By Rona Cohen
For the majority of green-minded consumers, solar energy has long sounded like a good idea that has been out of reach to all but those in possession of a sun-filled roof and several thousand dollars to purchase and install photovoltaic panels (PV).
Solar Panels at the Ellensburg Community Renewable Park; Ellensburg WA. Photo courtesy of Gary Nystedt
A new crop of community-based solar projects is working to change all of that, by enabling large numbers of residents to buy into a large-scale photovoltaic array and benefit from a proportional share of the clean energy it produces.
Green-power advocates are keeping tabs on their progress, with the hope that these programs will finally break down the key financial and space-related barriers hindering widespread access to solar, and along the way, generate local jobs that help the environment.
“Our objective was to try to overcome as many of those barriers as possible,” said Gary Nystedt, resource manager for the City of Ellensburg, Washington, whose municipal utility started the first community solar project in the United States in 2006.
When Ellensburg’s project was conceived in 2003, city officials believed that a portion of the utility’s 9,000 ratepayers would be willing to contribute more than the $10 to $15 monthly fee that energy companies typically charge for voluntary green power programs, as long as they paid substantially less than the cost of a rooftop PV system, which can run as high as $30,000.
They were right. The city council asked the utility to solicit $53,000 to install a 36 kilowatt (kW) system before the project was put out to bid, and raised nearly double that amount in about three months, said Nystedt. Funding was also provided by a local foundation and from the city’s conservation and renewable energy program.
In return for an upfront payment for a “share” of the solar array, the program’s eighty or so participants get a credit on their utility bill for the proportional amount of electricity generated every three months for a span of twenty years. Contributions can range from a minimum of $250 up to $11,000, and the reimbursement is calculated based on the overall portion of the system represented by the investment. So a customer who contributes 0.5% of the cost of the system gets credited for 0.5% of the value of the power it produces.
Nystedt said that the utility purposely situated the first PV array on a highly visible, south-facing public lot next to Interstate 90, which is traversed by 15,000 cars a day. The idea was to educate those who might be skeptical about solar’s possibilities in a northern state that may not strike some as ideal for producing power from the sun. The utility has twice expanded the project since then. It also inspired a like-minded undertaking in rainier Seattle.
“It got a lot of buzz within our state,” said Leslie Moynihan, community solar program manager at Seattle City Light, which serves more than 700,000 residents of the Seattle metropolitan area. Last year, the utility was awarded a $300 million grant from the U.S. Department of Energy’s Solar America Cities program to install a community solar project on city property. It aims to have an array of around 50 kW in place by the end of the year.
A Push from the States
Although it is cheaper to join Ellensburg’s program than to finance a rooftop PV system, it still typically takes at least fifteen years to earn back one’s investment. That payback period should soon narrow, however, owing to a measure recently signed by Washington governor Christine Gregoire that extends a generous production incentive to participants in community solar projects of 75 kW or less that are developed by individuals, nonprofits, cooperatives, mutual associations, and limited liability companies.
The measure enables community solar customers to receive 30 cents per kilowatt-hour of power generated, up to a maximum of $5,000 per year. The rebate leaps to $1.08 per kilowatt-hour if the solar panels and other equipment used to build the array were manufactured in the state—a move intended to spur a locally grown clean-energy industry.
“Clearly, we’re opening the door to distributed energy generation at the community level and using solar as our means to do that,” said Washington senator Phil Rockefeller, the measure’s sponsor.
Clean-energy experts say that state incentives are critical to making community-based solar projects affordable and helping them to spread.
In Utah, residents who buy shares in a community-based solar program in St. George can claim a 25 percent state income tax credit that normally is granted to owners of PV systems. Starting this year, Massachusetts residents and businesses who invest in community solar are eligible for tax credits and Solar Renewable Energy Certificates (SRECs). SRECs represent the renewable energy attributes of solar power, and can be sold to electric suppliers to meet their state clean-energy mandates. Regulations have set a floor of $300 for each SREC, which represents 1 megawatt-hour of production.
“It’s allowing participation in solar where probably you wouldn’t have seen it before,” said Michael Stone, manager of the Falmouth (Massachusetts) Community Solar Garden. The project is working with private investors, businesses, and institutions to secure a large rooftop or ground-mounted site for a solar array of over 100 kW, he said.
Maine allows residents who participate in a new community-based, renewable energy pilot program to choose among two different types of production incentives. One is a long-term contract with an investor-owned utility, which would agree to purchase the power generated by locally produced PV, hydro, or wind projects of less than 1 megawatt (MW) at a flat rate of 10 cents a kilowatt-hour for up to twenty years. Or they can choose a renewable energy credit (REC) multiplier, which values the electricity generated by a project at 150 percent of its worth.
“I think the idea really is to get some of these systems out there so people will see them and know that they work and generate support for them,” said Mitchell Tannenbaum of the Maine Public Utilities Commission.
