Community solar is an under-developed renewable energy investment market that can be opened to the world for investment by Sun Fund’s Producer to Investor Platform (PIP). Typically it is a renewable energy power plant owned and shared by a community.
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Community solar has been overlooked for large-scale solar operations by larger investors because the fixed and ongoing costs are similar.
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What is Community Solar?
Community solar programs (also called “shared solar”) offer the economic and environmental benefits of solar to the 49% of Americans without traditional solar access.1 Such programs are experiencing rapid growth, with active projects across 26 states, up from 6 states in 2010.2 This market has the potential to grow more than 50-fold from the 110 megawatt (MW) capacity in early 2016 to between 5,500 MW and 11,000 MW by 2020.3 Previously, it was often uneconomic to develop individual solar projects of less than 2 MW in capacity (2,000 kilowatts [kW])4 if they were not tied directly to or net metered with a customer site. With community solar, projects between 50 kW and 2,000 kW are often viable because numerous off-site subscribers can purchase shares of a solar installation rather than hosting the installation themselves. By bringing an enormous source of new demand into the market and offering new contracting arrangements to the 51% of Americans who already have potential solar access, community solar is expected to greatly expand the market for mid-sized solar projects.
One strong but sometimes overlooked source of suitable sites for community solar are those covered by the U.S. Environmental Protection Agency (EPA) RE-Powering America’s Land Initiative. The RE-Powering Initiative provides data, tools, analysis, case studies, issue briefings, and outreach resources to encourage renewable energy development on contaminated lands, landfills, and mining sites (collectively “RE–Powering sites”). RE-Powering sites represent a large and varied collection of sites that include former Superfund sites, brownfields, landfills, and mine sites, as well as other formerly contaminated sites under various federal and state cleanup programs. Such sites occupy millions of acres across the country and are often found in and among communities. In addition, the percent of households with income below the poverty line and living in close proximity to RE-Powering sites is generally higher than the overall U.S. population; that is, surrounding populations tend to be poorer than average.
RE-Powering sites can therefore potentially provide a higher number of sites for community solar projects and thereby deflect development pressures away from open space and lands with other environmental or economic re-use options. As described later in this paper, nearly 9,500 pre-screened RE-Powering sites, representing 8,800 MW to 15,200 MW of technical solar photovoltaic (PV) potential, are available for development in the 26 states that currently have community solar projects.5 This means that RE-Powering sites could, in concept, meet the entire community solar market forecast previously described. Beyond the raw numbers, RE-Powering sites offer valuable added benefits. They enable a unique opportunity to re-purpose sites that may have no other immediate development potential and have historically created environmental concerns for the community. RE-Powering sites also can add sustainable re-use to the winning combination of subscriber access and economies of scale that has fueled community solar growth.
In addition to these benefits, community solar can make a particularly positive impact in low- and moderate-income (LMI) areas. Community solar can overcome financing, contract flexibility, project size, and siting challenges that largely shut out LMI homes, apartments, and small businesses from the solar market, while offering added local economic development benefits if the community solar project itself is located in LMI areas. Because RE-Powering sites are frequently located in or near LMI areas, this paper will explore not only the general potential for developing RE-Powering sites for community solar, but also where siting adjacent to LMI areas extends their benefits. This market intersection is conceptually depicted in Figure 1. Within and outside LMI areas, this paper is intended to support sustainable re-use by characterizing the potential and pointing out the challenges and opportunities of community solar development on RE-Powering sites.
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1 The White House, Fact Sheet: Administration Announces New Initiative to Increase Solar Access for All Americans, July 7, 2015, https://www.whitehouse.gov/the-press-office/2015/07/07/fact-sheet-administration-announces-new-initiative-increase-solar-access [accessed July 2016].
2 National Renewable Energy Laboratory (NREL), Community Solar: Status, Trends, Legal, and Financial Issues, March 9, 2016, page 3, https://www.epa.gov/sites/production/files/2016-03/documents/webinar_20160309_oshaughnessy.pdf [accessed July 2016]. NREL’s full list of the 26 states and the number of projects completed by [a] state is provided as Figure 8 in Appendix C of this paper. In total, 108 projects are in the NREL document. Community Solar Hub’s website lists similar data on 98 shared solar projects in 25 states with a combined capacity of 100 MW, https://www.communitysolarhub.com/ [accessed November 2016].
3 NREL, Shared Solar: Current Landscape, Market Potential, and the Impact of Federal Securities Regulation, April 2015, page v, http://www.nrel.gov/docs/fy15osti/63892.pdf [accessed July 2016].
4 1,000 kilowatts (kW) = 1 megawatt (MW). While 2 MW has been a common historical limit to individual community solar projects, larger examples are likely in the future. Xcel Energy’s Minnesota Solar*Rewards Community® program has several hundred MWs of applications from the time when “co-location” of five adjacent projects of 1 MWAC was allowed, which effectively makes a 5 MWAC project. Another example is the utility Southern California Edison, which will allow community solar projects up to 3 MWDC in capacity, as highlighted in Section 3.3 of this paper.
5 Among the 26 states that have implemented community solar projects, program rules and/or incentives can vary widely, making the jurisdictions more or less favorable for such projects. Within some of these states, community solar programs are not universally available but restricted to certain utility territories. Turning to the remaining 24 states, this paper’s analyses cautiously assume no community solar activity. However, the sharp growth of community solar makes it likely that many of these additional states will welcome community solar in the future. In its 2015 Utility Solar Market Snapshot published in July 2016, the Smart Electric Power Alliance reports that “89% of utilities surveyed were either offering or planning/researching/considering a community solar program,” page 12, https://www.solarelectricpower.org/discover-resources/publications-and-media.aspx [accessed November 2016].
Source: EPA.gov