Solar energy — clean, powerful, and increasingly accessible — promises a revolution in the energy market. However, installing solar panels on rooftops is not always possible or economically viable. This is where a community solar project comes into play, offering an innovative way to unite communities and harness the benefits of solar energy collectively.
According to the Pew Research Center, one-third of Americans understand the potential of alternative energy sources, including solar and wind.
Source: Pew Research Center
But what are the benefits and challenges of solar panels projects? Is it possible to obtain shareholder capital in the region’s energy system? In this article, Solar Power Systems specialists will provide answers to these questions and discuss how community solar works and the stages of its creation.
Stay with us and find out how it will change the energy future of the USA.
What Is Community Solar?
The USA, with giant strides, is confidently moving towards its goal of becoming energy independent, aiming to generate an average of:
- 30 GW of solar power by 2025
- 60 GW by 2025-2030
Source: U.S. DEPARTMENT OF ENERGY
Community solar energy provides an apt solution. It enables individuals to collectively own and benefit from a shared solar power station.
Even if you have all the means to buy a solar system but want to join a community solar project for other reasons, you can do so. The combined efforts of many homeowners will gradually transform the area into a solar oasis.
Furthermore, the idea of community solar energy addresses societal dilemmas such as economic inequality and energy security.
How Does Community Solar Work
The pleasant advantage of belonging to solar energy communities is that your role is simplified. As a client, you invest and anticipate specific returns — namely, the provision of electricity generated through solar panels.
Source: Environmental Law & Policy Center
The developer builds a large solar power station in your community. The station generates energy from sunlight and sells it to the utility, feeding into the local grid.
As an individual, you sign up for the community solar project, typically buying a share of the power station’s capacity and becoming a subscriber. It’s akin to buying shares in a company. Owning them entitles you to a portion of the generated electricity.
Once the power station is up and running, the utility monitors the electricity output from your share and credits the corresponding amount to your account. These credits effectively lower your overall expenses for electricity. As a result, you have energy, save money, and don’t have to worry about solar panel maintenance or repairs (that responsibility lies with the developer).
Key Stages of Creating a Community Solar Project
The revolutionary path to cost savings and environmental protection is possible through a community solar project. Enjoying the benefits of community solar is one thing, but to understand all the processes, let’s explore how it works.
Stage 1: Conception of the Community Solar Farm Idea
- Identification of the needs and interests of the community solar: creating a profile of potential participants, and analyzing electricity consumption data.
- Identification of local businesses interested in the community solar program: assessing financial viability, and determining energy needs.
- Analysis of the feasibility of the community solar project: economic analysis to determine profitability, risk assessment, and development of a plan to minimize risks.
- Assessment of available resources for installation location (land/rooftop, field/building): analysis of energy generation potential, determination of grid connection possibilities.
- Concept development: determining the type and scale of the community solar, seeking sponsors, considering various financing options (investments, government grants, crowdfunding), and developing an implementation plan.
Stage 2: Implementation of the Concept
- Registration of the legal entity: gathering and submitting documents to relevant authorities, obtaining a registration certificate.
- Obtaining permits for the construction of the community solar project: documentation approval from local authorities and grid operator.
- Construction of the solar power station: contractor selection through tendering, contract signing, equipment procurement, supplier selection, and actual construction.
- Conducting an informational campaign and creating social media drives.
- Contracting with future participants.
Stage 3: Operation of Community Solar Farms and Work Monitoring
- Regular inspection and cleaning of solar panels.
- Monitoring the operation of the power station: collecting data on generation and consumption volumes, identifying and addressing issues.
- Optimization of the community solar project operation: purchasing additional batteries and panels to expand system capabilities.
The success of the concept depends on careful planning, coordinated teamwork, and active community involvement. By uniting residents of neighborhoods and then cities into a single solar-powered community, there is a chance to transform a specific state into an energy-independent and eco-friendly entity.
When to Consider a Community Solar Project
Although anyone can join a community solar project, for certain groups of people, it’s a lifesaver. Here are a few cases when it’s beneficial and necessary to become a participant:
- If you can’t install solar panels on your property
| Roof-mounted solar panels | Firstly, inconvenience may be tied to housing type, such as residing in a multi-unit or rental property. In the former, individual roof access is unavailable, while in the latter, landlords may disapprove of solar system installations, and it’s not financially beneficial for you to equip someone else’s house. Secondly, even if you own a house, the type of roof may be unsuitable for installation — having many bends, windows, protrusions, etc. |
| Ground-mounted solar panels | A solar system requires a lot of space in the yard. It should be a fairly spacious empty plot, preferably without additional buildings and trees that may obstruct direct sunlight on the panels. |
- If your goal is to save on electricity bills
Community projects allow you to receive credits for electricity. Each participant has the right to use them to offset their utility bills. Thus, you remain in the black — having an uninterrupted electricity supply and saving money. On average, savings amount to 5-15% per month. It can be more depending on the size of the investment, local energy tariffs, etc.
