Community solar is on the move. Just a few weeks ago, Minnesota’s Xcel Energy opened up a solicitation for new community solar projects. Expecting approximately 100 megawatts to be proposed, it received more than four times that amount.
There is good reason for the momentum. By enabling customers to purchase, lease, or otherwise share the benefits of a portion of a local solar array, shared solar vastly expands the market for consumer-driven solar power. Despite rooftop solar’s impressive growth in recent years, the fact remains that nearly four out of five residents cannot install solar panels on their own roof due to financial, structural, or solar resource issues. The commercial market faces similar constraints, with many businesses located in buildings that they lease or that are physically unsuitable for a solar array. A well-designed shared solar program breaks down those barriers and connects more Americans with the solar power they want.
The shared solar model holds great promise, but to date few states have established the right policies for fueling its growth. Here are three things states can do today to bring the benefits of community-supported renewable energy to their constituents.
Establish Statewide Shared Solar Programs
First, for most U.S. states, the first step is simply to allow community shared solar projects to be built. There are several policy paths that states can use to enable multiple customers to share an interest in one renewable energy facility and receive the resulting benefits on their utility bill.
Vote Solar and the Interstate Renewable Energy Council have four guiding principles for shared solar policies:
- Shared solar programs should expand access to a broader group of energy consumers.
- Participants in a shared solar program should receive tangible economic benefits on their utility bills.
- Shared solar policies should be flexible enough to allow for different contract models to meet different consumers’ preferences, such as an up-front payment model or a leasing agreement.
- Finally, shared solar policy should be additive to existing renewable energy programs, not undermine them.
Today ten states and the District of Columbia have policies in place that generally meet these criteria, although they have been implemented with varying degrees of effectiveness. A handful of additional states — notably Connecticut and New York — are actively considering new shared solar policies of their own. Considering the interest we have seen from policymakers and diverse stakeholders who want to expand solar access in their communities, we expect that number to increase quickly in the coming years. Experience with these early programs has shown the importance of establishing a bill credit that properly reflects the long-term value of the clean energy produced.
Expand Access to Virtual Net Metering
Virtual net metering enables individual homes or businesses to be credited for the electricity their panels generate, even though they are not located on their premises. A well-designed virtual net metering program can serve much like a shared renewables program to connect more consumers with the bill saving benefits of off-site solar power. Only eleven states and the District of Columbia allow virtual net metering in some form, and even solar-friendly states like New Jersey have yet to pass the requisite enabling legislation. As states enable virtual net metering, they should be mindful of the tremendous potential for market growth this represents and ensure that any caps on net metering allow for significant expansion. In Massachusetts, for example, where Solstice Initiative operates, the solar industry is likely to bump up against the net metering cap in a matter of months.
Remove Barriers to Participation
Even with these enabling policies in place, more can be done to truly expand access to solar to all energy consumers. There are several states that explicitly and unnecessarily restrict some categories of consumers from participating in community solar projects. For example, in Maryland, only farms, non-profit organization, and municipal governments can participate. This is a problem because it limits access to solar power, especially for those who need it most, like low-income renters who would derive the greatest benefit from solar savings.
In addition to geographic and ownership limitations, many lower-income individuals, families, and businesses face significant financial barriers to solar adoption. These low-income consumers likely cannot afford significant up-front payments, cannot easily qualify for financing, and need some flexibility around relocation or cancellation. Policies that require outreach, education and inclusion of low-income consumers in shared solar can help immediately and directly benefit those communities. These outreach programs should be combined with innovative policies that support financing for projects with low-income subscribers. Solstice Initiative and Vote Solar are committed to working together to ensure that shared renewable energy programs enables low-income solar market growth.
The solar industry created 50 percent more jobs last year than the oil and gas pipeline and drilling industries combined. To ensure we build on that success, we must create opportunities for more Americans to invest in and save from solar power. In the near term, state policymakers can do three things: enable community shared solar if it is not yet allowed, expand access to virtual net metering, and remove barriers to community solar participation.
With the right policies in place, we can truly offer solar for every American.