The last few years have seen extraordinary growth in the residential solar market driven by a reduction in equipment costs as well as the advent of financing solutions. Since 2008, the cost of photovoltaic (PV) panels has declined by over 80 percent, increasing solar electricity generation more than twenty-fold since 2010[1]. However, solar has extended at a slower rate to low-and moderate-income (LMI) households because LMI individuals are not likely to own their rooftop, many reside in multifamily buildings, and have limited access to credit score based financing options. Community solar has the potential to overcome these hurdles and include more LMI communities so they can benefit from solar power on a level playing field.

Community solar allows off-site solar arrays to produce energy for multiple energy customers, who can receive a credit directly on their utility bills[2]. According to the Rocky Mountain Institute, the untapped market represented by community-scale solar (500kW–5 MW projects) is substantial, up to 30 GW by 2020[3]. Community solar eliminates the need for upfront costs or financing for LMI the rooftop systems, as individuals can directly subscribe under a third-party owned system. In terms of credit barriers, community solar developers can rely on a large and transferable subscriber base, which mitigates credit risk and other financial issues faced by LMI customers[4].

A successful community solar program needs support from legislative regulations, financing institutions, and active utility partners. In some states, regulation has required a carve-out for LMI subscribers, including Maryland and Colorado, which gives them equal access to each community solar project.

A list of programs:

New York program: In July 2015, the New York Public Service Commission approved a Shared Renewables Program, consistent with the goal of New York’s Reforming the Energy Vision (REV) program to ensure 20% participation of LMI customers[5].

Maryland Program:  Maryland Public Service Commission finalized community solar regulations in 2016 for a three-year community solar pilot project, setting a carve-out for LMI projects[6].

DC Program: In 2016, The FY 2017 Budget Support Act amends the CREA 2016 to partially restore the full retail distribution rate credit for power sent back into the grid from Community Renewable Energy Facilities[7].

Green Banks are one active partner that can help lower the cost of solar for LMI. New York Green Bank along with private investors is providing $340 million to Sunrun, a solar company that expanded solar projects for low and no upfront cost solar projects[8]. These loans have encouraged banks to contribute additional capital for warehouse credit facilities to support projects serving this sector.

Helping LMI households save money on electricity directly increases their ability to better cover basic needs. On a macro level, community solar could enlarge benefits to the community, including increasing local jobs, economic growth, private investment, and lower rates of pollution. In addition, community solar can provide the flexibility of subscription, allowing LMI people to move with the option of keeping their subscription of the shared solar or transferring it to others. This flexibility will help achieve a strong subscription rate.

Management of a community solar project can be done by various different parties. In some cases, the utility can manage the project with the help of non-profit partners. As an example, in 2015 Grand Valley Power (GVP) and Grid Alternatives Colorado cooperated in building a 24kW photovoltaic system designed specifically for low-income customers. LMI customers receive net metering bill credits, similar to a typical community solar program, for four years at which point their subscription transfers to a new LMI household. There is no upfront cost to participants, and management fees are built into the project[9].

The continued growth of solar energy increases programs that target on bigger market, generating public interests to expand solar access for LMI households. Reduced solar cost also opens the possibility of enlarging the scale of a clean-energy economy, including solar in the grid to achieve community resilience. With regulation that aims to expand LMI solar access, utilities and organizations can provide better financing mechanisms to facilitate the success of community solar.

Hanyu Zhu – Summer 2016 Analyst, Johns Hopkins University SAIS, International Relations and International Economics

Sources:

[1] http://solar.gwu.edu/sites/default/files/GWSI-Bridging%20the%20Solar%20Income%20Gap%20Working%20Paper.pdf

[2] http://solarisworking.org/blog/massachusetts-community-solar-industry-at-risk-due-to-regulatory-changes

[3] http://www.rmi.org/Content/Files/RMI-Shine-Report-CommunityScaleSolarMarketPotential-201603-Final.pdf

[4] http://www.greentechmedia.com/articles/read/making-community-solar-work-for-low-income-customers-is-crucial-for-growth

[5] http://fresh-energy.org/wp/wp-content/uploads/2015/11/Bringing-Community-Solar-to-a-Broader-Community.pdf

[6] http://earthjustice.org/news/press/2016/maryland-community-solar-regulations-finalized

[7] http://www.dcsun.org/community-solar/

[8] http://greenbank.ny.gov/Investments/Portfolio-and-Pipeline

[9] http://www.solarelectricpower.org/media/378380/solarops-case-study-grand-valley-power-low-income-community-solar-program.pdf

[10] https://commons.wikimedia.org/wiki/File:Westmill_Solar_Cooperative_1.jpg (featured image)