Community-based solar power is growing at nearly double the rate of the total solar market in the United States, according to the latest report from the Smart Electric Power Alliance (SEPA). Current total installed capacity in the form of community solar programs is 734 megawatts, according to this year’s report. Of that, some 387 MW were installed only in 2017, corresponding to a year-over-year growth in capacity last year of 112%. For a comparison, the total solar market in the U.S. has grown at an average annual rate of 68% over the last 10 years, the report says.
Still, based on a total of 47.5 gigawatts of installed solar capacity in all markets through the third quarter of 2017, according to the US National Renewable Energy Laboratory (NREL), community solar adds up to just over 1% of that. As of the most recent figures, 228 utilities in 36 states had an active program (even though only 17 states plus the District of Columbia have enacted shared solar policies).
At present, 160 cooperative utilities have a program in their territory, compared to a total of 68 such programs between investor-owned and public power utilities combined. That said, most of those programs are small, with only 30% of them boasting a total generating capacity greater than 1 MW. On the other hand, average size is growing.
SEPA found some patterns in the range of program structures.
• The average subscription rate was 83%. Subscription was highest in programs that promise immediate bill savings, which “almost universally” achieve full subscription. Programs that provide either a hedge against potential rate hikes or pay back the upfront investment after a set period experienced lower subscription rates. As well, marketing budget seems to affect subscription rates, with programs spending above 5 cents per Watt (cents/W) of capacity experiencing higher subscription rates than those spending less.
• The type of program administrator seems to make a difference. In the survey, it was found that third-party administrators subscribed a majority of capacity (68%) to commercial customers while utility administrators subscribed a majority of capacity (52%) to residential customers.
• Economies of scale. The median program with a capacity above 1 MW had just 9 cents/W in administrative costs as compared to 12 cents/W for the median program with a capacity below 1 MW. Also, here too, the type of program administrator makes a difference: While third-party administered programs spend more on customer acquisition, utility-administered programs spend more on billing.
• Utilities rarely develop the entire program on their own. “There is a burgeoning industry centered around supporting utilities in implementing their programs,” the report says.
• Among the various challenges, signing up the initial customers is the largest, along with other participation-related concerns. Other issues include dealing with complex and uncertain policies and regulations.
Community solar programs are currently available in 228 utilities’ service territories. As there are a total of approximately 3,100 utilities across the U.S., customers in nearly 90% of utility service territories do not have the opportunity to subscribe to a program. Additionally, 33 states have not yet enacted a shared solar policy — even though several of those states have a number of utility programs.
SEPA developed a Community Solar Decision Tree to try and streamline the community solar program attribute design process down to a series of discrete choices, by asking the following key questions: Who runs the program? What is the subscriber’s economic proposition? What are the participation restrictions? What are the other terms and conditions? (See the illustration of the latter.)
Visit sepapower.org for more information.