What is Community Solar & How is It Different from a Solar Energy Plan?
Despite what we’re told about the hard work of the lone individual who works on their own against the forces of nature to carve out their space in this world, people really do like working together toward a common cause. This is especially true in the case of community solar programs. These solar developments help people work together to enjoy the benefits of solar energy in their homes.1
You see, despite the growth of the solar industry over the past decade — including the proliferation of rooftop solar panel installations — many people cannot take part in this renewable energy revolution. Between renters, people lower on the income scale, homes with awkward roof angles, and high-shade homes, nearly 50% of people and businesses are completely unable to use traditional solar power systems.2
Community solar can change this, but only if people choose to work together.
How Does Community Solar Work?
A community solar system — often called a garden or farm because of its highly localized nature — is a collection of solar panels in a publicly shared space that generates electricity from the sun. These panels are placed near homes and neighborhoods where they can provide maximum benefit to people who normally can’t use solar power.3 However, most solar developments deliver that renewable energy exclusively to people in the immediate area who have bought into the program.
Here’s how this works:
The solar panels are installed in a large, open area with maximum exposure to sunlight.
The solar energy gets fed into the larger energy grid for the region.
People who have joined the solar program will see their energy bill adjusted for the amount of energy generated in relation to the size of their home.
It’s all thanks to a concept called “virtual net metering.” With standard net metering, you have solar panels on your roof, and your local utility company pays you back in the form of bill credits for the amount of electricity your home directly fed into the electricity grid. With virtual net metering, your local utility company gives you bill credits for the amount of electricity the community solar farm sent to the electricity grid in proportion to the size of your home.4
The ultimate idea lies in encouraging enough members of the community to buy into the community solar farm. This way, the project first earns back the return on investing in installing the panels and then expands to serve more people.
What are the Most Common Types of Community Solar Programs?
As you’d imagine, getting community solar gardens up and operating efficiently can be difficult, as not every city, state, or region have the same energy grid, much less similar energy regulations. In every case, the electricity generated by the solar panels is sent into the larger electricity grid for the region, and the consumer sees the benefits as bill credits on their electric each bill.5 But because the United States lacks an integrated electricity grid, three specific arrangements have proven essential to starting, maintaining, and growing healthy solar programs.
#1 Utility Sponsorship
Such solar projects are operated by a forward-thinking utility company wanting to expand their services and invest in renewable energy. If you live close enough to the service area for a community solar garden, you will sign up through the utility company for your area. This option is perfect for long-term residents of a neighborhood who don’t have the funds to install their own panels or their roofs can’t support solar panels.
#2 Private Company
Whether operated as a for-profit or nonprofit enterprise, the idea here is that solar companies want to invest in solar power generation, and they’re looking for small-scale investors. As in, you can buy a small, long-term ownership stake in the company in exchange for the solar energy generated by that solar farm. This becomes an option for people who have local utility companies unwilling to build the first option for their customers.
#3 Subscription Program
This is the more affordable counterpart to the second option: the private company that built the community solar project isn’t selling you a long-term ownership stake. Instead, you simply pay a regular monthly fee in proportion to the number of solar panels needed to power your home for a given month. You might not “own” your panels, but you get all the green energy benefits — making this the perfect plan for lower-income people who still want to help grow the solar industry.
How is Community Solar Different Than Buying a Green Energy Plan?
Joining a community solar program in your area is very similar to signing up for a green energy plan from a local Retail Electricity Provider (REP). In both cases, you won’t have solar panels on your roof, but your efforts will go to increasing the amount of clean energy in your region’s electricity grid. In fact, with a company like Chariot Energy that owns its own solar farms, the relationship between us and you as the consumer is very much like the aforementioned subscription program.
The real difference lies in the nature of the green energy industry and how the amount of green energy generated is calculated and verified. Because the electricity grid contains both brown energy from fossil fuels and green energy from renewable energy sources, your home won’t receive pure green energy. That is unless you truly use rooftop solar exclusively and disconnect yourself from the greater electricity grid. Hence, companies that buy, sell, and trade in the green energy industry use a concept called a “Renewable Energy Credit” or REC.6 Here’s how that works:
Each REC represents 1,000 kilowatt-hours (kWh) of electricity generated by 100% renewable energy sources.
Each time a company generates 1,000 kWh of electricity from 100% renewable sources, they are given a REC.
Each REC is proof that the company has added that much renewable electricity to the greater electricity grid.
The company that placed that renewable electricity into the energy grid then sells those RECs to residential and commercial customers each time they use 1,000 kWh at their home or business.
Without a REC, the company cannot prove that they displaced 1,000 kWh of brown energy with renewable energy.
To summarize, when you buy a green energy plan, you’re buying RECs, but when you join a community solar farm, you’re partnering directly with the company operating solar panels. In some cases, you can even become an investor in that community solar garden.