1.
1
The
Bright
Future
of
Community
Solar
Figure
1:
Community
Solar
Advertising
Photo
(Solar
Feeds,
2014)
Energy
Infrastructure
and
the
Environment
Daniel
DiIulio
December
1st,
2014

2.
2
Table
of
Contents
Intent ...........................................................................................................................................3
Background ...............................................................................................................................3
Project
Delivery
and
Structuring .......................................................................................5
Benefits.......................................................................................................................................7
Accessibility.......................................................................................................................................................7
Distributed
Generation.................................................................................................................................7
Economic
Impact.............................................................................................................................................8
Risks.............................................................................................................................................9
Absence
of
a
Common
Standard...............................................................................................................9
Utility
Opposition............................................................................................................................................9
Reduction
of
Federal
Tax
Credits.......................................................................................................... 10
Conclusions..............................................................................................................................10
Abbreviations:........................................................................................................................13

3.
3
Intent
This
paper
explores
the
issue
of
community
solar
installations
and
their
place
in
the
United
States’
renewable
energy
generation
portfolio.
Specifically,
the
paper
seeks
to
explore
the
benefits
and
risks
of
community
solar
installations
and
determine
if
they
should
be
a
focus
area
in
future
of
US
solar
development.
Background
The
United
States
currently
has
over
12
GW
of
installed
solar
photovoltaic
capacity,
representing
approximately
1%
of
the
country’s
total
installed
electrical
Figure
2:
US
PV
Installations
and
Average
System
Price
(Solar
Market
Insight
Report)

4.
4
generating
capacity.
Over
half
of
the
country’s
PV
capacity
has
come
on
line
in
the
last
two
years,
largely
driven
by
the
steep
decline
in
the
price
of
solar
panels.
Whereas
residential
systems
made
up
the
majority
of
US
installations
as
recently
as
2002,
they
have
since
been
surpassed
by
non-­‐residential
and
utility
scale
installations
(Solar
Market
Insight
Report).
The
early
lead
enjoyed
by
residential
installations
was
partially
because
many
early
adopters
were
private
citizens
more
concerned
about
environmental
benefits
than
saving
money,
or
residences
that
were
completely
off
the
grid.
The
subsequent
rise
of
industrial
installations
is
on
the
other
hand
has
been
driven
by
investment
dollars.
As
the
price
of
solar
has
come
down,
investors
have
moved
in
and
the
market
has
favored
larger
installations.
However,
another
barrier
to
growth
in
the
residential
market
is
constraints
imposed
by
building
orientation,
shading
and
real
property
concerns.
These
issues
combine
to
make
residential
solar
installations
impractical
for
up
to
85%
of
residential
energy
customers
(Cardwell,
2014).
Community
solar
presents
a
relatively
new
and
creative
way
to
make
solar
PV
available
to
the
85%
of
customers
who
were
previously
left
out
of
the
residential
solar
market.
It
is
currently
available
in
nine
US
states
and
the
District
of
Columbia,
and
being
considered
in
nine
more
states
(Shared
Renewables).
While
increasing
accessibility
of
solar
PV
ownerships
is
one
of
CS’s
primary
advantages,
it
has
other
advantages
as
well.
Since
CSAs
are
smaller
than
industrial
systems,
it
can
be
easier
to
site
them
near
major
transmission
corridors
or
areas
with
a
high
demand
for
electricity,
potentially
reducing
stress
on
the
grid.
CSAs
also
have
a
greater
dollar
for

5.
5
Figure
3:
States
that
Allow
Community
Solar
Arrays
or
Have
an
Active
Campaign
to
Adopt
Them.
(Shared
Renewables)
dollar
impact
on
local
economies
than
larger
projects
since
the
companies
building
these
systems
are
more
likely
to
be
locally
owned.
In
some
areas,
CSAs
are
known
as
“solar
gardens.”
This
term
appears
to
be
falling
out
of
favor
so
this
paper
will
use
the
terms
“Community
Solar”
and
“Community
Solar
Array.”
However
the
terms
can
be
used
somewhat
interchangeably.
Project
Delivery
and
Structuring
One
of
the
largest
barriers
to
solar
energy
ownership
is
the
high
upfront
cost.
Community
solar
arrays
lower
this
hurdle
since
no
one
person
has
to
buy
an
entire
array
outright.
Ratepayers
instead
form
a
special
purpose
entity,
buy
shares
in
the

