Going Solar Collectively: Guide to Community Solar Projects
November 3, 2021
A home solar installation or commercial solar installation isn’t the only way to go solar. People across the country are taking advantage of community solar projects to share both the costs and benefits of solar installations.
What Is Community Solar?
Community solar refers to solar photovoltaic (PV) projects (or solar panel systems) with multiple owners or subscribers, including homeowners, renters, consumers, businesses, and nonprofit organizations.
People buy into or subscribe to the shared solar panel system, generate solar power for their homes, and then receive credits on their utility bill for any excess energy produced in a process called net metering. The larger their investment in the system, the more energy, credits, and savings they receive.
You’ll hear community solar projects referred to as solar co-ops, community solar gardens, and community solar farms. These projects can be led by state or local governments, municipal utilities, electric co-ops, or investor-owned utilities. Whatever name they go by and whoever leads them, community solar projects are expected to grow in prevalence over coming years.
Note: Be careful not to confuse community solar with group purchasing, in which numerous home or business owners come together to purchase solar panel systems at bulk prices. This is not considered community solar because the installations are private, not shared.
Community Solar Benefits
Community solar projects provide a number of benefits to their customers. For example:
- Net metering enables community solar customers to save money on their electricity bills.
- Community solar enables renters as well as those who can’t install solar panels on their property to go solar. Renters typically aren’t allowed to install solar panel systems, and the investment wouldn’t make sense. Likewise, some homeowners don’t have a suitable roof, wall, or ground area for solar panel installations.
- If you move, you can easily take your solar savings with you. Homeowners have to sell or uninstall and move their solar panels if they change residences. With community solar projects, all you have to do is update your address.
- Community solar is more financially inclusive. You’ll have to be able to make a considerable investment or qualify for a loan in order to purchase a private solar panel system. There’s a much smaller financial barrier with community solar projects, since you can choose the size of your share or pay a monthly fee.
- You don’t have to worry about maintenance. Solar panel installations on your property are your responsibility — and so is the cleaning and solar panel maintenance. With community solar projects, a project manager handles all of this.
- Shareholders are eligible for federal solar tax credits. That means that you can deduct up to 26% of your investment the next time you file your taxes. Unfortunately, this benefit is only available to those who own part of the solar project, not to those who subscribe to it.
- You likely have the option to sell or donate your share. There’s typically no long-term commitment. This is important if you move to a location outside of the community solar project’s boundaries or want to install your own solar panel system down the road.
Customers aren’t the only ones to benefit from community solar projects. They’re also ideal for utilities, primarily because the systems aren’t tied to a specific location. The utilities can strategically locate community solar projects wherever on the grid they’ll get the most benefit out of them.
Many utility companies also see community solar projects as opportunities to better serve their customers and boost engagement with them.
[Related: Are Solar Panels Worth It?]
How Does Community Solar Work?
Community solar projects enable you to share the costs and benefits of solar panel installations. However, community solar projects may function somewhat differently depending on the exact model.
The primary community solar project classifications to be aware of are ownership vs. subscription models and on-site vs. off-site models.
Ownership vs. Subscription
Community solar projects typically offer ownership shares, subscriptions, or the option to choose between the two.
- Ownership: Purchasing an ownership share gives you a stake in the community solar project. You will be entitled to power generation as long as the project continues, with the exact amount depending on the size of your share. The caveat here is that you’ll need the capital to pay for your share upfront. However, being an owner means that you qualify for the federal solar tax credit.
- Subscription: Subscribing to a community solar project involves a monthly fee rather than an upfront investment. The amount that you save on your power bill will always be higher than the monthly fee, but the fees themselves may eventually increase.
Both of these options will help you save on your electricity bill, so the best option for you depends on your specific situation.
The ownership model will likely yield greater savings, but you need upfront capital and will have to sell your share if you move outside of the project boundaries. The subscription model makes more sense for those who don’t want to make an upfront investment or plan on moving out of the area down the road, since you can easily cancel it.
On-Site vs. Off-Site
Community solar projects can either be on-site or off-site:
- On-site community solar projects are created by real estate developers as part of commercial and residential projects. The power that on-site projects generate flows to customers through a private system rather than the grid, enabling them to save money on utility companies’ transmission and distribution fees. However, only those that rent or own property within these communities can take advantage of the solar power generated.
- Off-site community solar projects are those that rely on the local electric grid. Because they’re not limited to a specific community, off-site projects can serve a greater number of people. Off-site projects also enable you to move without giving up your ownership or subscription (as long as you move within the project’s boundaries). Unfortunately, your savings are dependent on your local grid and may not be as high as what on-site projects provide.
[Related: How Do Solar Panels Work?]
Who Is Eligible for Community Solar Projects?
Homeowners, renters, consumers, businesses, and nonprofit organizations in areas where community solar projects are available are eligible to become share owners and/or subscribers. All you have to do is live or work within the project’s service area.
Unfortunately, while community solar is growing, it’s still not available everywhere. 40 U.S. states as well as the District of Columbia offer at least one community solar project. Additionally, policies and programs promoting community solar are in place in the District of Columbia and at least 19 states.
The Solar Energy Industries Association reports that 3.4 gigawatts of community solar power were operational by the end of the second quarter of 2021, and we can expect 4.3 more gigawatts within the next five years. Each gigawatt of solar power can provide electricity for about 186,000 U.S. households.
How to Find a Community Solar Project
The best way to find a community solar project near you is to check your utility and local government websites. If there is a project available nearby, it should be easy to find information and next steps.
Start a Community Solar Project
Solar panel company Freedom Solar provides SunPower solar panels for community solar projects as well as home solar installations and solar installations for businesses. Contact us today to learn more about our solar panels and how we can help you get your community solar project up and running.
Featured image via Unsplash