Community Solar

Join the Community Solar Movement: Unlock Solar Energy

Foreword by Ian Thompson, Editor

How to Invest in Solar Energy Without a Roof? Is Community Solar the Answer?

With the trend of roof ownership footprints getting smaller and more people resorting to renting rather than owning, investing in renewable energy like solar is becoming a challenge. In Matt’s latest video, he introduces an intriguing solution to this – community solar projects, also known as solar gardens. These projects allow multiple people to invest in a small solar farm, giving them access to solar PV even if it’s not located on their property or nearby.

Matt will explain how it works and the potential benefits, but I urge you to do some research before signing up. The schemes can be quite diverse, and it’s essential to find one that suits your needs and circumstances.

There’s an interesting spread of solar PV schemes worldwide, and I’ve noticed a trend where companies supply the hardware, use your roof, and offer you slight energy savings. However, I personally prefer owning my solar array to reap all the benefits, that way I’m in control and can’t blame anyone but myself if something changes.

Matt discusses two primary models for community solar: ownership and subscription. He highlights the role of virtual net metering in making these projects feasible and mentions that Minnesota, surprisingly not California, leads the U.S. in community solar proposals.

Interestingly, community solar projects are gaining traction in Europe and Australia, thanks to changes in regulatory frameworks. Matt also talks about different subscription systems such as utility rate discounts, escalating solar rate, flat per kilowatt rate, and lease to own.

So, if you’ve been waiting for a chance to invest in solar energy but were held back by circumstances, community solar might just be the opportunity you were looking for, if it exists in your country that is.

Video Transcript

There’s a lot of people that want to go solar but they just can’t because of the cost or they don’t own a home where they can install it. What if there was a way for you to get the benefits of solar but without the need of installing solar on your roof?

I’m Matt Farrell, welcome to Undecided.

Solar power has so much potential to solve our energy needs. The amount of power that hits the earth in a single hour from the sun is enough to power the world’s energy needs for an entire year. We just have to build out ways to capture and store it. And that’s not the only challenge.

I hear from so many people that want to go solar but they rent an apartment or they can’t afford the upfront costs to install it on their home, or they just can’t see the investment making financial sense given how cheap their electricity already is compared to their use.

According to the National Renewable Energy Laboratory here in the U.S., about 35% of residents are renters. They also estimate that only about 51% of residential buildings can accommodate a PV system of 1.5 kilowatts or larger due to ownership, number of stories, suitable roof space, and shading.

And if you live in a homeowners association, they often have requirements around where you can install it and how large the system can be so it won’t affect the look of the neighborhood. In some states, HOAs aren’t allowed to ban them, but they can drastically reduce their effectiveness.

And all of that leaves a pretty sizable group of people in the U.S. that can’t do solar even if they wanted to. It’s a similar situation in Europe, home ownership ranges by country, but among the EU member states, it averages out about seventy percent owning versus renting.

I’ve been wanting to make a video about this issue for a while now, and there’s been some recent developments that tipped me over the top. There’s a really interesting path for people in the situation that’s been gaining steam. It’s called community solar, sometimes they’re called solar gardens, which is playing off the community gardens aspect.

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The basic concept is kind of stupidly simple. A community comes together to invest in and build out a small solar farm on a plot of land. Each person of that community can buy in or pay a subscription fee to that community solar project, and then they get money or credits back towards their electric bill. The bottom line is that you’ll be reducing your electricity bill without having to install solar on your own property or home.

As I mentioned, there are two basic models for community solar: the first is ownership and the second is subscription. In the ownership model, you’re buying a share in the project and will get a percentage of the power produced based on how many shares that you own. It’s probably not the best analogy, but it’s kind of like a time share.

You can’t afford owning a vacation home in Hawaii, so you pull your resources together with other people and share that vacation home at different times of the year. It’s a different sharing principle so it’s not the best analogy, but anyway, in an ownership model you can purchase a certain number of panels on the farm up front or get financing for it as if you’re installing them on your own home.

You’re buying a certain number of panels and kilowatts within a larger system and, just like installing them on your own home, you’d buy a certain number of kilowatts that’s sized appropriately for your average energy use.

The second model is subscription-based, which doesn’t offer as much of a return on investment but it also doesn’t have upfront costs or signup fees. You can just jump in and start getting savings right away, and then you can back out if you move or aren’t happy with it. You typically have to live within a certain zone of a solar farm to sign up, and you’ll see monthly savings on your bill between five and fifteen percent.

The first hurdle towards either of these options, though, is something called virtual net metering, and not every community has this available. Now I live in Massachusetts, which has both net metering and virtual net metering available.

For the solar panels that I have installed on my own roof, I get a one to one exchange for each kilowatt of over production that I put into the grid versus what I take out, so if I put one dollar’s worth of electricity into the grid, I get one dollar taken off my electricity bill. Now virtual net metering does the same thing but without having to have the panels installed on the building that’s actually getting the benefit.