- If you don’t want to spend time and money on the installation and maintenance of a solar system
The community solar project is simpler and cheaper because a lot of issues are handled by the operating company. They conduct research and select suitable equipment, obtain all necessary permits, and carry out system installation and monitoring. Meanwhile, you receive electricity without additional costs by purchasing a share in the solar power station.
- If you plan to support the development of local renewable energy
Solar energy is a clean energy source, untainted by fossil fuels. Being a project participant, you power your devices or light your house with the sun and automatically contribute to reducing your city’s/district’s dependence on gasoline, gas, oil, etc. Moreover, community solar projects often belong to and are managed by local companies, so your contribution helps support the state’s economy.
- If you don’t want to spoil the aesthetics of your home
Historically styled houses, like Victorian homes, possess distinctive aesthetic features that risk being compromised during the installation of solar panels. The visual dominance of these panels can disrupt architectural harmony.
In some areas, there are zoning rules that regulate the external appearance of buildings to preserve visual unity. However, usually, community solar companies take care of such matters.
Community Solar Power Obstacles and Opportunities
According to the Global Market Outlook For Solar Power 2023-2027, the Community Solar sector currently has little demand compared to utility, residential, and commercial solar panels. The gap is clearly visible on the chart.
Source: Solar Power Europe
Although community solar energy offers broad access to solar power for all Americans, there are certain obstacles to its development, including:
- High initial investments. Participants in community solar power plants must initially invest in purchasing shares of solar panels. Gathering the necessary funds can be challenging for low-income families.
- Limited availability. Not all people have access to community solar power plants due to the unsuitable location of their properties. The connection of residents to the community solar project occurs based on access to the station’s service area. Additionally, locating a project can be challenging, given the limited availability of community solar initiatives.
- Regulatory complexity. Many legal circumstances complicate the development of a community solar project. These include permit procedures, high taxes and fees, and an imperfect net metering system. Long waiting lists also complicate the registration of new clients.
- Lack of information and support. Many people still do not know about community solar energy or how it works. This does not contribute to their decision to participate in community solar projects, as ignorance always intimidates them.
However, despite the obstacles, there are opportunities for the development of a solar community:
1. Reduction in the cost of solar panels. This has been the case for many years and is a significant step forward in the development of community solar energy.
Source: Our World In Data
Based on Our World In Data estimates, the price has decreased from $100 to $0.5 over 50 years, and the total capacity of one panel has increased.
2. Government support. The U.S. government aims to maximize electricity generation as part of its ambitious decarbonization goal, aiming to substantially reduce emissions by 2050.
Source: Energy.gov
States offer local incentives and grants to support the development of community solar energy. This will reduce dependence on fossil fuels and make society more resilient to fluctuations in energy resource prices.
3. Economic benefits. Solar projects, in addition to saving money for participants, have significant economic advantages for the local community solar.
- The construction and operation of community power plants create new jobs in the electrical and engineering industries (currently, there are already over 263,000 workers in the solar industry).
- The operation of solar power communities stimulates tax revenues and increases demand for products and services, which will lead to the creation of new enterprises and the expansion of existing ones.
- A community solar project diversifies energy sources in the region and reduces dependence on fossil fuels. Thus, your region will become more resilient to fluctuations in energy resource prices and supply challenges.
Is Community Solar Power Suitable for Me?
It depends on individual circumstances. First, determine if a community solar project is available in your region/city. Then, calculate the amount of electricity you use. We recommend comparing prices for community energy and traditional energy and exploring different subscription options. If unsure whether to join the project, discuss the details with an energy consultant.
Asserting that solar energy is the future, we’re not just throwing words around. SEIA expects that the solar energy market will triple by 2028. So, we can anticipate that community solar energy will save money and provide uninterrupted and clean energy to millions of Americans’ homes.
Ways to Finance Community Solar
A community solar system is a power station that generates energy from solar panels and distributes it among participants in the community solar program.
It can have different owners. Private companies and non-profit organizations build and own them, selling electricity. If the owner is a municipality, the idea of building a community solar station is based on a desire to provide its residents with clean energy.
Accordingly, the sources of financing are different.
- Private community solar companies invest their funds in construction to make a profit shortly (usually not less than 5 years).
- Other companies and non-profit organizations offer loans to participants for their share in the community solar power station. Alternatively, they can partially sponsor it using available government funds.
Regardless, to safeguard the invested funds and efforts, the developer must secure willing subscribers. If you are within the service area of a specific community solar station, you can take on this responsibility.
