No matter where we live, the urgency to reduce global warming and climate change is growing. As such, many of us are looking for ways to reduce our carbon footprint affordably. Actions like carpooling, public transit, and even diet changes (like eating less red meat) can all play small but important roles in moving us in the right direction.
Community solar is another approach to reducing our carbon footprint without the massive cost of installing our own solar panels. Community solar energy allows multiple individuals or households to benefit from a shared solar installation.
Below, we’ll explore the many sides of community solar, including how it differs from traditional residential solar, the primary benefits of participating in a community solar program, the role of utility companies and third-party developers in its development, and more.
What Is Community Solar?
Community solar refers to a solar energy project that multiple participants collectively own and share. This allows individuals who can’t install their own solar panels (think renters or homeowners with shaded roofs) to enjoy the benefits of solar energy. Rather than installing solar panels on individual rooftops, community solar projects are typically large-scale installations built on open land or rooftops.
Community solar is a unique solution for those who want to embrace renewable energy but might have constraints, such as budget. These projects help pool resources and share the benefits of solar energy, allowing them to provide an inclusive and accessible way for people to participate in the clean energy revolution.
Community solar projects ease the financial burden of solar energy. By pooling resources and negotiating favorable terms with solar equipment suppliers and installation contractors, community solar projects enjoy cost savings typically not possible on individual household solar installations. This cost-effectiveness is a big draw for those who want to reduce their carbon footprint and lower their energy bills but have limited financial resources.
Community solar also has high potential for positive social and environmental impact. When participants sign up for a community solar project, they can directly contribute to reducing greenhouse gas (GHG) emissions and support the transition to a sustainable energy future. This means a community solar project benefits the participants and has a positive ripple effect on the community and the planet.
Community solar projects come in various forms, including:
- Shared solar gardens: Large installations located on open land, where participants can purchase or lease a portion of the solar panels and receive credits on their electricity bills for the energy generated.
- Virtual net metering: Participants receive credits for the energy generated by a remote solar installation, even if they do not physically own or have access to the panels.
- Community-owned solar farms: A group of participants collectively own and operate the solar installation and share the project’s costs and benefits.
How Does Community Solar Differ from Traditional Residential Solar?
While both types of solar power can reduce carbon footprints, lower energy bills, and benefit the environment, community solar and traditional residential solar have some key differences.
No Individual Installations
While traditional residential solar requires an individual owner to install rooftop solar panels on their home, community solar participants enjoy the benefits of solar energy without on-site installations. Community solar participants instead purchase or lease a share of the project’s solar array or output. In return, they receive a portion of the project’s energy production or credits on their energy bills from their share of the energy production.
Large Scale Projects
Community solar projects are generally larger-scale developments than traditional residential solar installations, as they must serve multiple participants within a specific area, city, or municipality.
No Maintenance Needed
Community solar is also more hands-off than traditional residential solar. In a residential solar system, the homeowner is responsible for maintaining their solar systems. In a community solar project, the participants don’t worry about the day-to-day operations of the solar project. The project developer or operator manages maintenance and repairs, ensuring that the system operates efficiently and effectively.
Community Growth
Community solar also allows its participants to support local renewable energy projects. When they invest in a community solar project, participants contribute to the growth of clean energy in their community. A localized approach like this can help foster a sense of community and concerted action toward a more eco-friendly future. This shared commitment to green energy fosters a sense of unity and strengthens community bonds.
Educational Opportunities
Another lesser-known difference in community solar projects is their potential to offer educational opportunities for participants. For instance, some developers do so through workshops and informational sessions to educate participants about solar energy, its benefits, and how the community solar project works. This gives people the info they need to make informed decisions about their energy consumption and broadens their understanding of renewable energy technologies.
Lower Individual Financial Burden
A huge difference between community solar and traditional residential solar is the financial aspect. Traditional residential solar installations require substantial upfront financial investments from homeowners, prohibiting some from installing them.
Community solar, on the other hand, offers a few financing options. First, participants can purchase a portion of the project and pay an upfront fee for the energy that portion produces. They can also lease a small share of the solar project and pay monthly. The third option is to subscribe to a community solar project, which often involves no upfront fees, but the subscriber pays a monthly fee or for the electric bill credits they receive.
