiccups,” he said. But a typical customer “would be super-confused and be like, ‘Is this working?’” he said. In his case, it was — just not the way it was supposed to.
Is community solar available near me?
Maybe! Community solar projects aren’t available everywhere, in part because of varying state policies. As of December 2021, 22 states plus Washington, D.C. had policies that support community solar, according to the U.S. National Renewable Energy Laboratory. Robust community solar markets typically spring up in states that have such policies, including virtual net metering, which ensures utilities give customers credits for their solar energy produced offsite, according to Jenny Heeter, senior energy analyst at NREL.
Several other states also have community solar projects that are developed and managed by local utilities, not driven by state policy, according to the U.S. Department of Energy. At the end of last year, 39 states and Washington, D.C., had at least some projects. But almost three-quarters of the U.S. community solar market is concentrated in just four states: Florida, Massachusetts, Minnesota and New York.
Even if projects exist in your state, they might not be open to new subscribers. Some projects have the capacity to accommodate just a few dozen households; they can fill up fast.
How do I sign up for community solar?
First, find an open project near you. You can comparison-shop in your ZIP code on the EnergySage Community Solar Marketplace, where developers pay to list their projects, or you can check the websites of individual providers, such as Arcadia, Nexamp, PowerMarket and SunShare. Searching “community solar near me” could turn up more under-the-radar projects.
Then, compare the terms of different subscriptions, just like you would if shopping for a cell phone or internet provider. A few things to check for:
- Does the project offer guaranteed savings — and if so, how much?
- Is there a cost to sign up?
- Is there a credit score requirement?
- Do you need to qualify as low- or moderate-income to subscribe?
- What’s the contract length?
- Is there a cancellation fee?
Once you’ve decided on a project, sign-up is generally easy. You’ll share your utility account information with the community solar provider so the utility knows whose bill to credit. The whole process might take just a few minutes.
And then, even without panels on your roof, you’ll be putting solar on the grid — and likely saving money in the process.