Residential solar power use has grown exponentially in the U.S. over the past two decades. Solar power generation is now the fastest-growing source of electricity.¹ What was once just a ray of hope (pun intended) now sits alongside wind and hydroelectric as the most used form of renewable energy. But as much as we want to see solar panels on every single roof, that’s not quite possible.
Solar panel systems have remained out of reach for roughly 75 percent of American households², for a variety of reasons. Renters, apartment-dwellers, and people with homes that can’t accommodate solar installation have all lacked access to the energy source – or at least they did, until the advent of something known as community solar projects. And not only do community solar projects make solar power available to more people, but they also have the added benefit of strengthening the grid and preventing outages.
What Are Community Solar Projects?
Community solar projects, which are sometimes called solar gardens or shared solar, are a solar energy distribution model where participants purchase or lease part of a shared, off-site photovoltaic system. They enable groups of people who can’t or don’t want to purchase their own solar systems to come together and share in a larger, more cost-efficient solar power system. To be a little more technical, the U.S. Department of Energy defines community solar as any solar project or purchasing program within a geographic area that’s shared by multiple properties.³ Think of it like buying a solar panel system for your house, business, or farm, except you’re going in on the deal with several friends, and the equipment is offsite.
Community solar projects offer many of the same benefits of having your own solar system, including lower electricity bills, an element of energy independence, and net-metering — that’s when you produce energy that actually supplies the national grid. We’ll get more in-depth into that a little later.
Facts About Community Solar Projects
According to the National Renewable Energy Laboratory, the market status of community solar as of December 2020 can be summed up as follows:⁴
- Community solar projects exist in 39 states and Washington, D.C.
- 22 states and Washington, D.C., have policies to support community solar.
- Community solar accounts for nearly 3,300 megawatts of alternating current of the total installed capacity.
- Four states hold over 70% of the market: Minnesota, Florida, Massachusetts, and New York.
How Do Community Solar Projects Work?
You might be thinking that community solar projects sound like an exciting development and are wondering how to get involved with one. Do you just have to find a group of friends who want to split a solar panel system? Thankfully, no. It’s typically a lot easier than that. The first step is to research what community solar projects (if any) exist in your area.
As of 2020, 39 states and Washington DC have developed third-party markets for community solar programs — so they’re the first place to look. Outside of those states, community solar programs are managed by the local municipal and cooperative utility companies. Once you know what’s around you, the next thing to understand is how they operate. Community solar projects and programs are typically offered in two formats: ownership and subscription-based services.
Ownership-Based Community Solar Projects
An ownership model is when participants purchase a set number of panels in the array or a certain number of kilowatts from the system’s capacity. Typically, you’re only able to buy the equivalent of your actual electricity usage. Excess output goes to the grid and is credited to your electricity bill.
Subscription-Based Community Solar Projects
Subscription-based community solar projects are the most common and popular option. In a subscription-based model, participants don’t own panels or a share of the project but rather join the service and simply pay for electricity. It’s a little like signing up for a green electricity plan with the electric company, but instead of paying a premium for renewable electricity, community solar subscribers usually pay less.
What Are the Benefits of Community Solar Projects?
There are two primary benefits of community solar. First, community solar projects make it possible for more people to access the benefits of solar power. Second, people who participate in community solar projects can save money on their monthly electricity bills.
Community Solar Projects Make Solar Accessible to More People
Whether it’s the cost of installation, living in an apartment or rental unit, a shaded rooftop, or other aspects of the property that prohibit solar panels, community solar makes clean power available to people who may otherwise not have access to it. Since you don’t need roofs that accommodate solar panels to participate in a community solar project, it’s perfect for renters and people living in shared housing. And if subscribers move to a new home in the same service area, they might be able to continue community solar sharing, or sell or donate their subscription.
