The Bright Future of Community Solar

NIKITA NAIR

In looking at the transition to using 100% renewable energy, it is crucial to see how we can integrate every household into this path. Community solar acts as a bridge from traditional renewable energy to more convenient energy models that can entice customers previously barred from participating in solar energy. Though community solar represents a small portion of the renewables industry, it has been catching on in popularity, growing on average 121% annually since 2010. The implementation of more community solar projects into the current American energy pipeline will serve a dual purpose of better equipping us for the energy transition ahead and effectively saving money for consumers on their energy costs. 

The first question that must be answered is what community solar initiatives even entail. The Department of Energy defines community solar as “any solar project or purchasing program, within a geographic area, in which the benefits of a solar project flow to multiple customers” Essentially, it works by having another entity (rather than an individual household) own solar panels and then sell either ownership of those panels or the electricity produced to individual households. Community solar programs are different from both traditional utility-scale projects and conventional solar options for consumers. When it comes to utility-scale projects (projects with a productive capacity of 10 megawatts or more), there are often a multitude of energy sources (i.e. a mix of renewables and fossil fuels) because the traditional rates are usually not locked against rising electricity prices. There is also a marked change from what it has usually looked like to participate in solar energy. Most are familiar with the idea of installing solar panels on rooftops and then receiving tax credits on their electricity bill. Through community solar programs, individuals can pay for panels that are installed “off-site” but still benefit from the tax credits. 

The current model of installing solar panels on households presents significant logistical and financial barriers to many potential customers. A study by the National Renewable Energy Laboratory estimated that only 22-27% of residential rooftops were physically suitable for the installation of solar panels. Individuals living in apartments, renting their homes, or living in areas where they do not have reliable sunlight are all barred from installing and benefiting from solar panels. Participating in a community solar model also increases the convenience and flexibility for individuals looking to move. If they have installed solar panels in their own home, they cannot continue benefiting from that energy if they move. On the other hand, since community solar is based “off-site”, individuals can move and still participate in the project. There is, then of course, the steep financial cost associated with installing and maintaining solar panels. With community solar, individual households do not have to incur the cost of installing and maintaining solar panels, which can range anywhere from $15,000 to $25,000. Even though the physical cost is no longer the consumer’s responsibility, they can still benefit from tax credits, including the 30% Investment Tax Credit. Clean Energy Renewable Bonds and Renewable Energy Certificates (also referred to as carbon offsets or green tags) are included within a user’s energy bill. Depending on the state, individuals can also be privy to state-specific tax incentives.

The inherent accessibility of community solar programs is behind support to make the transition to renewables more affordable and equitable. In July, the Biden Administration announced that $10 million from the Bipartisan Infrastructure Bill would go towards community solar initiatives and to create community solar jobs in underrepresented communities. Another provision calls for an additional 20-30% tax credit (on top of whatever is already available) for projects benefiting low-income residential buildings and communities. The Biden Administration’s strong backing of community solar programs could see low-income households having a considerably smaller energy bill. According to a study conducted by researchers at George Washington University, low-income households currently spend an average of 8.6% of earned income on electricity, almost 3 times higher than the rate for households considered to not be low-income. Community solar can play a tremendous role in reducing that economic strain on low-income households. Results from the Solar For All program (implemented in Washington D.C) that offered community solar subscriptions to households that were below 80% of the median income reduced the energy burden on consumers by almost 5%. In total, the program saw an offset of 50% of what electricity bills previously cost to consumers. In Massachusetts, average costs for low-income consumers could be reduced by 35%. Communities that have historically faced more challenges with the high economic burdens of traditional energy sources can alleviate those concerns and simultaneously reap the environmental benefits of having more accessible clean energy. 

The biggest concerns still extant with community solar have less to do with inherent flaws and more to do with varying state policy. One of the biggest questions remaining is how providers of community solar can more efficiently engage with consumers. One part of this has to do with the financial benefits; the information can be complicated and muddled considering that community solar incentives are not fully codified at the federal level. Many benefits differ by state, with legislation only present in 22 states. While more convenient in the long run, community solar can be more confusing for individual households to start participating in. There are many different options to join; those owned by utilities, third-parties (most commonly), and nonprofit organizations. It is not quite as simple as going through with one’s usual utilities provider. A report by the L.B.J School of Public Policy at the University of Texas focused on building regional knowledge with local audiences in mind and to build more coalitions between community solar groups in Texas to create unified messages. With community solar currently making up around 3200 mwAC of current capacity and with another projected 5 gigawatts of capacity added in the next five years, it’s important to pay close attention to roadmaps for the future. Though community solar is far from perfect, in opening up accessibility to new populations of consumers, it paves a more equitable path to an entirely renewable future.