"Sunny" is probably not the first word that comes to mind when thinking of the Pacific Northwest. But the region was home to the nation's first community solar project in 2006 when the City of Ellensburg municipal utility installed a 36 kilowatt (kW) community photovoltaic (PV) system.
In the 16 years since, community solar projects have popped up in 41 U.S. states and Washington D.C. Twenty-two states, including Oregon and Washington, have policies that support community solar, whether through mandated levels of community solar deployment, policies that incentivize or otherwise make community solar deployment easier, or some combination of the above. (See Community Solar in the Northwest for more on programs in the four Northwest states).
Community solar is increasingly seen as a beneficial solution for climate resilience, expanded renewable energy generation, cost savings, and equitable access to the benefits of solar energy.
Community solar projects are a unique way for customers to reap the benefits of solar energy without having to install solar panels on their own rooftops. Solar energy is therefore more accessible to people who do not own homes, cannot afford the upfront cost of an on-site rooftop PV installation, or are among approximately 50% of U.S. households that the National Renewable Energy Laboratory (NREL) estimates are not suitable for 1.5-kW rooftop solar PV installations. (Estimates vary; according to Greentech Media, up to 77% of U.S. residential households are ineligible for rooftop solar).
Despite cost savings in the long run, high upfront costs mean that low- to moderate-income (LMI) households have not been able to take advantage of rooftop solar at the same rates as wealthier households. A 2021 Lawrence Berkeley National Laboratory study found that the median solar adopter’s income was $110,000/year, compared to the U.S. median of about $63,000/year, showing an equity gap that community solar projects could address. (1)
Community solar models vary in terms of implementation, but the general principle is that customers invest in large solar projects located elsewhere in the community, such as a field or school rooftop. Rather than receiving the energy directly, customers receive cost savings, typically in an amount credited to their electric bills, when the energy generated by the solar project flows to the grid.
Like most large-scale energy projects, obstacles to widespread adoption include permitting challenges, implementation issues, consumer education, state clean energy policies, among other factors. To address these challenges, community solar projects need to be tailored to the unique needs of every community, and community members should have the flexibility to implement projects in ways that make sense for that particular place and group of people. The following examples showcase various models from around the country:
The Sunnyside Landfill Solar Project is planning to install 50 megawatt (MW) of utility-scale solar, in addition to 2 MW of community solar, on a closed landfill in a historically black and low-income part of Houston, TX. Importantly, the Sunnyside project will be paired with a solar installation training program, additional community resources, and a promise that workers will be hired from the local Sunnyside community.
Efrem Jernigan, Sunnyside resident and president of the local community development nonprofit South Union CDC, helped lead the project and told his story on the Big Switch podcast earlier this fall. On the podcast, Efrem says, “We had to go the extra mile to win…I don’t like being told no.”
Recent RMI analysis focuses on the idea of converting closed landfills and other sites like shuttered coal plants and mines or inactive steel mills. Collectively, these are referred to as brownfield sites, and converting them to renewable energy generation projects is known as “brownfield to brightfield.”
RMI points to a provision from the Inflation Reduction Act (IRA) that provides a 10% tax credit bonus for solar and wind projects sited in an “energy community," which includes brownfield sites.
The Illinois Solar for All program, run by the Illinois Power Agency, is aimed at LMI participants (eligibility is based on income requirements of 80% or less Area Median Income). Additionally, consumers do not pay any upfront costs and are guaranteed a discount on their electricity bill covered by the credit. Eligible renters and homeowners can search for community solar projects in their utility area, such as this Oak Park community.
Illinois is also investing in a clean energy workforce through the recently announced Sustainability Hub, a partnership between clean energy developers and a clean energy career school. They plan to train 10,000 local residents, targeting veterans and underserved communities, over 10 years starting in January 2023. Program participants will be able to complete on-the-job training at clean energy projects throughout the state, including community solar projects.
Closer to our home, the nonprofit Olympia Community Solar (who recently won a Department of Energy Sunny Award for a different project) is developing a new community solar project at Thurgood Marshall Middle School, planned to begin construction in the summer of 2023. Community members can purchase any number of the project’s 306 solar panels and recover the costs annually as the project generates energy, which will be sold to the school at a lower price than the utility retail rate and therefore significantly lower the school’s electric bill.
Puget Sound Energy partnered with the Issaquah School District to install a similar community solar project, a 175 kW solar system, at Pine Lake Middle School in Sammamish, WA. Hosting community solar projects at schools provides the added benefit of educational opportunities for students.
While the IRA does not include any provisions explicitly for community solar projects, it does provide a new direct pay option for the solar energy production tax credit (PTC) and investment tax credit (ITC). This allows nonprofits, local governments, and other tax-exempt entities to benefit from the PTC and ITC for the first time by receiving direct payment of the federal tax credits, which will hopefully spur further community-led projects.
In addition to the 30% base ITC and the 10% bonus mentioned earlier for projects in energy communities, the IRA includes a low-income bonus of either 10% for projects located in low-income communities or Tribal lands; or 20% for projects located in public or affordable housing or those with at least half of the financial benefits going to LMI households.
This means that a community solar array on a brownfield site with at least half of the benefits provided to LMI households could get 60% of eligible project costs back by claiming the ITC and eligible adders. The lower project costs could then translate into lower community solar subscription fees. Community solar has proven to be a successful model for expanding renewable energy capacity and empowering communities with choice and ownership over their power both in the Northwest and across the U.S.
Image Credit: Olympia Community Solar
(1) The $63,000/year U.S. median household income cited here is number used in the 2021 Lawrence Berkeley National Laboratory study. However, it should be noted that the United States Census Bureau states that the real median household income was $70,784/year in 2021.
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