How Do Community Solar Projects Make Money?

community solar projects

The primary question that many community solar projects have is how they make money? Some community solar projects may have a contracted sponsor to finance for subscribers, while others may rely on subscribers to secure their financing. If they cannot secure funding, the project sponsors may have difficulty coordinating virtual net metering. If so, the sponsors should work closely with their utility to resolve these issues. In addition to cost savings, community solar projects often benefit from shared ownership models, popular among many groups and individuals. So let’s check for more.

Cost savings

The most common method of getting a share in a community solar project is through a subscription program. In this program, many individuals pay a certain amount of money upfront and begin receiving credits on their utility bills based on their share of the solar power they produce. Some programs are designed to maximize the environmental benefits, while others emphasize savings. However, these programs can have a steep up-front cost, and the savings can be smaller than expected.

The vital issue with community solar is that the subscribers must pay non-bypassable fees and program operating costs. The majority of these costs are based on the energy rate that the subscriber pays. This is important because fixed charges account for half of the energy bills in Illinois. However, in Oregon, the program administrators charge a one-cent per kilowatt to participate, which means they eat 70% of the savings. In both cases, increasing the pie of subscribers’ savings would significantly impact the energy system.

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Grants

To get the most out of your solar investment, you’ll need to know where to find the most suitable grants for community solar projects. Community solar farms are growing in popularity across the United States and in 2021, there was at least one community solar project in over 39 states.

The NC Clean Energy Technology Center’s Community Solar Program will work with participating utilities and electric cooperatives to identify the best places to build community solar projects. In addition, the program will provide technical assistance and outreach to LMI communities and simplify grant administration for participating utilities. The project will begin providing direct monthly savings to utility customers by late 2021. By the end of the program, community solar projects will have a net energy value of more than $16 million.

Incentives

There is growing momentum for California’s annual competitive solicitation of community solar projects. While this is an excellent idea for scalability, industry leaders are concerned about the risk of bad faith bidders driving prices down and resulting in hundreds of undeveloped community solar projects. In addition, abandoning the VDER model is fraught with challenges, including project finance ability, market consolidation, and annual auction complexity. In any case, it is still the best way to create community solar projects.

Developing a flexible policy that encourages participation in community solar requires careful consideration of the nuances of the solar industry. Community solar is an exciting tool for increasing solar access but does not guarantee low-income participation. Community solar projects face almost the same entry barriers as rooftop solar. In addition, community solar projects are not cost-effective for all customers.

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Shared ownership model

Shared ownership models of community solar projects are overgrowing across the country. Under the CEC model, a developer builds the solar project and leases the host site. Subscribers produce and sell electricity to the grid in exchange for monthly lease payments. In addition, participants earn credits on their utility bills for the electricity produced. A developer can offer a variety of program designs. In Minnesota, for example, a community solar project can be as large as 1 megawatt (MW).

Community solar is a growing market, but critics say the shared ownership model doesn’t meet the definition of community solar because the customers don’t own the panels and won’t accrue enough benefits to warrant the price. “Community solar has a barn-raising connotation,” says John Farrell, the Energy Democracy Initiative director at the Institute for Local Self-Reliance in Minneapolis. But his team has overcome those problems.

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