Community Solar: Policies that Go the Distance

Many individuals want to get into the driver’s seat by securing solar photovoltaic (PV) power — but how do you get into the pole position? By using Community Solar.

The issue at hand is that only 22-27 percent of residential rooftops are suitable for PV, once you adjust for factors such as the structure, building ownership, or shading issues. The idea behind Community Solar is to allow folks who couldn’t otherwise have rooftop PV to participate in investing in (and benefiting from) a PV system, according to A Guide to Community Solar: Utility, Private, and Non-profit Project Development.

To help these folks along, NREL has published “A Guide to Community Shared Solar: Utility, Private, and Nonprofit Project Development.” This revised guide is designed as a resource for those who want to develop Community Solar programs, from community organizers or solar energy advocates to government officials or utility managers. By exploring the range of incentives and policies while providing examples of operational community solar projects, this guide helps communities plan and implement successful local energy projects.

There are three main ways that a community solar program can be structured; choosing one will depend on your community’s unique situation. The three sponsorship models (taken directly from the guide) include:

  1. “Utility-Sponsored Model, in which a utility owns or operates a project that is open to voluntary ratepayer participation.
  2. Special Purpose Entity (SPE) Model, in which individual investors join in a business enterprise to develop a community solar project.
  3. Non-Profit Model, in which a charitable non-profit corporation administers a community solar project on behalf of donors or members.”

The guide examines the benefits and challenges of each sponsorship model and investigates some program variations that are emerging so that program planners can identify the one that best meets their goals and needs. The examples explain the project highlights and financial details — and even provide contact information so the reader can ask follow-up questions.

As Community Solar programs gain increased interest, innovations are occurring that promote wider, broader participation. Policies that encourage community solar include: group billing, virtual net metering, and joint ownership. By examining each in turn, the guide highlights some policy best practices and also considers regulatory changes that could significantly boost community solar installations across the country. The guide then reviews some of the tax and financing issues that impact community solar projects and offers practical tools and tips for communities planning their own project.

So for anyone interested in PV that has been vexed by not owning a house or by your lovely old-growth shade trees, there is hope around the bend! Community Solar can help you benefit from PV as if it was on your house.

This article was originally published on NREL Renewable Energy Finance and was republished with permission.

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Karlynn Cory is the National Renewable Energy Laboratory’s Project Finance Team Lead. She has over 15 years of research and analysis experience in renewable energy policy and markets, including feed-in tariff programs, renewable energy certificate markets, and complex project financial structures.

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