What is Community Solar Going to Cost?
November 06, 2014 by Sherry Stout
For many people, owning a private solar photovoltaic (PV) generation system is simply not feasible because of costs, siting issues, or housing type (i.e. rental properties or multifamily housing units). Community solar programs—sometimes called solar gardens—provide one way to increase access to the solar market, reduce up-front costs, and allow for optimal siting.
A community shared solar array allows multiple customers to purchase electricity generated by a solar project on a monthly basis. There are several models for this type of program. In most cases, a utility has ownership of the PV system and ratepayers pay a fixed monthly fee based on how much electricity they typically consume and what amount they want to purchase. Individual investors can also support a community solar project by structuring it as a business. Non-profits have also developed a community solar model in which the organization's supporters help finance shares of a PV system through donations.
Community solar projects are becoming more common throughout the United States. In a recent Solar Technical Assistance Team (STAT) survey, 81% of respondents said they were interested in learning more about community solar. After responding to several requests involving these programs, STAT recognized the need to create a simple, first-cut tool that would allow smaller municipal utilities, electric cooperatives, and state and local advocates to financially model a potential community solar project.
This idea led to the development of the Community Solar Scenario Tool (CSST). The CSST allows users to see how various inputs—such as system size, location, and project costs—impact the economics of a project and from both a potential customer's perspective as well as the sponsoring utility. It helps answer questions like, "Would the monthly cost be attractive to potential customers," "How many shares would be ideal," and "What is going to be the average annual cost to the utility for running the program?"
By giving an initial idea of the financial implications for developing a solar garden, the CSST allows decision makers and communities to quickly assess whether or not a community solar project might warrant further investigation. For those who decide to move forward with a project, NREL's System Advisory Model (SAM) provides a next-step for more complex financial modeling.
For additional information on community solar programs, check out A Guide to Community Solar and check back next week when we will feature a guest blog post from one of the tool's creators.