As the solar energy market rapidly expands, more people are exploring the possibility of going solar. While not everyone is able to install panels on their roofs, due to unsuitable roof space, living in a large condo building, or renting living space, alternative business models like community solar and shared solar are gaining popularity and increasing access to clean solar energy.
Community solar business models increase deployment of solar technology in communities, making it possible for people to invest in solar together. Shared solar falls under the community solar umbrella, allowing multiple participants benefit directly from the energy produced by one solar array. Shared solar participants typically benefit by owning or leasing a portion of a system, or by purchasing kilowatt-hour blocks of renewable energy generation.
Solar in Your Community Challenge
The Solar in Your Community Challenge is a prize competition that aims to expand solar electricity access to all Americans, especially underserved segments such as low- and moderate-income (LMI) households state, local, and tribal governments, and nonprofit organizations. In order to make solar more accessible and inclusive for every American, the Challenge works to spur the development of new and innovative financial and business models that serve non-rooftop solar users such as community solar.
Offering $5 million in cash prizes and technical assistance over 18 months, the Challenge supports 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.
National Community Solar Partnership
The Solar Energy Technologies Office (SETO) is a founding member of the National Community Solar Partnership that works to expand access to community and shared solar throughout the nation, especially in low and moderate income households. The partnership, which kicked off on November 17, 2015 at a meeting at the White House, is a collaboration with the Department of Housing and Urban Development, the Environmental Protection Agency, the Department of Agriculture, and key representatives from solar companies, non-profit organizations, state and community leaders, and financial institutions. On July 19, 2016, the White House announced a new goal to enable 1 GW of low- and moderate-income solar by 2020. This goal is a 10 fold increase and an expansion of the initial target President Obama set in the Climate Action Plan. Learn more and see a list of National Community Solar Partnership members.
SETO awardees are making strides in the shared and community solar arenas, increasing access to solar for all Americans. SETO provides cooperative awards to the below organizations focusing on shared and community solar.
Shared Solar Awards
- Yale University (Solar Energy Evolution and Diffusion Studies 2-State Energy Strategies): This project is testing new messaging, financing, and shared solar approaches for enhancing the diffusion of solar energy in low- and moderate-income (LMI) populations.
- Center for Sustainable Energy (Solar Market Pathways): CSE is working to expand the awareness, effectiveness, and use of virtual net metering in California and beyond. Virtual net metering enables multi-meter property owners to allocate a solar system’s energy credits to other tenants, thereby giving solar access to multifamily homes and other multi-tenant facilities.
- Cook County Department of Environmental Control (Solar Market Pathways): Cook County is identifying and establishing shared solar models that can benefit multi-unit housing tenants and low-income customers in the Chicago area. This project will produce economic and policy analyses and detailed case studies of pilot projects.
- Extensible Energy (Solar Market Pathways): Extensible Energy, Inc. is working with several utilities, including the Sacramento Municipal Utility District and the Public Service Company of New Mexico, to develop new market-based shared solar business models using strategic solar technologies and design, systematically prioritizing local sites, and integrating demand response programs and energy storage.
- Solar Electric Power Association (Solar Market Pathways): SEPA is conducting comprehensive research on the intersection of community solar business models and consumer demographics and marketing to streamline the design of more attractive, cost-effective, and standardized programs.
- Virginia Electric and Power Company (Solar Market Pathways): Dominion Power is working with representatives from state government, research institutions, environmental organizations, local communities, and solar businesses to develop and refine sustainable models for solar deployment, including shared solar.
Community Solar Awards
- Solstice Initiative (Solar Energy Evolution and Diffusion Studies 2-State Energy Strategies): This project gathers customer data to assess the assumption that metrics other than a traditional FICO score can and should be used to qualify customers for community solar.
- NC Clean Energy Technology Center (Solar Energy Evolution and Diffusion Studies 2-State Energy Strategies): This project makes solar more affordable and accessible through shared solar projects developed by cooperative and municipal utilities across the Southeast.
- Washington State Department of Commerce (Solar Energy Evolution and Diffusion Studies 2-State Energy Strategies): This project focuses on how to deploy smart, equitable solar in both Washington and Oregon to achieve broader system benefits and societal goals. The project aims to triple the solar capacities of both states, reduce installed costs for rooftop solar by almost half, and double the solar-related employment in the Pacific Northwest by leveraging the technical, social, and economic benefits of solar.
- Montana State Energy Office (Solar Energy Evolution and Diffusion Studies 2-State Energy Strategies): This project is developing a cost-effective, community solar energy strategy for Montana that will expand access to solar energy. The project aims to develop model community solar projects that will be promoted across the state in a manner to meet the needs of interested consumers and communities, as well as electric utilities or cooperatives.
- Council of Independent Colleges in Virginia (Solar Market Pathways): CICV is partnering with 15 of its member colleges and their hometown communities to develop a collaborative and replicable approach for solar adoption on college campuses.
- Midwest Renewable Energy Association (Solar Market Pathways): MREA is facilitating on-campus solar investment by university governance boards and endowments at Illinois State University, Missouri University of Science and Technology, Purdue University, and the University of Minnesota.
