Wednesday, April 17, 2024

Is Community Solar A Good Deal

How Is The Us Department Of Energy Solar Energy Technologies Office Improving Community Solar

Developers Deals With Community Organizations Under Fire As Solar Farm Moves Closer To Approval

SETO is advancing community solar through the National Community Solar Partnership, which is a coalition of community solar stakeholders working to expand access to affordable community solar to every American household by 2025. Partners leverage peer networks and technical assistance resources to set goals and work to overcome persistent barriers to expanding community solar access to underserved communities.

SETO also funded the Solar in Your Community Challenge, a prize competition that worked to expand solar electricity access to all Americans, especially underserved segments such as low- and moderate-income households. The challenge supported teams across the country to develop projects or programs that expand solar access to underserved groups, while proving that these business models can be widely replicated and adopted by similar groups. Learn more about SETOs work to increase solar access and affordability.

To view specific SETO community solar projects, search the Solar Energy Research Database.

Using The Community Solar Garden Financial Decision

While we are unlikely to know with certainty how electricity rates will change over the next 25 years, we can use a decision tool to help us understand the financial impacts of a CSG subscription in future years. You can use the tool online to test scenarios, or download the tool and save your work if you have Excel on your computer.

With your assumptions, you can test your potential savings of a solar garden subscription, depending upon the rate of escalation that actually occurs over the next 25 years. You can use and download the free tool, in order to test how your subscription might work out for you at the following link:

, and keep reading to learn more.

A screenshot from the tool. Click to use and download it.

Below is Figure 3, which was generated by the decision tool. It shows how electrical rates would change over time for the case of a subscriber reserving 800 kWh per month, starting at an Applicable Retail Rate of $.127 per kWh and a $.02 per kWh REC. The graph compares billing rates for CSGs with a 2.75% escalation, average Minnesota annualized electric price rate of change from 2001-2014 of 3.7%, and a 3.25% tested potential utility escalation rate. The amount of customer savings due to subscription in a CSG is represented by the gap between the green line, testing the possible 3.25% utility rate and the red line, showing the schedule of offered prices by the CSG with the 2.75% escalation.

Figure 3

You Pay For The Solar Electricity Generated No Matter What

With a PPA, you pay a fixed rate for solar electricity. But thereâs a big difference between a solar PPA bill and the one from your utility company: you donât pay the solar company for how much electricity you use, but how much you generate.

Letâs say that in one month your solar panels generate 500 kWh of electricity, but your house only uses 400 kWh. In the normal case, youâd get a bill for 400 kWh from your utility company.

Not so with a solar PPA. You get billed for the 500 kWh of electricity that the solar panels generated, even though your house used less than that.

The solar system will be grid-connected, and any solar electricity you donât use will be sent into the grid. You will receive a credit for that electricity, but the size of that credit will depend on whether you have net metering or net billing. Because of this, any excess generation could be a financial liability for you.

A system should normally be sized to generate no more than 100% of your annual usage – and many utility companies place restrictions on this – but if you decide to do energy-saving measures such as installing a smart thermostat to make your air conditioning use more efficient, it wonât really benefit you when you have a PPA because your monthly solar bill reflects your generation, not your consumption.

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Little Or No Tax Benefit

Since the solar industry is booming, the tax credits or benefits are lowering. These benefits were used as a way to assist in solar energy development and produce greener energy.

The solar garden developers and commercial entities associated with solar industry use these credits to complete their community solar projects.

However, this facility is not available to the subscribers or they cant take advantage of these tax deductions.

Solar Rating Is Irrelevant


If you want to install a rooftop solar array, it is necessary to know the sun score or solar rating of your property. This relates to the time for which sun shines on your roof. The solar rating also explains the intensity of the sunrays.

It helps to analyze how much power one can generate through a rooftop solar array. However, the subscribers of the community solar garden dont require any kind of solar rating.

As long as the solar garden receives the sunlight, you are good to use this facility.

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Is There Feed In Tariff In Tennessee

No, unfortunately not. To be honest, Feed In Tariffs are still as rare as hens teeth here in the U.S.

But there are still some performance-based payments available, courtesy of good old TVA.

If youre paying a utility or electricity co-op in their area, you could tap into these.

Its all part of the Green Providers Program weve already mentioned. Right now,its worth an extra 2 cents for each kWh you send to the grid.That premium payment only lasts for 10 years. But that could add up to hundreds of dollars for a mid-sized system.

