Solar Savings for All: How Community Solar is Redefining Energy Economics
SolarEdge maximizes energy generation despite uneven terrain at Harford Pike, Rhode Island
Community Solar is an excellent option for potentially reducing energy bills without installing panels onsite. Almost anyone—from households through businesses to public organizations—can lease or purchase a percentage of a solar farm at an off-site location. They share the profits from the energy produced by receiving credits directly on their electricity bill for their portion of the savings.
From a developer’s perspective, community solar projects can be eligible for different state tax incentives, and for additional tax breaks under the 2022 IRA (Inflation Reduction Act) climate law. Qualifying for these tax breaks and bringing projects online successfully and efficiently requires navigating complex regulations and constraints. Incentives are typically location-based and can vary per state, which is why “siting” is a key element in maximizing the project’s financial potential. The flexibility to choose any location, while also ensuring maximized energy output and minimal O&M costs, can make or break a project.
SolarEdge technology is suitable for a variety of site terrains, including both challenging and uneven terrains. It maximizes energy output and reduces O&M costs so that community solar projects can be sited at the optimal locations to meet constraints and maximize incentives.
What is Community Solar?
Community Solar, or CSS (community-shared solar), is a fast-growing sustainable energy option for anyone who wants to enjoy the benefits of solar but is either unable or does not want to have solar panels on their rooftop. It’s a great way for businesses and individuals, whether owners or renters, to reduce their energy bills.
The Community Solar concept is based on a shared-economy model. After all, if one can book accommodations on Airbnb or raise capital through crowdfunding, why not share a solar array?
How Does It Work?
Customers, or “subscribers”, can buy or lease a portion of a solar energy system for a monthly fee. The electricity manufactured by the array is fed into the grid. Through virtual net metering, each subscriber is credited on their electricity bill for their share of the profits. Depending on the state’s policies, according to some subscribers they can receive as much as 10% savings off their electricity bills. In addition to the financial benefits, subscribers are also reducing carbon emissions and the impact of global warming, while increasing their energy independence.
Everyone Wins
Community Solar provides social, financial, and environmental benefits to a range of stakeholders, in addition to subscribers. According to Wood Mackenzie, 94% of Community Solar projects are owned by third-party companies. These companies typically receive a handling fee—a portion of the subscriber’s payments and can pocket the substantial IRA tax credits as well as RECs (renewable energy certificates) received for the Community Solar array.
Typically, state legislation mandates utilities to run community solar programs. In states without legislative mandates, some utilities develop these projects voluntarily, and might even own them, gaining an additional source of cheap energy.
By maximizing energy production and reducing O&M costs, investors, and energy providers are all incentivized to capitalize on this vast opportunity to increase renewable energy production. As Community Solar expands, entire communities gain new solar jobs and economic benefits. There is also significant educational value in reaching out to communities and encouraging them to consider renewable energy. And, of course, the environment gains a huge win by lower reliance on fossil fuels and reduced GHG emissions.
Positive U.S. Market Forecast
Community Solar has emerged as an attractive and increasingly popular solar option in the U.S. Since 2010, cumulative community solar capacity has more than doubled on average each year. Community Solar currently serves 600,000 households with a total capacity of over 3.2 GW through 1,600 projects nationwide. Wood Mackenzie projects an average of 8% continued annual growth of existing community solar markets over the next five years. This amounts to nearly 14 gigawatts of cumulative capacity expected by 2028 - excluding potential new programs.
Credit: Wood Mackenzie
Siting is a Key Success Factor
Community Solar provides social, financial, and environmental benefits to a range of stakeholders, in addition to subscribers. Community Solar projects are typically owned by utilities or third-party companies. These companies receive a handling fee—a portion of the subscriber’s payments and can pocket the substantial IRA tax credits as well as RECs (renewable energy certificates) received for the Community Solar array. State legislation might mandate utilities to run community solar programs. In states without legislative mandates, some utilities develop these projects voluntarily, and may even own them, gaining an additional source of cheap energy.