So, imagine that you have signed up for a local community solar project and paid for a certain number of panels. Now, they generate energy and supply it to the city or district grid, and you regularly receive electrical energy.
If desired, you can cancel your subscription by notifying the information center of the power station’s owning company. Please note that sometimes you may need to give a 3-month notice for cancellation.
How Electricity Credits Are Accrued
In addition to supplying electricity to meet your household energy needs, a solar power station allows you to receive monthly credits for the energy produced by your share of panels:
- Excess electricity production: If you generate more energy than you consume, the surplus will be credited to your account. You can use this credit to pay for electricity in the future.
- The shortfall in electricity production: If you consume more energy than your solar panels generate, you will be required to pay the difference.
Ultimately, becoming a subscriber to a community solar power station is a wise decision that ensures the development of solar autonomy for the city/region.
The Spread of Community Solar Energy
It may seem that the United States’ inclination towards sustainability in green energy production began relatively recently. However, as far back as 2008, Massachusetts took the first step towards solar energy at the state level. The state government officially adopted a decision allowing and regulating the activities of solar power communities.
NREL says that as of 2022, more than 20 states, including the District of Columbia, have joined Massachusetts in this endeavor.
Source: NREL
Community solar energy is expected to continue to develop further, given its current pivotal role in the transition to a sustainable energy system. This evolution is attributed to various factors, such as the declining costs of solar panels, rising demand for clean energy, and a more favorable attitude towards the idea of a community solar project by the government.
Main Roadblocks to Creating a Community Solar Project
In states where legislative authorities have not yet passed bills permitting the use of energy for community solar, the progression toward renewable energy is being impeded. It turns out that even if people want to participate in a community solar project, they do not have the legal opportunity to do so.
A logical question arises: Why is the government delaying the coordination of legal matters when it sets goals for achieving independence from fossil fuels as quickly as possible? The answer is resistance from municipal structures. They do not want competition in the energy market, where they hold a dominant position, and strive to maintain control over their service territory.
Indeed, if solar power plants provide city residents, and later the entire state, with free energy, the revenues of municipal enterprises from its sale will significantly decrease. This unpleasant prospect motivates lobbying for the adoption of appropriate laws to protect their interests.
Leveraging the Influence of Ordinary Residents on Municipal Structures
Transitioning to community solar energy is possible but requires efforts from all stakeholders. Americans, when united, can tilt the balance in their favor.
What actions can you take today?
| Support the passage of laws | This is one of the most effective ways to help. Local legislators need to know that their constituents support the idea of community solar energy. There are numerous ways to express support, such as:
|
| Inform friends | Let’s recall the famous Latin adage: “Knowledge is power.” And it works: the more informed people are, the more attention is paid to the problem, and the higher the chances that measures will be taken to solve it. Therefore, you have the option to:
|
| Invest in community solar project | Funds are often the stumbling block for potentially successful projects. Lack of sufficient resources can stop the process at the stage of generating the idea of creating a community solar farm. Therefore, if you have the opportunity, invest in and purchase electricity from suppliers that support community solar energy. |
Overall, any efforts aimed at developing a solar community will be beneficial. Only through coordinated joint efforts is it possible to create a new energy future for the United States and the planet.
Solar Power in the Hands of the Community: What’s the Power of Unity?
Community solar energy is not just an alternative energy supply model; it’s a catalyst for change. Thanks to it, everyone can take control of their energy destiny, pool resources, and invest in a clean and environmentally friendly energy source for solar-powered communities.
Solar projects offer residents, businesses, and local authorities a unique opportunity to move toward a sustainable, decarbonized future. Subscribers of a community solar project can save money, reduce CO2 emissions, achieve energy autonomy for the area, and foster new environmental awareness — all of this is open to them!
The Solar Power Systems website provides more reliable and up-to-date information about everything related to solar systems in the USA.
Frequently Asked Questions
What’s the main purpose of community solar programs?
Community solar programs aim to make solar energy accessible to people who cannot install their solar panels. People from one service area come together and collectively invest in a solar power plant, later receiving credits on their utility bills for electricity and contributing to environmental protection.
What are the responsibilities of community solar companies?
Community solar companies take on organizational and legal responsibilities and monitoring. They develop, finance, build, own, and operate solar power plants that serve multiple consumers. Some of the most prominent ones include Arcadia, Nexamp, Perch Energy, and Solstice.
Can I become part of community shared solar?
Almost anyone can become a subscriber, except for residents of multi-unit buildings without their own roofs, renters, and homeowners living in states where community solar programs are not operational.
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Jed Hilton, our Founder and CEO, has over a decade of experience in the solar industry. His innovative leadership and expertise in solar technologies guide our company's vision and strategy.
