Decarbonization Today
I'm sure most people know something about solar energy. They see of panels on some roofs. They may see solar panels perhaps on a patch of land near a large business building or even in a parking lot. And I'll assume that most people think they are used somehow to provide electricity. I'm also going to assume that many people think it takes a good deal of money to buy and install those solar panels.
What if there was a way for a homeowner, landlord, or even a renter to get the lower cost of solar generated electricity without the need to purchase and maintain the solar panels?
Well, there is. Welcome to the world of community solar!
The way community solar works is a person or a bunch of people (I'll call them the developer) raise money from private investors and the government to buy and install the solar panels. In addition, the developer finds an entity like a business (I'll call them the site host) that has a rooftop or land where the solar panels can be situated. The developer and site host agree to terms on how much the developer will pay the site host for having the solar panels on their property.
The developer then contracts with the local electric utility company whose distribution lines service the area. After all, the electricity coming from the solar panels need to connect to the grid so the solar generated electricity can get to customers. The contract ensures the distribution lines will have the capacity and ability to take on the energy created by the community solar and service the local area.
(Technical note: Community solar does not produce enough electricity at a high enough voltage to be carried by transmission lines.)
(Side note: Click here if you want to understand where distribution lines fit into the overall grid scheme.)
With all this in hand, the developer needs approval from a governing body for permission to proceed with the project. The plan provided to the governing body includes among other things, the geographic to be served, how much the electricity will cost customers, and the project's duration. (In my home state of NJ, the governing board is the Board of Public Utilities.)
Once approved, the developer then has what is called a community solar project and begins the solar panel acquisition and installation, and sets out to acquire customers (called subscribers). This is where you and I come in. We subscribe to the community solar project. Subscribers are allocated a portion of the solar community output. This means the number of people that can subscribe to a community solar project is fixed.
My understanding of the community solar's business model is based on what I've learned here in New Jersey. I am assuming the concepts are similar across the 22 states plus Washington D.C. (as of December of 2021) that have policies in place supporting community solar. If you reside in such a state, different laws and regulations may mean the model may be slightly different.
One major benefit of community solar centers around the lower cost of electricity. Solar generated electricity is the cheapest source for electricity. Fuel costs are a significant reason as solar requires no fuel. Therefore, the plan approved by the governing body documents the discounted electricity cost to subscribers. (Note: In NJ, I see discounts advertised as 15% to 21%.)
Another major benefit to subscribers is there is no upfront costs to buy anything. Subscribers are not putting panels on their roofs. This means EVERYONE can subscribe - homeowners, landlords, and renters!
So what's the catch?
While community solar lowers your electric bill by providing your home with solar generated electricity, the contract between the subscriber and the community solar developer can be confusing. Take billing for example. It would be ideal if the bill you get after being a subscriber continues to be your only bill with the contribution of the lower electricity cost from community solar on the bill. (This is called consolidated billing.) However, often a subscriber gets two bills. One from the current electric utility and another from the community solar.
It is also important to note that not all of your electricity is coming from the community solar project. Rather, your subscription may only cover a portion of your total electricity needs. In addition, because the sun may not be shining every day, the amount of savings from the community solar varies from month to month.
The contract may also show there are initial deposits to secure your subscription or there may be exit fees. So, as with any contract, reading and understanding the contract is vital in understanding your obligations and your expectations. Fortunately, in my state of NJ, there are usually no additional fees associated to subscribing or cancelling.
Another caveat is availability. Community solar is not widely available, so you may not have access to a community solar project. And even if there are community solar projects in your area, each can only accept a certain number of subscribers. So, you may not be able to join those in your area.
However, even considering all the caveats, community solar is the real deal. For those who are lucky enough to be able to subscribe to a community solar project, you'll have the opportunity to save money each month and reduce the demand for fossil fuel generated electricity -- without having to buy anything. Lastly, community solar can be an important contributor in addressing decarbonization and climate change.
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