By maximizing energy production and reducing O&M costs, investors, and energy providers are all incentivized to capitalize on this vast opportunity to increase renewable energy production. As Community Solar expands, entire communities gain new solar jobs and economic benefits. There is also significant educational value in reaching out to communities and encouraging them to consider renewable energy. And, of course, the environment gains a huge win by lower reliance on fossil fuels and reduced GHG emissions.
Positive U.S. Market Forecast
Community Solar has emerged as an attractive and increasingly popular solar option in the U.S., where cumulative community solar capacity has more than doubled since 2010. Community Solar can power the equivalent of over 600,000 U.S. households with a total capacity of over 3.2 GW through 1,600 projects nationwide (as of 2021). Wood Mackenzie projects an average of 8% continued annual growth of existing community solar markets over the next five years. This amounts to nearly 14 gigawatts of cumulative capacity expected by 2028, excluding potential new programs.
Reducing Diesel Reliance in Rural Alaska
Financing Community Solar projects can be costly, requiring upfront capital to cover all the various expenses. Generous federal and state tax breaks are available mostly for locations with degraded land. This is why siting of a Community Solar project plays a key role in maximizing financial potential. Location affects everything from the project’s cost, through performance and utility allowance structure, to the value of the program offered to subscribers.
Even after navigating the intricate state-specific regulations including land-use and zoning laws, and obtaining tax breaks for a selected site, there are other factors to consider. Energy output and ongoing O&M costs can make or break a project. The flexibility to choose any location and win sizable incentives, while also ensuring maximized energy output and reducing ongoing O&M costs, is critical.
Higher Yields Even on Harsh Terrains with SolarEdge
SolarEdge provides more flexibility in site selection, making it attractive to choose sites with degraded or contaminated land that qualify for more tax credits.
With its innovative design flexibility, the array can be placed at various pitches and orientations, so more modules can fit into each site, increasing the amount of overall energy generated. By eliminating the need to level sloped or uneven terrain, SolarEdge lowers improvement and leveling costs often required for ensuring high solar outputs.
With SolarEdge’s Module Level Power Electronics (MLPE) technology, modules that underperform due to dust, bird droppings, aging, and other factors do not impact the other modules on the same string. This allows for minimum energy loss and maximized energy production, translating into more energy. Ultimately it increases the program’s value for subscribers, with potentially more savings passed on to them.
Simpler O&M
SolarEdge’s industry-leading modular architecture is designed to simplify and reduce O&M costs. Its Monitoring Platform provides visibility into each module’s performance, with fault detection alerts for remote maintenance and easier O&M.
SolarEdge Power Optimizers attach directly to the solar modules, so service personnel can remotely track each solar module’s performance. Should one underperform, an alert will automatically pinpoint its location, enabling efficient issue resolution. This amounts to more system uptime for subscribers. In addition, SolarEdge’s granular monitoring enables more effective and precise management of subscriber billing by third-party operators.
A Community Solar Success Story in Rhode Island
An exciting example of how SolarEdge’s solution installed at a Community Solar ground-mounted site enables the people of Foster, Rhode Island to enjoy a more affordable, sustainable lifestyle is showcased in this case study.
In its first nine months of operation, the project generated 5.81 GWh of solar energy, of which 3.35 GWh was made available to local residents and businesses. For subscribers, this meant a total reduction in their energy costs equivalent to $74 monthly per consumer on average. As described by local resident and professional glass blower Katie Corticelli in this video testimonial, the equivalent is 10% off her electricity bill—a significant benefit at a time of global energy insecurity and rising prices.
The project lowers reliance on fossil fuels, reducing CO2 emissions by 3425 tons, saving the equivalent of 3,438,090 pounds of coal from being incinerated each year. Over 600 households and 670 electric vehicles are powered thanks to this project. The project also helps the state meet its renewable energy quotas. And, as the cost of grid electricity continues to rise, future savings are likely to grow as well.
James Pochez
/ Director of Project Development, Sunlight General Capital
