Local solar bridges the gap between utility and roof-top
Fourteen US states, including Maryland, New York and Connecticut, have now passed regulations to support community solar, enabling 30,000 households over the next year to be powered using this source instead of conventional power. The community solar sector is expected to increase seven-fold by 2020. According to GTM Research, 49% of American households wish to go solar but are unable to do so.

President Trump announced a 30% tariff on imported solar panel parts, with a declining rate over four years. Solar prices have plummeted by 70% over the last decade, in part due to the availability of cheap panels.

Demand has increased for solar panels: Last year, solar panel jobs spiked 25% to 260,077 workers, according to the Solar Foundation, a nonprofit group that supports solar technology. Solar jobs have nearly tripled since the foundation’s first report was released in 2010.

But what if your home is not compatible with solar panels? If you’d like to use solar power in your home but can’t put panels on your roof, help may be on the way. Several U.S. states recently passed legislation to support the concept of community solar, which gives homeowners the chance to use solar instead of conventional power.

Community solar allows consumers to share solar power from a common system with other consumers. The source of the solar power can be owned by municipal utilities, independent solar developers, a group of homeowners or businesses, or community and nonprofit organizations such as electric co-ops.

How leasing solar electricity works

Participants can own, lease or subscribe to a specified number of panels or a portion of the system and typically receive electricity or monetary credits in proportion to their share of the project. Consumers who opt for community solar continue to work with their utility, but sign on for solar in addition to conventional energy.

There are about 15.8 million homes in the U.S. that have the potential to go solar, according to GTM Research, the research arm of energy media company Greentech Media. Only a sliver of these homes have installed rooftop solar power systems.

About 49% of American households wish to go solar but can’t because they don’t have the right kind of roof to host solar panels, they don’t own the houses they live in, or can’t afford to invest in the systems, which may take about four years to pay back, according to the National Renewable Energy Laboratory, a Colorado-based government institution that conducts research and development in renewable energy and energy efficiency.

More communities share solar power

The solution? Community or shared solar, the segment that experts believe will drive the solar market over the next few years, as more states in the country pass legislation to support it.

Community solar initially began like a community garden — people who couldn’t put solar panels on their roofs could come together and use a piece of land nearby to put up a solar power plant, said Vikram Aggarwal, CEO of EnergySage an Expedia-like online marketplace which helps consumers choose from various solar options. But now, the concept has grown into big business. Companies now offer subscription or leasing schemes at prices that are up to 15% lower than utility rates.

While Colorado and Massachusetts were among the first to support this model, several states have jumped in, passing regulations to support the sector. Maryland, New York and Connecticut are the latest, and now 14 states and Washington, D.C have legislation supporting community solar, GTM Research said.

Who Wins as Solar Prices Plunge

Solar companies prepare for more interest

Colorado-based Clean Energy Collective, one of the pioneers of community solar, has set up a separate portal to give people information about community solar. Called the Community Solar Hub, the website serves as a repository of information about community solar and also helps consumers, developers and the utilities connect with each other. The company has a software platform — which helps manage design, construction and billing of the shared solar system — to help other solar developers, a spokesman said.

EnergySage has also opened its portal up for community solar. The website initially only catered to people who wanted to put up rooftop systems. After noticing that about 15% of their consumers were interested in solar but didn’t have the right roofs for it, EnergySage started serving the community solar segment as well.

Given that it is a new sector, however, legal and administrative issues are holding back growth in the sector and utilities need to manage the sudden growth in interest in going solar. Another challenge for consumers is that most companies currently offer long-term subscriptions — between 10 and 20 years — which may not be attractive to a many people, especially renters.

“It would help if they offered short-term subscriptions of about a year,” Aggarwal said. “For instance, consumers who wish to move houses may not sign up for long-term contracts.”

Options for lower income households to go solar

But community solar may allow for low- and middle-income households to go solar, since consumers have the option of paying for a subscription instead of an upfront cost for the panels themselves, said Hannah Masterjohn, chair of the board at the Coalition for Community Solar Access.

California-based GRID Alternatives, a nonprofit that works on helping low-income households get rooftop solar systems, has also entered the community solar sector. Grid Alternatives, in partnership with local utilities, builds solar power projects and helps low-income households purchase power from them. The nonprofit has received a $1.2 million grant from the Colorado Energy Office and is working on setting up about 750 kilowatt of projects that would help around 200 low-income families reduce their energy bills by half.

Given the potential, several companies such as NRG and SolarCity are getting into community solar, Honeyman of GTM Research pointed out. “They have huge sales teams in place and this will help scaling up,” he said. Over the next couple of years, rooftop solar installers will provide a scalable strategy by leveraging a pre-existing salesforce and pool of qualified leads ineligible for rooftop solar, but a fit for community solar, GTM Research said.

(This story was updated on Jan. 23, 2018.)