Community Solar – A Renewable Energy Option for Everyone

Community solar arrays (CSA’s) are large solar installations that power small communities of homes and/or businesses. You may also hear them referred to as “farms” or “gardens.” CSA communities are not necessarily bound by geographic location. They arise through the connection of like-minded folks who want to go solar without hosting the solar infrastructure on their property. The participants in a CSA can be neighbors, or they can live many towns apart. They participate by owning or leasing a “share” of the whole array, and the economy of scale of shared equipment reduces the costs for all participants, making community solar a more affordable option.

Community solar projects are often implemented by utilities, businesses, investors, and community groups. Arrays require a large open space with adequate solar exposure that also meets the siting requirements of the state, utility and local community. The solar power that is generated by the CSA is transferred to a local electric utility, which then credits the members of the project for the electricity their array has generated.

Three Community Solar Project Models

CSA models vary and continue to evolve as the industry grows. Some solar businesses lease their panels, while others require that you purchase the panels. Most models allow members to sell or transfer their shares to others of the same electric utility, and some allow members to monetize their credits and exchange them with someone in a different utility. The industry will continue to evolve as communities develop models that meet their specific needs. However, there are basic CSA models that have become popular in Vermont. They are:

The Third Party Ownership/Partnership Model:

An increasingly popular model for community solar project development, this model is quick and easy to get up and running. What makes this model so simple is that the community hires a third-party company to manage the financing, design, construction, operation, and maintenance of the system. The drawback to a system like this is that it is an out-of-the-box solution that may not meet some of the community’s needs.

The Direct Community Ownership Model:

With this model, the community designs a custom solar array for its own specific needs. This model requires the members of the array to structure and run the project as a business. The complexities of running a community solar business can be overwhelming for community members so it is common for communities to hire a solar company or contractor to build and manage their solar farm.

The Utility-Sponsored Model:

With the utility-sponsored model, a utility makes the initial investment and owns or operates the project, providing it as an option to their ratepayers. If you live in an area that does not have any existing community solar options, you can approach your electric utility to find out if it is willing to develop a CSA in your area.

Developing a community solar array is a complex process. In addition to finding a location that will meet local, state, and utility permitting requirements, planning will also include determining who will participate, and how it will be funded or financed. There are a variety of approaches, and it is important to engage the appropriate legal and financial resources.

Rebates and Financing for Community Solar

The cost of participating in a community solar array is a smart investment because it enables you to lock in your electric costs and protect yourself from electric rate increases for years to come (as long as your electricity usage remains the same). You can also finance 100% of the system, so you will pay no upfront costs. With incentives, you may even be able to zero out your monthly bill.

Tax incentives are offered at the federal and state levels to ease the costs of developing a community solar array. The Investment Tax Credit (ITC) enables individual owners of PV systems a one-time tax credit equaling 30% of qualified installation costs. The tax credit will be available until 2019 and will be reduced to 26% in 2020 and to 22% in 2021. Electric utility production bonus credits may be available as well through your utility. Vermont individuals and businesses may qualify for additional tax credits.

Are you interested in participating in a community solar project? Find out how VSECU can help with financing.