6.
6
array
and
partner
with
a
company
that
can
build
and/or
operate
the
system.
The
investors
receive
payments
and/or
credit
for
their
share
of
the
energy
produced
for
a
certain
number
of
years.
This
is
known
as
the
“Special
Purpose
Entity
Model.”
A
second
method
of
organizing
is
the
“Utility
Model”
in
which
the
electric
utility
owns
the
system
and
ratepayers
may
participate
voluntarily,
agreeing
to
buy
a
certain
amount
of
power
from
the
array
for
a
given
time.
Another
interesting
concept
is
the
“Non-­‐Profit
Model”
in
which
donors
to
contribute
to
build
a
system,
which
is
then
owned
by
a
non-­‐profit
corporation
(Coughlin,
2010).
Benefits
from
community
solar
arrays
can
be
distributed
in
a
number
of
different
ways
including:
group
billing,
virtual
net
metering
and
joint
ownership.
Under
group
billing,
the
CSA
output
is
credited
to
a
combined
utility
bill.
That
bill
is
then
divided
among
the
participants
according
to
a
pre-­‐determined
billing
structure.
A
customer
representative
from
among
the
group
handles
the
billing
and
resolves
any
disputes.
This
system
allows
all
of
the
participants
to
benefit
from
net
metering
incentives,
but
adds
an
extra
–
often
unpaid
–
administrative
burden
for
the
customer
representative.
Virtual
net
metering
places
the
administrative
burden
on
the
utility
and
works
similarly
to
traditional
net
metering.
Each
customer
receives
his
or
her
own
bill
for
energy
usage
and
generation
credits.
Joint
ownership
works
in
a
manner
similar
to
power
selling
arrangements.
Customers
partner
to
form
a
business
entity,
which
then
sells
power
to
a
utility
at
a
contracted
rate.
While
this
may
enable
customers
to
create
more
power
than
they
use,
it
also
generates
taxable
income,
potentially
offsetting
the
economic
benefit
to
the
customer
(Coughlin,
2010).

7.
7
Benefits
Accessibility
Complete
residential
solar
systems
can
cost
tens
of
thousands
of
dollars,
putting
them
out
of
reach
for
many
homeowners.
While
third
party
financing
and
power
purchase
agreements
can
allow
homeowners
to
install
systems
with
little
or
no
upfront
costs,
many
homeowners
are
not
comfortable
entering
in
to
long
term
contracts.
CSAs
offer
another
path
to
solar
ownership,
with
shares
in
some
systems
being
available
for
as
little
as
$725.
In
most
cases
these
shares
can
be
resold
if
the
customer
moves
(Coughlin,
2010).
CSA
also
extends
the
possibility
of
solar
ownership
to
renters,
condo
owners,
and
homeowners
with
roofs
that
are
poor
sites
for
PV
installations;
increasing
the
available
investor
market
by
as
much
as
500%.
This
increased
accessibility
serves
to
increase
social
equity
as
well
since
incentive
programs
are
funded
using
either
taxpayer
or
ratepayer
dollars,
and
CSAs
give
all
ratepayers
an
opportunity
to
benefit
from
incentives
(Carwell,
2014).
Distributed
Generation
Commercial
and
utility
scale
solar
power
plants
require
large
sites
that
are
often
located
far
away
from
areas
with
high
electrical
demand.
Since
community
solar
sites
are
smaller,
they
can
be
located
nearer
to
demand,
reducing
congestion
on
the
grid
and
the
need
to
build
additional
transmission
capability.
Furthermore,
many
of
the
best
utility
scale
solar
sites
have
been
or
are
being
developed.
This
is
especially
true
in
the
southwestern
US,
an
area
with
very
high
annual
solar
radiation.
CSAs
will
serve
as
a
useful
tool
for
building
out
solar
generating
capacity

8.
8
in
these
built
out
areas
where
the
remaining
sites
are
too
small
for
utility
scale
projects
(Parkinson,
2013).
Economic
Impact
Companies
that
install
CSA
are
more
likely
to
be
locally
owned
than
large
solar
installers
due
to
the
smaller
size
of
the
arrays
and
the
need
to
find
a
group
of
customers
in
one
community.
This
local
ownership
increases
the
economic
impact
of
the
project
since
the
company
is
more
likely
to
hire
local
workers
and
bank
locally.
The
effect
on
hiring
can
range
from
a
modest
ten
percent
increase
to
a
near
tripling
of
local
job
creation.
The
overall
economic
impact
is
more
likely
to
be
increased,
with
effects
ranging
from
a
fifty
to
three
hundred
and
forty
percent
improvement
over
than
absentee-­‐owned
projects.
(Farrell,
2014)
Figure
4:
Relative
Benefits
of
Locally
Owned
Solar
Projects
Compared
to
Absentee
Owned
Baseline
(Farrell,
2014)

