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Community Solar

Community solar, also known as shared solar or solar gardens, is a solar energy deployment model that allows customers to buy or lease part of an offsite shared solar PV system. This arrangement lets customers enjoy advantages of solar energy without having to install a system on their own residential or commercial property. Community solar projects provide distributed solar access and benefits to customers who:

  • Have insufficient solar resources (e.g. shading, roof size, etc.)
  • Do not own their homes
  • Are unable or unwilling to install solar for financial or other reasons.

Participants typically receive a monthly bill credit for electricity generated by their share of the solar photovoltaic (PV) system, as if the system were located on their premises.

Background

As of April 2015, 13 states and Washington D.C. have enacted policies that support community solar. Shared solar projects are located in 25 states, plus Washington D.C., and represent 172 MW of total installed capacity.

A 2008 NREL analysis estimates that only between 22%–27% of residential rooftops are suitable for onsite distributed PV systems. Community solar is one model for addressing the lack of solar PV access that many U.S. customers face.

Implementation Issues

Other clean energy policies interact with community solar.

  • Net metering is a commonly used mechanism that credits distributed generation owners for the power that their systems contribute to the grid. Community solar participants can be credited through net metering or alternative arrangements such as value of solar tariffs; group billing; or joint ownership. Eligibility depends on utility and state-level requirements.
  • Virtual net metering (VNM) allows customers to receive bill credits—in other words, offset their loads—with generation from an offsite solar system. Some form of VNM must exist for community solar to work properly so that multiple customers can offset their electricity loads from a system located elsewhere.
  • Tax credits, like the federal investment tax credit (ITC) for solar PV systems, may apply differently to community solar participants depending on the structure of the community solar program. Variables include whether the participant owns the panels or output ( in kilowatt-hours) and if a participant claims an individual or commercial tax credit. There is still uncertainty regarding the exact circumstances in which a community solar participant can claim the ITC.
  • Depending on their design, some community solar projects may have to comply with U.S. Security and Exchange Commission regulations.

Benefits

Community solar projects can benefit customers, utilities, and third-party entities in various ways, such as providing:

  • Greater electricity rate stability and potential bill savings for program participants
  • Wider solar accessibility for different electricity customer classes, especially if portions of projects are set aside for low-income customers
  • Projects that can be sited in specific locations to provide grid benefits
  • Energy generated from community solar projects that can contribute to Renewable Portfolio Standard compliance (To do so, utilities must retain ownership of the renewable energy credits, which represent the environment components of this energy generation.
  • The possibility for utilities to recover a larger portion of program costs from participating customers rather than nonparticipating ratepayers, compared to other incentive programs. This recovery will depend on the pricing structure employed.

Design Best Practices

Community solar projects can be owned by utilities or third-party developers and can be located on public buildings, private land, brownfields, and other suitable areas. There are many program designs that vary by type of bill credit (usually kilowatt-hours or dollars), contract length, cost of participation and financing options, eligibility, number of participants allowed, and products offered (e.g., panels or generation). Typically, program participants who move within the same utility service territory or county can retain their community solar share, but options for selling or donating program subscriptions are available. Community solar projects and programs can also be designed with set-asides for low-income customers in order to expand solar PV accessibility.

Sources

Denholm, Paul. and Robert Margolis. "Supply Curves for Rooftop Solar PV-Generated Electricity for the United States." NREL/TP- 6A0-44073. Golden, CO: National Renewable Energy Laboratory, 2008. Accessed 2014: www.nrel.gov/docs/fy09osti/44073.pdf

Feldman, David, Anna M. Brockway, Elaine Ulrich, and Robert Margolis. 2015. Shared Solar: Current Landscape, Market Potential, and the Impact of Federal Securities Regulation. National Renewable Energy Laboratory and U.S. Department of Energy. Accessed July 30, 2015. www.nrel.gov/docs/fy15osti/63892.pdf

National Renewable Energy Laboratory. 2015. Community Shared Solar: Policy and Regulatory Considerations. Accessed July 30, 2015. www.nrel.gov/docs/fy14osti/62367.pdf.
Shared Renewables HQ. 2015. "Community Energy by State." Accessed July 30, 2015. www.sharedrenewables.org

U.S. Department of Energy. 2015. "Community Renewable Energy." Green Power Network. Accessed July 30, 2015. http://apps3.eere.energy.gov/greenpower/community_development/community_solar_faq.html

Additional Resources

The following tools and resources about community solar may be helpful.