What Are the Primary Benefits of Participating in a Community Solar Program?
Community solar program participation offers several advantages. The most obvious is that it gives individuals access to renewable energy that they may otherwise not have. This allows them to reduce their dependence on fossil fuels.
Community solar also typically provides long-term electric bill savings. When participants subscribe to a community solar project, they can expect more predictable energy costs and insulate themselves from potential price fluctuations.
Community solar projects can benefit local communities economically by creating jobs during the development, construction, and operation phases.
What Is Virtual Net Metering and How Does It Relate to Community Solar?
Virtual net metering (VNM) is a billing arrangement that allows a community solar project’s energy production to be credited to the participating subscribers‘ utility bills. Through VNM, participants receive monetary credits based on the energy their allocated share of the community solar project generates. These credits offset their monthly electricity bills, which is one of the big benefits of community solar participation.
For example, if a homeowner purchases or leases 5% of the solar panels in a community solar project, they will get an energy credit based on the 5% they own or lease minus any associated fees.
What Types of Community Solar Models Exist, and How Do They Work?
Community solar models can vary depending on factors like the ownership structure and subscription arrangements. The two main types are shared array and subscription based.
Shared-Array Model
In a shared-array model, a group of individuals or a cooperative collectively develops and owns the community solar power project. In these models, the participants have a direct ownership stake in the project and share in its profits or benefits, such as reduced energy costs. The only downside to this model is you often pay monthly for maintenance and upkeep, but the tradeoff is you may be able to claim the federal tax credit based on your investment.
Subscription-Based Model
Sometimes, a utility company or a third-party solar developer owns and manages the community solar project. Participants then subscribe to the project and receive credits or payments based on their share of the energy generated. This community solar subscription generally requires no upfront investment but does require a monthly fee or fees based on the credits received.
For example, if the subscription earns you a 15% discount on energy credits, and you get a $100 credit, you’d pay the project owner $85 for said credit. On top of this, you may also still have a monthly fee.
While the lack of upfront fees makes this model attractive to community solar subscribers, you also miss out on the federal tax credit by not outright owning a portion of the project.
What Factors Should People Consider About Community Solar Programs?
You should consider various factors when looking into participating in a community solar program. Some of the more important elements include:
- Current energy consumption: Before jumping into anything, assess your current electricity usage and the potential benefits of offsetting it with community solar. If the benefits make sense based on your consumption, it may be a good option for you.
- Upfront costs: These costs are critical as they have an immediate and sometimes substantial impact on your finances. If the upfront costs are too high, it could put you under a financial burden. Moreover, it could take years before you break even on your investment.
- Subscription fees: In a subscription-based model, you may incur a monthly fee to be a member. Look at this fee and the money you’ll save on your monthly electric bill to ensure the savings exceed the subscription fees associated with joining a community solar project. Also, account for the percentage of the energy credits that you must pay for to ensure the discount is worthwhile.
- Fine print: Always evaluate the contract terms and agreements closely. Some areas to pay close attention to include commitment duration and early termination fees.
- The developer and operator: Ensure you’re working with a reputable community solar project by researching the reputation and track record of the community solar provider.
What Financial Incentives or Savings Can Participants Expect from Joining a Community Solar Project?
Community solar initiative participants can expect several financial incentives and savings. The savings start with lower electricity costs through the credits they receive for the energy generation of their allocated share of the project.
In a shared-array setup, where participants are owners, the participants may be eligible for federal or state incentives, such as tax credits or grants. These financial benefits will vary based on your tax circumstances, local laws, and your specific investment in the project.
Community Solar Can Bring Solar Energy to the Masses
Because of its lower barrier to entry and flexible subscription models, community solar gives those who would generally not have the means to switch to solar the opportunity to participate in this renewable energy. This can range from renters to low-income or moderate-income families who want to lower their energy bills — and reduce their carbon footprint. Community solar projects can also foster connections with other people, creating a community of like-minded individuals working toward the common goal of ensuring a cleaner, sustainable environment.
If you’d like to make good on your goals of a cleaner future, don’t miss our tips on how to reduce your carbon footprint. You can also check out Just Energy’s green energy plans to help you save energy, money, and the planet.
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- Source: https://justenergy.com/blog/community-solar/