EDITOR’S NOTE: Community solar is one of the many new utility business options to be fully explored at the Empowering Customers and Cities event in Chicago November 4-6.
Many utilities today are heading this advice, making practical, proactive adjustments to their business strategy to ensure long-term relevance and strength. Innovative solar solutions are providing utilities with more options and more flexibility in integrating renewables to meet consumer demand and regulatory requirements. One of those solutions is community shared solar.
Two years ago, most of the utilities were not aware of what community shared solar was. Today, most utilities are starting to understand how the solution can help them deploy solar in their territory in way that makes it a benefit instead of a threat to their businesses. As shared solar begins to scale more rapidly, the model is demonstrating consistency and value, and generating substantial demand on both sides of the meter.
Despite its relative young age, about six years old, the marketplace is maturing and the future is quite bright.
In its most recent report, the National Renewable Energy Laboratory reaffirmed the potential for community shared solar to serve as the dominant solar energy model throughout the country. The number of shared solar programs has grown from two in 2010 to more than 60 today, spanning more than 20 states and dozens of cooperative, municipal, and investor-owned utilities, with a collective capacity exceeding 170 megawatts.
According to GTM Research, 21 megawatts of community solar came on-line in the U.S. in 2014, and it is forecasting that number to be 115 megawatts in 2015 and 534 megawatts in 2020. By 2020 shared solar will account for up to 50 percent of the U.S. distributed solar market, representing $8.2–$16.3 billion of cumulative investment.
Several factors are escalating the appeal for utilities and electricity ratepayers. Unlike most rooftop models, the foundation of a program like Clean Energy Collective’s is a mutually beneficial relationship with utilities and customers, where energy credit rates are negotiated directly with the utility so there are no issues with net metering or lost profits, and the utility maintains a direct, grid-tied relationship with its customers.
The simplicity of shared solar, from a participant perspective, is a significant advantage over other renewable energy options, particularly rooftop solar. Customers can purchase panels or subscribe to energy production in a community shared array in a few minutes and begin receiving power production credits on their next utility bill.
By definition community shared solar should deliver a consumer benefit, over and above the environmental advantages of increased clean power production, in the form of a good financial payback, which is driving demand even in markets with relatively low power rates.
Initiating these projects, however, can be a very complicated and capital-intensive process. It requires expertise in navigating the complexities of on-bill crediting, securities and tax laws, tax credits and incentives, consumer protections, operations and maintenance, and customer acquisition and management. Without the proper resources to guide project development, efforts to deploy shared solar programs are inefficient, prone to errors, and inhibiting success.
Few third-party developers and utilities can manage the process from start to finish. For this reason, Clean Energy Collective offers a comprehensive suite of software tools—called the Community Solar Platform—for utilities and other enterprises to successfully deploy and manage all aspects of community solar programs. We believe this will help position community solar for exponential growth.
Community shared solar is delivering a lower risk proposition for integrating solar into today’s utility model. Having the utility more directly engaged in owning renewables assets is creating value for customers, but in a way that plays to the strengths of utilities as a grid owner and operator, allows for cost recovery, and makes financial sense for all stakeholders.
Paul Spencer is founder and CEO of the Clean Energy Collective.