by Laura Burkhardt

Solar Energy to Your Home: Rooftop Panels, Community Solar Farms, et al.

Powering the home with solar-generated electricity is one way many people can increase the use of renewable resources. In this article we describe different ways this can be done.

Rooftop Solar.

Installing solar panels on the roof of a home is a very common way of using the sun to generate electricity. The diagram below shows photovoltaic (PV) solar panels that would be on a roof connected to the house electrical system and to the grid.

 Source: https://www.nrel.gov/docs/fy02osti/31687.pdf

Since the production of electricity varies according to amount of sunlight available at any particular time, there may be times when more electricity is being generated than is needed by the home. In this situation the excess electricity is pushed back to the grid, and the local utility credits the homeowner’s account. In the opposite situation where the home is consuming more electricity than is being produced, electricity from the grid makes up the difference and the utility uses any accrued credits as payment. This system is called net metering. The electricity generated by the solar panels and used by the home directly is referred to as behind-the-meter, since it does not go through the home’s utility meter. [1]

Community Solar Farm.

A community solar project is a solar power plant whose electricity is shared by more than one property. The capacity of the plant is .5 MW - 5.0 MW, which is considered community-scale as compared to utility-scale (greater than 5.0 MW).

The primary purpose of community solar is to allow members of a community the opportunity to share the benefits of solar power even if they cannot or prefer not to install solar panels on their property. Community solar is thus an attractive option for renters or others who live in shared spaces. Project participants benefit from the electricity generated by the community solar farm, which costs less than the price they would ordinarily pay to their utility. [2]

Community solar uses Virtual Net Metering (VNM) and similar policies to provide financial benefit for those who use community solar. Like net metering for rooftop solar power, VNM and similar policies allow households or businesses to receive the net metering credits associated with a renewable energy project, though unlike rooftop solar it’s a project installed at a remote location. These credits are worth as much (or almost as much) as what the household or business would pay for electricity from their utility. For example, every unit (kilowatt-hour or kWh) of electricity generated by the community solar farm will effectively reduce the participant’s power bill, either as a one-for-one kilowatt-hour basis, or as a monetary credit. [3]

Source: https://www.energysage.com/solar/community-solar/pricing-models/

There are two main pricing models for community solar: ownership and subscription.

Ownership. It is common (and even required in some states) for community solar projects to be jointly owned by participants. If you own a share in a community solar farm, you will pay a set price for it – which you can either pay for up-front with cash or finance with a loan.

In states with virtual net metering, like New York, once the solar farm is operational you will begin to receive solar net metering credits on your monthly power bill equivalent to your share of the solar project’s total electricity generation. Once you recoup your initial investment through these savings, you will continue to receive free electricity in the form of solar credits until you sell your share or the project is decommissioned (which can be 25 years or more). [3]

Subscription. The second option for joining a community solar project is a subscription. If you subscribe to a program, you will either pay for your solar electricity on a monthly basis through a type of power purchase agreement (PPA), or in a one-time up-front payment.

A community solar farm does not sell its electricity to the local utility. Rather, each subscriber is allocated a share of the electricity generated by the farm, based on the subscriber’s annual electricity usage, and he is then given credits on his utility bill for this share of the electricity. With the monthly payment model, the subscriber also pays a monthly subscription fee to the solar farm; the net of the payment to the utility (if any) and the subscription to the solar farm is often advertised as being 10% less than the subscriber’s current payments to the utility. The actual implementation details of this process may be different for each individual solar farm; the general concept is shown in the figure below.

In Step 1 of the sequence, the solar farm owner reviews the subscriber’s annual electricity usage in order to assign that subscriber a share of the solar farm’s generation. The solar farm owner then informs the utility company that the subscriber will be receiving a portion of the solar farm’s production each month.

Step 2 illustrates the flow of electricity from the solar farm and other power plants through the grid to the subscriber’s residence.

Steps 3, 4 and 5 are part of the monthly billing cycle. At the end of each month the utility credits the subscriber’s account for the amount of electricity he was allocated by the solar farm. The subscriber pays his utility bill, which may be $0 if his allocation exceeded his actual usage. Any unused credits are carried over to the next billing cycle, just like net metering for a rooftop solar system. The user also makes his monthly subscription payment to the solar farm owner. [4]

Alternatives to Community Solar.

There are a number of other vehicles that allow individual investors, households and businesses to get involved in the clean energy economy.

Below are some of the approaches that are sometimes confused with community solar. [2]

• Group Purchasing: Group purchasing deals allow a large number of households or businesses to purchase their own individual solar systems at bulk rates through negotiations with a solar installation company. As such, group purchasing does not result in a communal project whose benefits are shared—once completed, each participant benefits separately from a separate system. In contrast, in a community solar project, all participants benefit from the same system, which is usually located on a piece of land not necessarily owned by any of the participants.

• Green Power/ESCOs/Third Party Providers. Green power arrangements or those with ESCOs (Third Party Providers) allow a utility’s customers to purchase electricity from renewable energy generation plants—mainly hydro, wind, and solar. Those who sign up for green power programs generally do so to ‘do the right thing,’ rather than to save money on their power bills, since these options often come at a price premium. Importantly, participation in a green power plan does not necessarily result in the build-out of additional renewable power plants, as the electricity may be sourced from pre-existing facilities. Most community solar projects, on the other hand, are developed with a primary aim of saving participants money on their power bills.

• Crowdfunding / Online Solar Investment Platforms: Some companies have opened up renewable energy investment to the masses with online platforms that allow virtually anyone to invest into new solar power system installations. Under such arrangements, buy-in is set up purely as an investment, and the power that such a system generates is not associated with the participant’s electricity bill in any way—and indeed may not be located in the same utility region, state or possibly even country. Returns from these projects may be taxable, whereas the benefits from a community solar plant are not.

Sources:

[1] “Connecting Your Solar Electric System to the Utility Grid”, https://www.nrel.gov/docs/fy02osti/31687.pdf

[2] “Community Solar: What Is It?”

https://www.energysage.com/solar/community-solar/community-solar-power-explained/

[3] “Community Solar: Pricing Models”,

https://www.energysage.com/solar/community-solar/pricing-models/

[4] “What is Community Solar”,

https://ampion.net/subscribe/?utm_source=google&utm_medium=cpc&utm_campaign=purchasers&utm_content=allsave&gclid=EAIaIQobChMI8-njitbT6AIVxuDICh3RtgCKEAAYAyAAEgL3cfD_BwE

[5] “How Does Community Solar Work”,

https://mysunshare.com/blog/how-does-community-solar-work/