Also essential are policies that extend to multiple ratepayers the benefits of net-metering, in which the meter tied to a single PV system is allowed to send electricity back to the grid during periods when it produces more energy than it consumes. The customer gets credited for the excess power. Eight states allow some form of community net metering.
Ensuring Access
Despite their ability to lower the price of solar, the programs underway are not cheap, and will remain out of reach of green-minded customers who cannot afford to pay a premium for their power. Supporters of community solar say that costs could be trimmed dramatically if participants could take advantage of a 30 percent federal tax credit provided to residential owners of PV. A bill introduced in Congress this year by Senator Mark Udall of Colorado would extend those benefits to community solar arrays for the next five years, at a cost of around $117 million.
Some administrators of community solar programs have experimented with ways to make solar more appealing to conservation-minded customers, whose modest energy habits can make the higher-priced electricity seem like less than a good deal. Those who purchase energy-efficient appliances and take other steps to lower their home energy use tend to have a longer-than-average payback period for a solar investment.
“One of the barriers to solar that we identified was that people who have a good conservation mentality and good home energy efficiency are not necessarily good candidates for solar,” said Rachel Huang, senior project manager of customer strategy at the Sacramento Municipal Utility District (SMUD).
SMUD decided to offer those customers an extra subsidy to participate in its community-based program, called Solar Shares.
Ratepayers who join Solar Shares elect to pay a fixed monthly fee to cover 20 to 40 percent of their total electricity needs with solar power. Customers are credited on their monthly bill for the power generated, which partially offsets the fee. A smaller fee is offered to lower energy users—those who consume fewer than 6,000 kilowatt hours per year. They can purchase a 1 kW portion of Solar Shares for $21.50. The same 1 kW costs a higher $26.50 for medium energy users—those whose annual consumption ranges between 6,000 and 14,000 kilowatt-hours.
Solar Shares is powered by a 1 MW PV system owned by solar developer enXco, a third-party owner that operates the PV array and supplies its power to SMUD through a twenty-year purchase power agreement. Some 700 ratepayers participate in the program, out of SMUD’s total customer base of around 500,000. The program launched in July 2008 and sold out within six months.
Big City Solar
Community solar is seen as offering important options in urban areas like New York City, which has electricity rates high above the national average, growing power demand, legions of apartment dwellers without roof ownership, and miles of potentially available roof space.
“One of the main hurdles we’ve been struggling with is that it’s more expensive here,” said Alison Kling, the NYC Solar Coordinator at the City University of New York, which administers the U.S. Department of Energy’s Solar America Cities Program there. “The permitting process and dealing with a bunch of different agencies can be really challenging for a homeowner.”
New York City is exploring various models for community solar, as part of stimulus funding received last year through the Solar America Cities Special Projects program. The city has set an overall goal of installing 8.1 MW of solar capacity throughout is five boroughs by 2015.
Officials are also creating solar empowerment zones, which will identify areas that are well-suited for widespread PV installations and make buildings within the zones eligible for increased incentives to speed solar investment.
There is a tangle of logistical and administrative challenges that will need to be worked out before solar can take off, though.
A study performed by the National Renewable Energy Laboratory last year examined ten power networks within New York City and found that in more than half, widespread deployment of PV would sometimes exceed the network load and export power back to the grid. This could lead to disruptions in some of the mechanisms created to protect the grid and ensure reliability, because the city’s power system was not designed to absorb large quantities of distributed generation, the report said.
But the study also suggested that solar power could help meet rising electricity needs and aid in lowering distribution system requirements, since the arrays are generally located close to demand. New York’s distribution system is underground, which is expensive to maintain and offers limited space for new equipment.
Several large-scale community solar arrays are planned elsewhere in the state as part of a new public-private partnership to develop 100 MW of PV, as announced by the New York Power Authority (NYPA) last January. The goal is to link community PV to the distribution systems of municipal utilities and rural electric cooperatives, to lower costs and provide relief for grids nearing their transmission capacity, NYPA said in a statement.
Supporters say that while community solar is still a niche model that has been largely embraced by municipal utilities, its ability to site larger projects that offer benefits to a smaller, residential market offers much potential to broaden demand for solar in new ways. Observers say the challenge is to nudge large, investor-owned utilities to embrace community solar as a way to meet state renewable-energy mandates and create greater economies of scale.
Ultimately, the broader goal is to chip away at solar’s high cost until it reaches parity with grid power.
Nystedt said that he typically hosts two groups of visitors a week who are eager to learn how they can replicate Ellensburg’s program in their own communities. They have come from as far away as South Korea and Ghana.
“We give them all of the materials we’ve generated and say: ‘Make it your own. Your community has unique abilities and opportunities, and I’m sure you can come up with some ways to do it better and faster.’” He also tells them, “Just let me know what you come up with.”