9.
9
Risks
Absence
of
a
Common
Standard
Community
solar
laws
vary
across
the
ten
jurisdictions
that
have
them,
and
utilities
in
those
jurisdictions
have
differing
degrees
of
interest
in
CS
projects
and
offer
different
programs
for
participation.
This
makes
for
a
confusing
development
process
that
leads
to
many
one-­‐off
projects.
It
is
likely
that
some
streamlining
will
occur
as
community
solar
best
practices
are
developed
and
published,
however,
it
is
unlikely
that
a
common
project
development
model
will
present
itself
across
such
a
varied
legal
and
financial
landscape
(St.
John,
2014).
Utility
Opposition
Utilities
have
a
history
of
opposing
laws
that
threaten
their
business
model.
In
California,
the
state’s
two
largest
utilities
opposed
community
solar
bill
SB843
before
it
became
a
law
on
the
grounds
that
the
utilities
would
have
too
pay
too
much
for
CSA
generated
power
(Baker,
2012).
While
the
bill
eventually
passed,
the
utilities
answered
with
their
own
bill,
which
would
have
added
$120
in
annual
fees
to
residential
PV
owner’s
bills
(Gunther,
2013).
While
the
utilities’
bill
failed
to
pass,
it
is
certain
that
there
will
be
future
resistance
from
utilities
which
will
likely
slow
the
community
solar’s
spread
into
other
states,
particularly
those
with
less
progressive
renewable
energy
climates.

10.
10
Reduction
of
Federal
Tax
Credits
The
federal
solar
investment
tax
credit
currently
offsets
up
to
30%
of
solar
project
costs.
However,
current
legislation
will
cut
this
to
10%
in
2017,
this
is
expected
to
reduce
US
solar
installations
by
more
than
50%
between
2016
and
2017.
While
the
effects
of
this
cut
will
be
felt
across
the
entire
solar
industry,
community
solar
is
particularly
at
risk.
The
reduced
volume
of
work
will
likely
put
solar
companies
in
to
downsizing
mode,
making
it
unlikely
that
they
will
pursue
legislation
to
open
new
markets
to
community
solar.
Current
projections
forecast
that
the
industry
will
take
up
to
six
years
to
recover,
making
it
unlikely
–
assuming
the
tax
credit
is
allowed
to
expire
–
that
there
will
be
any
major
developments
in
community
solar
between
2016
and
2020
(Martin,
2014).
Conclusions
While
US
solar
installations
have
soared
in
recent
years,
solar
still
accounts
for
only
1%
of
domestic
power
generation.
Community
solar
holds
great
promise
as
a
method
to
accelerate
this
growth
and
should
be
a
focus
area
for
future
US
solar
development.
Community
solar’s
advantages
of
increasing
non-­‐commercial
investment
in
solar,
reducing
stress
on
an
aging
electrical
grid
and
creating
local
jobs
should
help
overcome
the
obstacles
presented
by
utility
companies
and
help
it
gain
approval
in
more
jurisdictions.
This
wider
use
will
drive
the
development
of
best
practices,
which
will
further
streamline
the
community
solar
project
process.
However,
an
uncertain
financial
future
looms
over
CS
and
the
entire
solar
industry.
While
community
solar
will
continue
to
boom
through
2016,
it
is
likely
that
it’s

11.
11
growth
will
moderate
in
2017
and
beyond
without
an
extension
of
the
30%
investment
tax
credit
or
a
comparable
reduction
in
price.
Figure
5:
SunCommon
Co-­‐President,
Duane
Peterson,
christens
Vermont’s
first
Community
Solar
Array
(SunCommon)

12.
12
References
April,
Lee.
"Most
New
Residential
Solar
PV
Projects
in
California
Program
Are
Not
Owned
by
Homeowners."
EIA,
17
Sept.
2013.
Web.
http://www.eia.gov/todayinenergy/detail.cfm?id=12991
Baker,
David
R.
"Solar
Legislation
Opposed
by
Utilities."
SFGate,
27
Aug.
2012.
Web.
http://www.sfgate.com/business/article/Solar-­‐legislation-­‐opposed-­‐by-­‐utilities-­‐
3819538.php
Cardwell,
Diane.
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Into
Solar
Power,
No
Roof
Access
Needed."
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York
Times,
19
June
2014.
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Jason;
et
al.
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Community
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Private
&
Non-­‐Profit
Project
Development."
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1
Nov.
2010.
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John.
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Why
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Self
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Sept.
2014.
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Marc.
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on
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ack/2687
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20
Oct.
2014.
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Giles.
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2013.
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theyre-­‐locally-­‐owned-­‐report-­‐finds?paging=off&current_page=1#bookmark

13.
13
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review
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John,
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2014.
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http://www.greentechmedia.com/articles/read/community-­‐solar-­‐a-­‐big-­‐idea-­‐with-­‐
big-­‐barriers
SunCommon.
Web.
https://www.facebook.com/suncommon/photos_stream?ref=page_internal
Abbreviations:
CSA:
Community
Solar
Array
CS:
Community
Solar
NREL:
National
Renewable
Energy
Laboratory
PV:
Photovoltaic
US:
United
States