The Promising Potential of Community Solar

By Eddie Fidler

Category:
Industry Trends

The world is facing a period of anthropogenic climate change driven by emission of greenhouse gases (GHGs), with human and material costs that are likely to rise dramatically in the coming decades. Combustion of fossil fuels for the generation of electricity is the largest source of emissions in the world, though second to the transportation sector in the US.  To meet climate goals, nations will need to reduce power gen emissions by both increasing energy efficiency and developing renewable energy resources.  Community solar technology can help get us closer to this goal.  
 

NREL%20Historical%20Benchmarks.jpg

 

What is Community Solar?

Solar power, along with wind, has become one of the most promising renewable technologies. Solar already makes economic sense in some combinations of geographic and political circumstances, and now accounts for 67 GW of generation capacity in the US. As prices continue to fall, adoption will surely grow. That being said, people who rent, live in multi-family buildings or have a shaded or poorly oriented roof cannot install solar panels. Others simply cannot afford the upfront capital cost.

Community solar organizations aim to serve this vast potential market by acting as demand aggregators for these customers. In a community solar arrangement, a residence is “allocated” a portion of a solar field from a partner solar developer in their region. Every month, the customer is billed for the energy produced by the developer and sees an energy credit on their regular utility bill. This arrangement does not change how electricity is delivered to the customer, but they may see energy cost savings. Solstice, one of the most prominent community solar providers, actually guarantees modest savings and will pay the difference if these are not realized, while its competitor Clearway does not make any guarantee.

Using Solar vs Going Solar

An interesting quirk here is that the energy generated by the partner fields does not power participants’ homes, but enters the grid that serves them. A solar renewable energy credit (SREC) is created for each megawatt hour of energy generated, but that SREC is usually retired by the utility and not the community solar members. This means that a member cannot actually claim to be using renewable electricity, though the electrons generated by their parcel enter the grid, making it that much cleaner. This is why Solstice can claim to be enabling their customers to “go” solar, and not to actually use solar power.

The catch is that utilities in many states are mandated to produce a certain proportion of their energy from renewable sources under renewable energy portfolio standards (RPS). If a utility purchases SRECs from a community solar project that they would have purchased from elsewhere regardless, then the environmental impact from the project is questionable. However, RPS requirements are rising across the nation, and community solar projects can be viable way to provide that renewable capacity.

The “EnergyScore”

Low income households rarely access solar power, partially because developers rely on credit scores to vet potential customers’ credit risk. Solstice’s analysis suggests that low income households often prioritize their utilities and tend to pay those bills on time more often than their credit scores would suggest. To capitalize on this discrepancy, the company has developed what they call an “EnergyScore”, using a potential customer’s bill payment history. This score, they have found, is a more accurate predictor of future bill payment than a traditional credit score, greatly expanding the potential customer pool available for their community solar projects.

Conclusion

Solar has proven to be a viable technology on the way to a sustainable energy system. Though many are not able to install rooftop panels, community solar arrangements are a promising way to expand access. With state-level policymakers in the US becoming more open to community solar, this is becoming an approach worth watching going forward. 

Engage with ARC Advisory Group