Why Would You Chose A Solar Lease

When you sign a contract for a solar lease or PPA, you dont pay for the cost of the equipment – youre pay to use them. In other words, its like a rental agreement. This can be appealing because the average upfront cost when you purchase a system is several thousand dollars.

Another advantage is that at the start of your lease or PPA, you should pay less for electricity than you did before.

One last possible advantage is that if you dont have enough tax liability to take advantage of solar tax credits, such as the 26% federal tax credit, a solar lease or PPA might make financial sense for you.

I said that you should pay less for electricity with a lease deal, but thats not always the case. In fact, due to escalator clauses in most contracts you might find yourself in a losing situation where you end up paying more for electricity than you did before!

This is one of the reasons why two states attorneys general have sued Vivint Solar, one of the largest companies in this market. More about that later.

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Questions To Ask With A Lease Or Ppa

The SEIA provides a thorough list of items that should be disclosed in a solar lease contract. We recommend printing it out and discussing it with your installer. In addition, here are some key questions to be sure to ask:

  • What is the term of the agreement?
  • What fees or downpayments are due at signing?
  • Who receives the solar tax rebates for the system?
  • What happens if I need to repair my roof?
  • What happens if I sell my home? Is the agreement transferable?
  • Who is responsible for maintenance, repair, and monitoring?
  • What happens if the system generates less power than planned?
  • With a lease: How much does my lease payment increase over time?
  • With a PPA: How much does my per-kWh rate increase over time?
  • With a PPA: Is there a monthly fee? Does it increase over time?
  • Is there an option to end the contract early? Is there a termination fee?
  • Is there an option to purchase the system at the end of the term?

Ppa Option On Tennessee

Community Solar Is Bringing Renewable Energy to Everyone

This is the other approach for going solar with no upfront cost. PPAs are similar to leases, but rather than paying a fee to lease the panels from a third-party, youre only paying for the power that they produce.

No hassles of ownership. No worries about performance. And no big down-payments.

And while Tennessees ambiguous law has made them less common than leases and loans, theyre still up for grabs by the states homeowners.

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Tennessee Solar Power Incentives Tax Breaks And Rebates

As weve already said, Tennessees legislators havent really been keeping their eyes on the ball, when it comes to solar. In fact, they dont even seem to have noticed that theres a new energy kid on the block.

As a result, state incentives, tax breaks, and rebates are pretty thin on the ground in Tennessee.

Thats not the case with the states main utility, the Tennessee Valley Authority.

And whatever power coop is sending your bill, its likely the TVA will be the ones actually providing the power.

Lets run through exactly whos offering what to whom.

My Experience With Community Solar: Excessively Complicated And Frustrating

To unleash the power of community solar, developers need to step up their marketing game.

Community solar can be a confusing process. Developers need to do better.

For cleantech and renewable energy advocates, the steady rise of community solar is the feel-good story of the last couple of years. Over the last 24 months, the sector has grown at an annual rate of 112 percent there are currently 734 megawatts of community solar capacity installed in the U.S., and more than half of that was installed in 2017.

Despite this momentum, community solar has yet to reach a clear breakout point and applying old marketing and sales strategies to the acquisition of community solar subscribers is a big reason why.

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Community Solar Customers Are Often Not Eligible For Solar Incentives

Many people who invest in a community solar program do so under a subscription model with this pricing model, you dont own any solar panels at the farm, but rather pay for electricity generated at the solar farm at a rate thats typically lower than what youre paying your utility company. Many solar incentives are only available to people who purchase and own a solar panel system with a community solar subscription, because you dont own any part of the solar farm, youre not eligible for solar incentives like tax credits or rebates, as your community solar company or developer is taking advantage of those incentives themselves.

The exception to this rule is if youre participating in a community solar ownership model, which means you purchase and own a specific share of a community solar farm. While this program type is less common than subscription programs, those who participate in an ownership program may be eligible for federal and/or state-specific solar incentives, but it is not guaranteed.

What Other Factors Should I Consider

Community Solar vs. Rooftop Solar: a Full Comparison ...

Installing rooftop solar may have other impacts beyond energy savings.

  • It is considered a major renovation to your home. If your home is an older building, your roof may need repairs or even an entire roof replacement before solar panels can be installed. Its a good idea to have a professional contractor inspect your home before making any major modifications.
  • You may be responsible for ongoing maintenance costs. Make sure you understand any contract you sign prior to moving forward.
  • Not all panels and inverters are alike. Do your homework to understand the different types. The quality of the energy you generate has more to do with the inverter than the panels themselves. Get quotes from several vendors to fully understand your financial cost.
  • Your homeowners association may have restrictions on structure renovations. Contact a HOA representative before moving forward with an installation.
  • Youll want to ask your insurance company how this renovation to your home will affect your homeowners insurance.
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    Why Cant I Save More

    With Community Solar, you earn modest savings on your electric bill each month. While it might not seem like much, it really adds up! Sometimes, though, subscribers still want to know why they cant save more each month.

