Ben Schiller is a New York-based staff writer for Co.Exist, and also contributes to the FT and Yale e360. He used to edit a European management magazine, and worked as a reporter in San Francisco, Prague and Brussels Continued
Community solar is a growing business model that makes it easier for anyone to buy a stake in an installation. Here's why it could eventually overtake the idea of a panel on every home.
For all the boom in residential solar (and it is impressive), a lot of people are excluded from getting in on the homemade energy game. They don't have the right roofs (only about a quarter of homes are suitable), or maybe they're renters. In all, only about 15% of people are in a position to install panels, and that's assuming they can afford them.
What's everyone else supposed to do? One answer could be "community solar"--an increasingly popular alternative to self-installation. Community solar is when, instead of putting up your own panel, you buy one at a local collective, and let an outside organization--a utility, developer, or non-profit--look after it. No roof required.
Such facilities are springing up all over the country (map here), and there are several reasons why the model might eventually become widespread--not least because it's less threatening to utilities than solar panels owned by individual households.
Colorado-based Clean Energy Collective, which built the first community solar facility in 2010, now has 25 farms in four states. CEO Paul Spencer says he started the business after working on a net-zero housing development, and finding that some buildings couldn't hold solar panels. He wanted to power the homes from a spare plot of land instead, and he contacted the local utility to find out if they could help. Surprisingly, they said they could, and the two parties struck a deal. The home-owners would buy the panels. Spencer would look after them. And the utility would buy all the power. In return, the customers would have whatever they generated credited to their bills, offsetting what they would normally pay.
The idea stuck. Since that first project, CEC has signed up about 2,000 customers, including homeowners, municipalities and businesses. The customers range from companies that have bought in for as much as $1 million to residences that paid as little as $400. The typical customer buys a 3-gigawatt panel for about $9,000. And, on average, Spencer says they make about 7% in the first year, though in some cases it can be more than that. As an extra incentive, they make more as conventional power rates go up; customers pay only an upfront fee at the beginning, with a small amount set aside for maintenance.
"It opens up solar financially to a much broader swath of people, and, of course, you don't have to have a roof that's perfectly sited for solar, because it's not sited there. You don't have to worry about shading or living in New York City, or anything like that," Spencer says.
CEC recently received $13 million in private funding, and expects to triple its installations in the next 18 months. Spencer says he's currently talking to utilities in 38 states. Other companies pursuing similar models include SunShare in Colorado Springs, Ecoplexus in San Francisco, and Community Energy in Pennsylvania.
"There are several dozen projects around the country now," says Joy Hughes, at the Solar Gardens Institute, which tracks the projects. "They are popping up so fast I don't have an exact count." The Department of Energy says there's at least 50 megawatts of shared solar out there. It wants to boost that to 5,000 MW by 2020.
Spencer reckons the community solar model will one day dwarf conventional residential solar for two reasons. One, demand among households for self-installation is limited to those who want to go through setting up their own system and worrying about whether it will maintain its performance. With community ownership, a third party like CEC worries about that, replacing panels if necessary. Second, utilities are likely to be more friendly to community endeavors because, unlike home ownership, it keeps them involved in the picture.
"It has the potential to be seven times larger than what we're seeing on rooftops, because utilities are getting behind it, rather than fighting it," Spencer says. "It could be a complete shift. It's doing solar the way utilities want to do solar, but allowing the public to own the solution, and benefit from it long-term."
CEC currently works with 10 utilities. Spencer says, in most cases, they've come willingly because they're happy to buy whatever power CEC can provide. In other cases, legislation has been helpful. Colorado, for example, has a "solar gardens" law that requires utilities to buy from community projects.
"It allows customers to get ownership of solar, and the environmental and financial benefits," Spencer says. "But it also gives utilities what they want, which is stabilized prices, clean energy, and some control over the power generated. They are also leveraging utility customers from across the country to capitalize renewable projects."