Editor's note: The following is a guest post from Natacha Kiler, a marketing and communications professional with extensive experience in the solar industry. If you or one of your colleagues is interested in submitting a viewpoint article, please review these guidelines.
Community solar is the easiest way for people to get low-priced and clean electricity. It represents huge growth potential for all sorts of solar companies. And it can be the difference between a utility losing or retaining its customers.
That makes community solar one of the most realistic and economically viable ways to avoid the 2° C limit for global warming. Yet, within the general population, almost no one knows about community solar. And it’s surprising how many energy professionals get a glazed look in their eyes and nod ignorantly when they hear the term “Community Solar”.
At a minimum, everyone should know that community solar energy systems are not located on the energy user’s roof or property. Instead, the solar arrays are remotely located and grid-connected, they commonly feed electricity into existing transmission lines or substations. Community solar is also known as “shared solar” or even “roofless solar”, and arrays are called “solar gardens”. And utilities like them more than behind-the-meter rooftop solar systems for a variety of reasons.
Each Community Solar program differs by state and utility territory, but here are five key program differences that you should be keen on knowing:
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Who markets the community solar program? It’s either the utility or an independent solar developer. Or sometimes a developer works with the utility to provide white labeled community solar services and/or software.
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What are the size limits? Residential and commercial energy buyers are limited to a percentage of their prior year energy usage — like 50%, 100%, or 120%. Most programs require 5-10 customers minimum, and each customer may not be allowed to take more than 40% of the total system output.
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What’s the economic value proposition? Community solar customers are typically compensated through a solar credit on their utility bill, or perhaps a line item payment. Community solar can be a premium product, where customers initially pay 1-3 cents more than they would for brown power but save in the long term. Or, it can be an immediate savings product where the customer starts saving money right away because the utility bill credit is more than the cost of community solar. Depending on future electricity prices, price escalators, and length of contract term, the long-term value of the community solar can be calculated in the thousands.
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REC treatment: The green attributes (or Solar Renewable Energy Credits) can be retired upon production by the utility, sold separately from the energy, or can be given to the customer. The REC treatment affects if/how, you can legally describe and market the (“solar”) energy.
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Term length and Contract Length: When offered by a utility, contract terms can be pretty short — like one year, but customers have the option to subscribe for 10 years, 20-25 years, or the life of the system. When offered by solar developers, there is usually a 20-25 year contract term with various contract outs.
According to SEPA’s community solar report, as of August 2015, there were 68 active community solar programs; and 24 of those were in Colorado, Massachusetts and Washington. According to SEIA, 4 states (California, Colorado, Massachusetts and Minnesota) are expected to install the majority of community solar over the next two years. SEIA also says that community solar market will add an impressive 1.8 gigawatts in the next five years, compared to just 66 megawatts through the end of 2014.
A lot of solar companies are also exploring opportunities in New York, but there are projects and programs popping up in states that you might not expect like Kansas, Wisconsin, Maine, and Nebraska (where there is neither enabling or disabling legislation). Within the competitive landscape, there are a few pure play community solar companies that do everything from land development to O&M and customer service, but there are also solar EPCs getting into the space and new types of players. Of course, shared solar models and services continue to evolve and improve.
Personally, I expect more utility companies to embrace community solar and try to do their own projects because it is one of the easiest ways for utilities to meet their RPS goals without sacrificing relationships with existing customers. Ever since I sat in on SEPA’s community solar focus group in Denver, I’ve been telling people that I’d bet that 50% of utilities in the country will have a community solar program in the next 5 years and that 80% of utilities will have a program in the next 10 years. Any takers?
Natacha Kiler has been helping solar companies, like SunEdison and Sol Systems, grow from startups into industry leaders since 2007. She recently relocated to sunny Colorado and helped SunShare pioneer the path for community solar.