Community Solar Projects Save Money
Participating in a community solar project is an opportunity to invest in the environment’s future and make responsible energy consumption choices. It’s also a chance to save on your energy costs and enjoy lower monthly electric expenses. The savings can range from a few percentage points to as much as 15 percent less compared to purchasing from a retail electric provider. Terms vary by program or state, but most participants in a community solar project receive two bills. The first is from the actual community solar program for their share, and the second is from the utility company for any additional energy consumed.
Often, because of virtual net metering, participants in a community solar project receive credits from the electric company for the energy their share of the community solar project has provided to the grid. The relationship between community solar projects and the power grid is an important one, so let’s explore that more in-depth.
How Does Community Solar Improve the Grid?
So we know that community solar projects are valuable for making solar power available to more people and empowering them to experience all the associated financial savings. But that’s not the only benefit of these systems. Community solar projects help improve the reliability and overall strength of the grid by contributing electricity that, in turn, lowers the demand curve, alleviates grid stress, and reduces the cost of upgrading and maintaining the grid.
You might remember how in Texas last winter, the grid’s reliability was an extremely hot topic during the cold weather that tested its capabilities. Equipment upgrades, diversification in energy production, and other strategies can help to improve grid stability. Community solar projects are an essential component of that toolset.
What Is the Grid?
In order to lay a solid foundation for the information ahead, let’s sidestep for a sec and talk about what the grid is and how it works. It’s a term we’ve all heard, but let’s define it for the sake of completeness and clarity. The grid is the network of electrical generation facilities, distribution lines, voltage converters, distribution channels — all of it. The interconnectedness of all electrical creation and distribution is the grid.
Wait a Sec, If I have Solar, Do I Need the Grid?
In short, usually, yes. Disconnecting completely from the grid is possible, but it’s not what most people do. First of all, when the sun isn’t shining, your solar cells can’t generate electricity. So staying on the grid is helpful for those on-demand moments. Second, if you’re disconnected from the grid, you can’t contribute to the grid. And that contribution is where a lot of the cost-savings are found. It’s also what makes the grid more stable.
Community Solar Projects Reduce Grid Demand
Every kilowatt-hour you’re able to generate and use yourself is one more that doesn’t have to come from the grid. Multiply that over many households and many community solar projects and it’s easy to see why these policy initiatives can have a major impact.
Community Solar Projects Supply Electricity to the Grid
Solar panels generate electricity whenever the sun is shining on them, and it’s often more than what the participants in the community solar project need. That’s when you begin to provide the grid with power and reduce the power plant’s need to meet demand.
Community Solar Projects Reduce Grid Stress
Because we can’t see electricity, it’s easy to think of it in an abstract sense but, in reality, it’s a lot more like transmitting water. A lot has to happen in order for water to come out of the faucet when you turn the handle. Electricity is the same. It must be generated, converted, transmitted, stored, distributed, and so on. Despite being invisible, there’s a very real supply chain at work. Using your own solar lessens “wear and tear” on the grid, and that can reduce maintenance and upgrade costs.
The Future of Community Solar Projects
Community solar projects are relatively new and small, but it’s a sector of the industry that’s snowballing. Presently, a few states — Minnesota, Massachusetts, and New York — are leading the pack. But the Solar Energy Industries Association reported that 2019 was the third year in a row with 500+ megawatts of installations. Additionally, other states, like Illinois and New Jersey, are expanding initiatives. At the start of 2020, the United States had roughly two gigawatts of community solar projects in operation out of a 76-gigawatt total from all solar plants.⁵
The outlook for community solar is positive. One of the most promising efforts is due to the National Community Solar Partnership initiative spearheaded by the U.S. Department of Energy. It’s making community solar a reality for everyone and has the goal of bringing community solar to five million American households by 2025. A move that will save about a billion dollars.⁶
Are You Interested in Community Solar?
This article is part of the Chariot University series that seeks to educate and inform consumers about the electricity industry and the options that are available to them. Did you find it helpful? Check out the others in the series to learn more about solar power, the grid, and other aspects of retail electricity that affect us all.