Community Solar

NREL conducts market analysis, provides technical assistance, and develops tools and resources to accelerate equitable access to community solar.

Community solar is a solar energy deployment model that allows customers to buy or lease part of a larger shared solar photovoltaic (PV) system.

The U.S. Department of Energy (DOE) defines community solar as any solar project or purchasing program, within a geographic area, in which the benefits of a solar project flow to multiple customers such as individuals, businesses, nonprofits, and other groups. In most cases, customers benefit from energy generated by solar panels at an off-site array. 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.

Community solar arrangements allow customers to enjoy advantages of solar energy without having to install their own solar energy systems. 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.

In a 2024 study, NREL estimated the technical potential for community solar in the United States, finding that community solar could theoretically grow to serve all residential electricity customers who are unable to adopt behind-the-meter solar, including low- to moderate-income households. Through this analysis, NREL found that 42% of households and 44% of businesses are unable to access behind-the-meter solar, which is lower than previous estimates.

Market Status

As of December 2023:

• Community solar projects are located in 44 states, plus the District of Columbia.
• 23 states, plus the District of Columbia, have policies that support community solar.
• Community solar projects represent more than 7,300 MW-AC of total installed capacity.
• About 75% of the total market is concentrated in the top four states: Florida (2,083 MW-AC), New York (1,570 MW-AC), Massachusetts (1,005 MW-AC), and Minnesota (875 MW-AC).

Since 2018, NREL has collected and analyzed data on the community solar market in the U.S. through its Sharing the Sun initiative. Sharing the Sun: Community Solar Deployment, Subscription Savings, and Energy Burden Reduction presents U.S. community solar market trends through 2023, with content on energy burden reduction potential. NREL's list of community solar projects, updated through 2023, provides the most recent details on project sizes and locations.

Implementation Considerations

Other clean energy policies interact with community solar; 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.

Benefits

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)
• Meaningful benefits of community solar, as defined by DOE, including equitable access and consumer protections, meaningful household savings, increased resilience, community-led economic development, and solar workforce development.

Program and Project Design

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. Program designs 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 to expand solar PV accessibility.

Publications

Browse all NREL publications related to community solar in the NREL Publications Database.

See the National Community Solar Partnership playlist on the NREL Learning channel on YouTube for access to a list of relevant videos.

Additional Resources

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

DOE's National Community Solar Partnership, led by the DOE Solar Energy Technologies Office, includes community solar basics, market trends, and program initiatives such as technical assistance, States Collaborative, Community Power Accelerator, Clean Energy Connector, and more.

National Community Solar Partnership, DOE Fact Sheet (2020)

Municipal Utility Community Solar Workbook and Online Course, American Public Power Association, U.S. Department of Energy, and National Renewable Energy Laboratory (2022)

The Screening Tool for Equitable Adoption and Deployment of Solar is a database and mapping tool with a user guide designed to promote clean energy investments for low-income communities across the U.S.