- Washington State Department of Commerce (Rooftop Solar Challenge II): Community solar models have helped drive solar adoption in the Pacific Northwest, where group purchase programs were pioneered. Through the Rooftop Solar Challenge II, Washington State is working with Northwest SEED, co-author (with the National Renewable Energy Laboratory) of the original Solarize guidebook, to develop new shared solar projects as well as additional group purchasing programs.
- Yale University (Solar Energy Evolution and Diffusion Studies): Solarize group purchasing programs help homeowners band together to collectively purchase rooftop solar systems at lower rates. Researchers from Yale and New York University are working with SmartPower to design and run a series of randomized field trials to quantify the effectiveness, cost-effectiveness, and scalability of community group purchasing strategies.
Small Business Development
- Ethical Electric (Technology to Market 2): This project builds a platform to enable the sale of community solar at a significantly lower cost per acquisition than comparable residential solar sales. Ethical Electric will be the first competitive retail electric provider in deregulated states to offer community solar—creating the customer acquisition, finance, and development tools needed to offer solar as a subscription at scale.
- PowerScout (Technology to Market 2): This project develops a direct-to-consumer eCommerce platform called the PowerScout Community Solar Marketplace that aggregates tens of thousands of residential customers and connects them with high quality community solar projects, accelerating the maturation of a very fragmented market.
- Clean Energy Collective (Incubator): Clean Energy Collective builds and manages shared solar projects. With the award, CEC created CommunitySolarHub.com, a portal for information about community and shared solar projects.
- Sunvestment Group (Incubator): Sunvestment Group is building a community-sourced funding and investment platform to make community-scale solar projects possible. The platform streamlines legal, financing, and investment development of the projects.
- Village Power Finance (Incubator): Village Power Finance is building a platform to facilitate investments by community members to help nonprofit organizations go solar. The platform allows community organizations to organize projects, and community members to make, monitor, and manage their investments.
Potential for Growth
The National Renewable Energy Laboratory (NREL) published the SETO-funded report “Shared Solar: Current Landscape, Market Potential, and the Impact of Federal Securities Regulation.” The report finds that 49% of households and 48% of businesses are unable to host photovoltaic (PV) solar systems because they rent their spaces or have a lack of suitable owned roof space. For this customer base, shared solar opportunities give them the chance to purchase solar energy.
After accounting for the development necessary to expand the shared solar market, as well as limiting factors such as net-metering caps, the report finds that shared solar could lead to cumulative U.S. PV deployment growth of 5.5 to 11.0 gigawatts between 2015 and 2020 and represent $8.2 to $16.3 billion of cumulative investment. In fact, according to the report, by the year 2020 shared solar could account for up to half of the overall distributed solar market in the United States.
Benefits and Challenges
By aggregating customer demand, shared solar programs can reduce the financial and technical barriers to going solar. Instead of acting alone to purchase panels and hiring professionals to complete individual site assessments, shared solar programs divide those costs among all of the participants. This also makes it easier for participants to buy in at a level that works best for their budgets. Investments are even safe for those who can’t stay in one place too long. In the event a customer moves, his or her solar share can be transferred to a new home within the same utility service territory or sold to someone else.
Siting flexibility is also beneficial to participants. Since shared solar arrays can be located on or off site thanks to virtual net metering, it allows for strategic placement on sites such as commercial rooftops, brownfields, and municipal land, which can optimize grid operations and aid local economic development.
Utilities also reap the benefits of shared solar programs. They can work with programs’ siting flexibility to ensure that arrays are strategically sited for maximum electricity benefits. It also makes their jobs easier; having larger, shared arrays connected to the grid allows utilities to operate in a more streamlined manner compared to maintaining many smaller, diffuse solar systems.
The Securities and Exchange Commission (SEC) requirements for registration and disclosure of shared solar projects create a challenge. If a shared solar program is classified by the SEC as a security, it could significantly impact how the program operates and subject it to more federal scrutiny, potentially affecting the financial benefits of participating. However, most issues can be resolved with proper marketing, as shared solar offerings that are marketed and structured as reducing customers’ electricity bills are less likely to be treated as a security than those marketed as profit-generating programs.
- EnergySage Community Solar Marketplace
- NREL Report: “Shared Solar: Current Landscape, Market Potential, and the Impact of Federal Securities Regulation”
- Press Release from April 27, 2015: NREL Report Estimates Market Potential of Shared Solar and Discusses Relevant Securities Regulations
- Blog Post from April 28, 2015: NREL Report Shows Big Potential for the Future of Shared Solar
- Blog Post from January 29, 2015: No Roof, No Problem: Shared Solar Programs Make Solar Possible For You
- Blog Post from January 31, 2014: Shared Solar Projects Powering Households Throughout America
- Solar in Your Community Challenge
- Solar Energy Industries Association's Residential Consumer Guide to Community Solar
- The Solarize Guidebook: A Community Guide to Collective Purchasing of Residential PV Systems
- A Guide to Community Shared Solar: Utility, Private, and Nonprofit Project Development
- Shared Renewables Headquarters
- IREC’s Shared Solar Program Catalog
- IREC's Model Rules for Shared Renewable Energy Programs