Cooperative solar: harnessing people power to fund renewables
You can get some of the benefits of solar power without having to install panels on your house. Collective ownership is an alternative means of financing renewable energy projects by incentivizing small businesses and homeowners to buy in to receive a credit on their monthly bills and combat climate change.
SmartPlanet interviewed some advocates of this model, Andy Noel, director of utility business development at REC Solar, and Paul Spencer, chief executive officer of Clean Energy Collective in order to learn more. Noel and Spencer are cooperating (pun intended) on projects in Colorado. Here is their collective feedback:
SmartPlanet: How does community solar work?
Noel & Spencer: Community solar - also known as solar gardens, solar farms, community-sited energy, off-site solar or solar cooperatives - is a distributed energy model whereby a utility-scale solar PV project, up to several megawatts, is located in and serves a participating utility territory. A developer creates a solar array on a site ideally suited for maximum solar production, and allows local businesses and homeowners to own panels within the facility and receive credit for the electricity produced on their monthly bills.
Community solar makes solar both more accessible and more affordable. 80 percent of metered utility customers in the US face less than ideal conditions for solar on their own rooftops, because of building regulations, poor sunlight on their property or the fact that they are renters. Buy-in is within reach for most prospective customers, from as little as $535 for a single 230 W panel (depending on location, available rebates, and RECs), which is a net cost of less than $2.50/Watt after rebates and incentives, and they produce more power for longer.
The model also presents an opportunity for a utility-from large IOUs to municipal utilities and rural cooperatives-to add solar to their mix with a turn-key solution. It provides them with in-network, reliable, utility-scale clean energy generation at reasonable power rates that applies nicely to a RPS without capital outlay or responsibility for monitoring, customer administration, operations and maintenance.
SP: Where do the installations go?
N&S: Community solar installations from REC and CEC are planned to be on a school, a farm and a field - really, they can go anywhere. All are expected to clock in at 500kw.
SP: What about people living in crowded suburban developments where there is no open space?
If you live in suburban house, you just buy a panel. A developer can put it anywhere in your utility territory - ideally somewhere with terrific sun exposure and relatively big so they can benefit from economies of scale. Sure beats my shaded apartment with minimal sun exposure and a small roof.
SP: How would I as a home (or building) owner determine what my payback is and what the savings would be?
N&S: Savings fluctuate on a case-by-case basis and will vary depending on how much energy a household or building uses. Clean Energy Collective (CEC), which operates several community solar systems in Colorado, New Mexico and Minnesota, offers the following estimates for savings throughout a system's 50-year life:
- 1 Panel: $45 in year 1 / $7,291 over life of the system
- 5 Panels: $223 in year 1 / $36,453 over life of the system
- 10 Panels: $446 in year 1 / $72,906 over life of the system
- 20 Panels: $892 in year 1 / $145,813 over life of the system
SP: How many participants are required before the model becomes economical?
N&S: For participants, the model is economical from the get go. Economies of scale gained through bulk purchase and aggregation, greater production as a managed solution, and purchase flexibility (members can buy as few as one panel) contribute to a faster financial return and greater lifetime value than a home-sited system.
For developers, the model is scalable, allowing for phased construction of installed capacity based on demand.
SP: What are some of the obstacles?
N&S: The process of implementing community solar offers some challenges. Careful consideration is required regarding ownership and capitalization structures, financing methods, third-party ownership and development arrangements, ownership of RECs, property tax liability, and interconnection and net metering rules.
Developers such as Clean Energy Collective (CEC) have stepped in to address some of these barriers to entry for consumers, such as education, cost, pay-back time, and hassle-factor.
SP: Where has it worked?
N&S: Community solar has been successful thus far in Colorado. The Xcel Solar*Rewards Community program, for example, sold out within minutes of launching, with three times as many applications as allowed capacity. In addition to the Xcel Program, Clean Energy Collective has implemented six other community solar projects in the state and has expanded to New Mexico and Minnesota. In Colorado, CEC is working with REC Solar to sell and develop the arrays to Xcel ratepayers. REC Solar, an installer with a national footprint, has already seen strong interest from consumers by tapping into their existing market of solar buyers
SP: Are people remaining committed to the "community?"
N&S: Yes, people who participate in community solar projects remain central to community, because, first and foremost, they have an ownership stake in the system. Participants have the ultimate say in what happens to the panels that they own; the panels are assets that can be sold, donated, or transferred to another residence within the utility territory.
SP: What places does this make most sense?
N&S: Because the barriers to rooftop solar access are so pervasive, community solar is not an obscure solution to a rare problem. Since 80 percent of homes in the US cannot accommodate rooftop or home-sited solar, community solar makes sense across the board.
(Image credit: blog.solargardens.org)
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