Virtual net metering unlocks potential for community solar projects just like these. If you look across the U.S., the top contender for community solar isn’t California as you might expect, it’s Minnesota. As of 2017, Minnesota had over 1,000 community solar proposals awaiting approval. In the second quarter of 2020, the top contender is still Minnesota’s community solar program and has over 700 megawatts of capacity.

Massachusetts is another one of the top states for community solar and has about 300 megawatts of capacity. Where they’re installed is kind of fascinating. In some cases, community solar projects lease land from someone like a farm owner.

For example, there’s Iceton’s Hidden Acres 5 megawatt solar farm, which is made up of over 15,000 panels in Center City, Minnesota. Aceton Acres is a family owned cheese and buffalo ranch that leases out a portion of their land for the project. All in, this facility is powering 650 homes a year but could handle up to 1,300 energy-efficient homes.

As the owner of the ranch said, “It’s a good use of my land to help society.” But where you’re able to jump into these projects is really hit or miss. In the U.S. there are only 19 states that have legislation supporting community solar projects and virtual net metering. This image from Solstice also shows the states that have at least one independent project online but don’t have official laws supporting them.

If you journey outside the U.S., it gets a bit murkier. From what I was able to find, Europe doesn’t have its many community solar projects at the moment because of the lack of consistent regulatory frameworks, but that may be about to change. The 2030 EU Renewable Energy Directive is laying the groundwork for these missing frameworks. All 28 member states have to design laws that will ease the way for community energy generation and consumption.

A professor of renewable energy systems at the University of Applied Sciences in Berlin said, “Citizen energy is the key to getting the acceptance necessary to make the energy transition happen.”

In the UK, the Mayor of London launched the second round of funding for his community energy projects, which is part of a goal to hit 1 gigawatts of installed solar capacity by 2030. And just this year in France, they removed a footnote from their energy code that was holding back community energy systems.

And in the land of residential solar, Australia, it shouldn’t be a surprise that they have a lot of community solar options available too. There’s a lot of investment options in the community solar projects as well as community solar programs that you can sign up for as a customer.

One of the biggest challenges is finding a project and a place to start, and then knowing what to look for. But before I get into that, I’d like to thank SurfShark for sponsoring this video. I know we’re not all traveling much right now, but I still like to use a VPN when I want to protect my privacy online.

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So can you find a community solar project near you? Well, for anyone in the U.S., a great resource is EnergySage, which I’m actually a partner of. I’ve been a big advocate of using EnergySage if you’re looking for a solar installer, but they also have rolled out a community solar portal. I’ll include a link to my EnergySage portal below, but it’s as easy as entering your zip code and average monthly energy bill. From there, you can see what kind of savings you can expect and what the high level contract terms are for the project.

If you’re outside the U.S., I’ll include some links I found of other programs and companies that can help you with your search. A few quick ones are Solar Sense in the UK, Anova Community Energy in Australia, Community Solar Portal and Farming the Sun are also worth checking out too. If you know of any good programs or portals, please drop a comment down below and I’ll add them to the list.

The other challenge is to know what to look for in a project, whether you want to own or do a subscription. If you’re looking towards an ownership model, pay attention to the total size or kilowatts of the share that you’re interested in, and just like installing solar in your home, what’s the per watt price?

It’s the best way to compare projects in an apples to apples way. Are there any production guarantees or expected production estimates? Compare the cost of the system to how much you’ll be saving to estimate the payback period and if it aligns with your goals. And finally, be sure that the final offer and price includes all the equipment and administration costs. You don’t want any fees sneaking up on you.

If you end up moving, you can usually continue to receive the virtual net metering credits associated with your share, but can also exit by selling the panels to somebody else.

Now subscription programs are much simpler, both cost wise and for the things to look out for. What are the membership and signup fees that affect the overall savings? Are there early termination fees that if you want to leave? Many of the programs I’ve seen don’t have early termination fees, but they just require 90 days notice, but make sure that you understand both of these points before jumping in.

And beyond that, there are some different styles of subscription systems like utility rate discounts. Some of the ones I’ve looked into say 10% discount versus what you pay now, so it fluctuates along with the current electricity prices. There’s also escalating solar rate – this usually means that you start at a fixed lower rate and then slowly increase that rate by a certain percentage each year after that.

There’s also flat per kilowatt rate, sometimes the price a kilowatt hour rate that’s slightly higher than what you’re currently paying for electricity, but it won’t go up over time, so the expectation that electricity prices will increase in time will end up saving you money down the road.

There’s also fixed monthly fees – this is similar to flat per kilowatt hour rates since you’ll be getting a certain number of credits towards your bill each month. Over time, these credits become more valuable as electricity rates increase.

There’s also lease to own – after a certain number of years your payments stop and the solar credits you receive each month are free.

There’s partial and full up front payments, probably what you expect, but you pay a lump sum to get a deeper discounted rate.

Now community solar isn’t going to bring solar to every corner to the globe yet, but it’s a step in the right direction and can open up the possibility of going solar for a much larger population.

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