BLOG | JULY 9, 2019
How Subscribers, Landowners and Communities Benefit From Community Solar
This blog was originally published while our Development team was still operating under the Borrego business name. We’re now New Leaf Energy, the same team under a new name.
The quickening pace of community solar project development is being fueled by homeowners and businesses that want to benefit from clean energy that’s priced to save them money. The spread of community solar projects is made possible by landowners opening up their land to host these projects and, in turn, benefiting from thousands of dollars in annual lease payments.
Subscribers of a community solar project receive credits on their utility bill for the power produced by the system. They pay for the clean energy at a lower cost than what the credit value is worth, therefore saving on their overall electric bill. Subscribers can also choose to opt in or out of the subscription as they wish. Homeowners and businesses typically subscribe to these community solar projects because they want to power their homes and facilities with a cleaner energy source that also saves them money, but aren’t able to do it themselves because of various restrictions. For example, renters or businesses who lease can’t install solar on site.
Also, some customers may not have the capital or credit needed to secure financing for a solar project. For those who own their homes or facilities, there might be site conditions that can prohibit going solar, such as shading from trees or limited or aging roof space. Instead of facing these roadblocks, interested customers need only to subscribe to a community solar program.
This is where landowners come in to offer up their properties to host a pollution-free, clean energy source for their local community. The projects are typically around 20 acres in size, which is small compared to utility-scale projects. Unlike larger utility projects often built in remote areas, community solar projects are built on land in the same utility zone as subscribers.
Benefits for all
Most community solar programs allow residential as well as commercial, institutional, municipal, and other customers to participate. Community solar not only benefits subscribers, but also landowners and the community as a whole.
The customer is typically able to save between 10 percent and 15 percent on their electricity costs while mitigating their exposure to volatile energy prices and meeting any sustainability goals. At the same time, the community benefits from tax payments to local jurisdictions, more jobs, and reduced pollution and emissions.
Community solar also offers advantages for landowners, such as having a reliable source of revenue from a long-term lease. Annual lease payments can help pay taxes and costs associated with maintaining the land. Farmers use the lease payments for a variety of purposes:
- Retirement income and set themselves up for retirement
- Paying for property taxes
- Offsetting farming operation costs
- Expanding farming operations
- Property improvements
- Savings for property taxes in order to keep land in the family
- Mortgage payments
States with community solar
Community solar programs are gaining popularity, with Massachusetts, New York, Illinois, and Minnesota leading the way.
However, not all programs are created equally. While utilities have slowly started to get into the game, many utility offerings are not true shared renewables programs. Customers who want to take advantage of shared renewables or community solar should be careful to ensure their program involves new, local renewable energy projects.
The size of a community solar program is also important. Programs smaller than 50 MW per year are unlikely to attract participants needed to enable a robust market. Larger programs — 200 or 300 MW per year — foster a competitive market that drives down costs and results in better value for customers and more benefits for everyone involved.
The most successful community solar programs are flexible and don’t overly restrict project type and eligible customers. In addition, states with clear interconnection rules and regulators who are engaged with the utility are often more attractive to developers, allowing a more accessible community solar market. Lastly, successful community solar programs offer a credit that’s high enough to deliver a reasonable margin of savings to subscribers.
Hosting a community solar project
Landowners who own land of at least 20 acres in states with active community solar projects — such as Massachusetts, Illinois, New York, and Minnesota — have an opportunity to make tens of thousands of dollars annually for the life of a project, typically 20-25 years.
An ideal site for solar
First things first, we typically come out and assess the land to determine if it’s suitable for solar. We typically look for sites with at least 20 acres of contiguous land that’s close to a public access road with easy access to the utility existing utility infrastructure. We look at factors such as shading, topography, soil conditions, and sight lines for neighboring properties. We also work with landowners to select the best site for the solar system that won’t disrupt any of their current or planned future use. In short, landowner preferences and site viability go hand in hand when choosing a site for solar development.