    The answer is that, in order to provide affordable clean energy at no upfront cost and with no recurring subscription fees, we must reduce the monthly savings we offer . This allows money to flow evenly so that subscribers benefit and we can afford to offer more projects.

    If your goal is for solar to cover 100% of your electricity bill, you should look into rooftop solar. Through rooftop solar, you can maximize your long-term savings, albeit that it requires installation fees. When it comes to installing your own solar, the more you can pay upfront for an installation, the more youll be able to earn down the line. Installing your own panels is great if you can do it! But the truth is, most of us cant. Either were unable to pay the upfront cost, rent our homes, live in an apartment, or perhaps have roofs that are simply facing the wrong way.

    Solstices mission is to make going solar so easy and so affordable that anyone can do it, which means eliminating these barriers to participation, including any upfront costs of joining. And while a typical households savings may be relatively modest each month, those savings come with no strings attached or extra investment.

    Community Solar Marketing: A Customer Case Study

    My interest in this topic is both personal and professional. As a marketing professional working in cleantech sectors, part of my job is knowing and understanding the latest industry trends. Personally, Im a staunch advocate of renewable energy and a climate hawk, so I want to see community solar grow and thrive for ideological reasons.

    I live in New York state, which is one of the hottest community solar markets in the country, thanks in large part to strong policy support like the Reforming the Energy Vision initiative, which includes a 50 percent renewable statewide generation target by 2030, and the $1 billion NY-Sun program, a public-private partnership that expands access to solar through incentives and resources. In May of this year, New York state had 728 megawatts’ worth of community solar projects in the pipeline.

    Rooftop solar isnt an option for me , so Id been on the lookout for community solar projects for a while when I finally got an email about a project in my area. I immediately filled out an online form to learn more. My personal beliefs, my home’s incompatibility with rooftop solar, and my location in one of the friendliest markets in the U.S. made me a hot lead for community solar developers.

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    How Do I Save Money With Community Solar

    You pay a subscription fee to a company to help fund the construction and operation of a solar farm. The solar farm then sells the power to the utility and in return, you receive a credit on your electric bill for your share of the electricity generated. The credit received on your bill is usually greater than your subscription fee, and savings of 10-20% are usually realized. For most, but not all, community solar offers youll have two bills, your solar subscription bill for your share in the farm, and youll keep getting your regular electric bill, with monetary credits for the solar energy your subscription generates.

    How Much Control Do I Need

    What Are The Benefits of Community Solar?

    Having a personal solar energy unit gives you the ability to customize your system to suit your lifestyle. Shared solar is managed by a cooperative or private firm, for the benefit of all members. This may be an issue for households that use a large amount of power.

    • Install solar panels: If you want additional features or customizations – backup power being a prime example
    • If you are able to run your home using whatever solar power is being offered to subscribers

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    Escalator Clauses Mean Your Costs Automatically Go Up

    Your lease or PPA contract will probably have an escalator clause. This means that the price you pay will steadily increase over time. Even if your utility company holds their rate steady, your solar electricity bill will go up no matter what.

    A common percentage these days is a 2.9% escalator. What does that mean? Letâs say that your PPA contract specifies you will pay 13 cents per kilowatt hour. If you sign a 20 year contract, a 2.9% escalator means that at the end of your contract, you will be paying 22 cents per kWh.

    Compounding effect of a 2.9% escalator rate

    Year 20 $0.22

    Thatâs a big fixed increase, and it applies no matter what happens with the retail price of electricity charged by your utility company. This means that even if your non-solar neighbors pay a steady rate, you could end up paying more.

    Of course, it could work in your favor: your utility company might increase their rates by more than 2.9% .

    But if you own your system, thereâs no escalator. By purchasing your systme, you are basically pre-paying for your electricity for the next 25 years or more – however long your system lasts. The main gotcha with owning your own system is paying to fix system failures, which are generally rare.

    What Is The Difference Between A Competitive Electricity Supplier And A Community Solar Offering

    What do I get from this company? This is your electricity supply shown on the last page of your electricity bill Provides kWh credits on electricity bill. Applies credits only to kWh charges
    How do I pay my bill? Typically paid through your monthly utility bill
    Who enforces consumer protections? Attorney General 436-2131

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