Clean Energy Strategies
Low- and Moderate-Income Solar
Community solar, also known as shared solar or solar gardens, is a distributed solar energy deployment model that allows customers to buy or lease part of a larger, off-site shared solar photovoltaic (PV) system.
Community solar arrangements allow customers to enjoy advantages of solar energy without having to install their own solar energy system. Community solar projects provide an alternative to rooftop PV systems for customers who:
- Have insufficient solar resources or roof conditions to support a rooftop PV system (due to shading, roof size, or other factors)
- Do not own their homes or buildings
- Are unable or unwilling to install an on-site solar PV system for financial or other reasons.
Community solar subscribers typically receive a monthly bill credit for electricity generated by their share of the solar PV system, as if the system were located on their premises.
As of December 2021:
- Community solar projects are located in 39 states, plus Washington, D.C.
- 22 states, plus Washington, D.C., have policies that support community solar.
- Community solar projects represent more than 3,200 megawatts alternating-current (MW-AC) of total installed capacity.
- About 74% of the total market is concentrated in the top four states: Florida (1,636 MW-AC), Minnesota (834 MW-AC), New York (731 MW-AC), and Massachusetts (674 MW-AC).
Sharing the Sun: Community Solar Deployment, Subscription Savings, and Energy Burden Reduction presents U.S. community solar market trends through 2020, with content on energy burden reduction potential. The previous version, Sharing the Sun: Understanding Community Solar Deployment and Subscriptions, presents U.S. community solar market trends through 2018.
NREL's list of community solar projects provides the most recent details on project sizes and locations.
A 2015 NREL and U.S. Department of Energy analysis estimated that 50% of residential and commercial rooftops are suitable for on-site distributed PV systems. Community solar is one model for addressing the lack of solar PV access that many U.S. customers face.
Other clean energy policies interact with community solar, and depending on their design, some projects may have to comply with U.S. Security and Exchange Commission regulations.
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, also referred to as "remote" net metering, allows customers to receive bill credits for generation from an off-site solar energy system. Some form of virtual net metering 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 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 investment tax credit.
Based on design details, community solar projects can benefit customers, utilities, and third-party entities, by 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
- Grid benefits by siting projects in specific locations
- Renewable portfolio standard compliance through increased renewable energy generated from community solar projects (to do so, utilities must retain ownership of the renewable energy credits, which represent the environment components of this energy generation).
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).
Common ownership arrangements include:
- Utility-sponsored model: utility owns or operates a community solar array and utility customers may voluntarily participate.
- Special purpose entity model: individuals come together to form a business enterprise to develop a community solar project, which allows the business entity to take advantage of state and federal tax incentives.
- Nonprofit model: a nonprofit entity administers a community solar project to benefit members or donors.
Typically, program participants who move within the same utility service territory or county can retain their community solar share, or options for selling or donating program subscriptions may be available. Community solar projects and programs can also be designed with set-asides for low-income customers in order to expand solar PV accessibility.
Sharing the Sun: Community Solar Deployment, Subscription Savings, and Energy Burden Reduction, NREL Presentation (2021)
3 GW and Growing: Trends in the Solar Community Market, Recording of NREL Webinar (2021)
Equitable Access to Community Solar: Program Design and Subscription Considerations, NREL Fact Sheet (2021)
States with Community Solar Policy Updates and Capacity Growth Potential, NREL Presentation (2020)
Sharing the Sun: Understanding Community Solar Deployment and Subscriptions, NREL Presentation (2020)
Sharing the Sun: U.S. Community Solar Data and Cost, Recording of NREL Webinar (2020)
Community Solar 101, NREL Presentation (2020)
Up to the Challenge: Communities Deploy Solar in Underserved Markets, NREL Technical Report (2019)
Design and Implementation of Community Solar Programs for Low- and Moderate-Income Customers, NREL Technical Report (2018)
Modeling the Cost of LMI Community Solar Participation: Preliminary Results, NREL Presentation (2018)
Low-Income Community Solar: Utility Return Considerations for Electric Cooperatives, NREL Technical Report (2018)
Focusing the Sun: State Considerations for Designing Community Solar Policy, NREL Technical Report (2018)
Project Summary: Community Solar Stakeholder Impacts in Cook County, Illinois, NREL Technical Report (2017)
Virginia Solar Pathways Project. Economic Study of Utility-Administered Solar Programs: Soft Costs, Community Solar, and Tax Normalization Considerations, NREL Technical Report (2016)
Shared Solar: Current Landscape, Market Potential, and the Impact of Federal Securities Regulation, NREL Technical Report (2015)
Community Shared Solar: Policy and Regulatory Considerations, NREL Brochure (2015)
The following tools and resources about community solar may be helpful.
Community Solar Market Trends, a U.S Department of Energy website that visualizes market status data by state
Join the National Community Solar Partnership, a U.S. Department of Energy Office of Energy Efficiency and Renewable Energy website
Community Solar Business Case Tool, a webpage published by Elevate that contains a flexible financial model for community solar
A Guide to Community Shared Solar: Utility, Private, and Nonprofit Project Development, a report published by the U.S. Department of Energy's SunShot Initiative
Model Rules for Shared Renewable Energy Programs, a website published by the Interstate Renewable Energy Council (IREC)
Community Solar Basics, a website published by the U.S. Department of Energy Office of Energy Efficiency & Renewable Energy
Utility Community Solar Handbook, a handbook published by the Solar Electric Power Association