Everything You Need to Know About Community Solar

Jessica PirroDecember 12, 2019 2211 1

With the solar energy industry evolving, there are more and more trends that are being adopted in the solar power industry. One way that the solar energy industry is evolving is through community solar power.

What You Need to Know About Community Solar!

A community solar panel installation (oftentimes referred to as a solar energy garden), is a solar panel installation that shares its solar energy with more than one property.

Community solar-powered systems can refer to both ‘community-owned’ solar-powered systems and third-party-owned solar power plants whose solar energy is shared by a community.

The primary purpose of community solar panel installations is to allow members of a community the opportunity to share in the benefits of solar power, if they can’t (or prefer not to) install solar panels on their rooftop or property. Those who participate benefit from the solar energy that is generated by the community solar-powered system, which costs less than the price that they would ordinarily pay to their utility.

Community solar panel installations allow homeowners to use solar power, even if they don’t own their solar-powered system.

What are the Benefits of Community Solar-Powered Systems?

Because community solar power is a newer concept, there’s new groups, companies, and even utilities are entering this sector of the solar power industry, and have begun building community solar panel installations. Because of this, anyone considering joining a community solar energy must comparison-shop across all available offers, including rooftop options, to find the one that offers the best value for them.

Community solar panel installations offer a way for really anyone to use solar power, without installing solar panels on their property.

Community Solar Formats

- Ownership: This format allows participants to own some of the solar panels or a share of the solar-powered system. They get to benefit from all of the solar power that is produced by their share of the solar panels or solar-powered system.

- Subscription: This model allows participants to become subscribers and pay a lower price for the solar electricity. Subscribers will not own the panels - they will only buy the power at a reduced rate.

Ownership-Based Community Solar-Powered Systems

When the community solar-powered systems are ownership-based, participants can either purchase their solar panels up-front or finance them through a loan provided by the solar power project developer or their bank. In this way, the ownership-based community solar-powered systems are similar to rooftop solar panel installations, only the solar panel installation will not be done one the participant's property. Instead, the participant will own a designated amount of solar panels in the solar panel installation, or a certain number of kilowatts out of the community solar panel installations total capacity.  

In these programs, participants might only purchase enough shares to meet their annual electricity usage. A matching portion of the project's actual output will be credited to the customer through their electricity bill or some other arranger with the community solar-powered system’s project administrator.

Ownership-based solar energy projects can be complicated to develop and administer, and the ‘ownership’ factor can be a barrier to entry for those who don’t have the means necessary to get involved.

Subscription-Based Projects

In the subscription-based community solar energy programs, participation is going to be more fluid: a third party or a utility will develop and own the project and extend the opportunity to participate to the public. The solar power project will generally be administered by the utility, which will manage participation enrollments and billing.

The program details are going to vary, however, most are going to require no upfront fees to join while offering savings right away. In this case, subscribing to a community solar project is likened to signing up for green power, except instead of paying a premium for clean electricity, participants will pay a lower price for their electricity.

To qualify, there are limits to participation. Participants must reside within the utility’s network area, and their share of power from the project will not significantly exceed their electricity usage.

A benefit to subscription-based programs will allow participants easy entry into and exit out of their scheme. If a subscriber chooses to opt-out or moves to a different utility area, their spot will be opened up to the next aspiring participant in line.

What Community Solar Power is Not

Community solar power is similar to, but distinct from several other vehicles that allow individual investors, households, and businesses to get involved in the quickly expanding clean energy economy.

Here are some of the different projects that are often confused with community solar:

- Group Purchasing: Group purchasing deals allow several households or businesses to bu their individual solar-powered systems at bulk rates through negotiations with the solar panel installation companies.

- Green Power: Green Power arrangement allow a utility’s customers to purchase electricity sources of renewable energy generation plants (mainly hydro and wind). Those who sign up for Green Power aren’t typically doing so to save money, they are doing it because it is the right thing to do. They are paying a premium price for electricity generated by solar or wind farms.

- Crowdfunding/Online Solar Investment Platform: Firms have opened up sources of renewable energy investment to the massed with online platforms that allow virtually anyone to invest in solar panel installation. But returns from these projects may be taxable, where the benefits from a community solar power plant are not.

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