By Paul Augustine
In early August 2015, the Obama Administration finalized its Clean Power Plan rules, which will lead to a dramatic shift in the U.S. electricity system over the next 15 years, reducing carbon dioxide emissions by nearly one-third. The combination of impending greenhouse gas regulations, increasing customer demand for clean energy, and a steep decline in the cost of solar can be seen as a threat or an opportunity for U.S. electric utilities. In many states, third-party residential rooftop solar developers actively implement campaigns to secure customers by presenting utilities as dirty, high-priced, slow-moving monopolies. But there is a way for utilities to use these trends (as well as solar developer education efforts) to their advantage, specifically by establishing utility-sponsored community shared solar programs.
Community shared solar has a variety of flavors, but, for purposes here, it is defined as a solar photovoltaic project that delivers energy and/or economic benefit to multiple customers. These customers subscribe to the solar project by purchasing a share of its energy output. A community solar project, then, allows subscribers to benefit from a central commercial-scale solar plant through virtual net energy metering. Virtual net energy metering refers to an arrangement through which multiple customers are credited for a share of energy generated by a renewable energy facility that is not physically connected to their property. If the costs of transmission and distribution, reliability, and ancillary services provided by the utility are properly accounted for, crediting subscribers for their share of solar output should not lead to a cross-subsidization by non-subscribers. This is an important area that requires dedicated analysis as utilities consider rate restructuring to better account for the full value of the services they provide to those with distributed energy resources.
Community solar may be a more appealing concept for many customers than traditional rooftop solar, since it allows greater access to solar energy (i.e., for renters, those with shaded roofs, and households that cannot afford the upfront costs of a solar system). While community solar is rapidly gaining traction throughout the country, there are a number of barriers that need to be evaluated and addressed before developing a new community solar program.
Community shared solar represents a unique opportunity for utilities to engage customers while simultaneously reducing their greenhouse gas exposure. Potential barriers should be properly assessed, but the benefits of community solar could be great in accomplishing multiple goals of the utility of the future. With the Investment Tax Credits set to decrease at the end of 2016 and extensive stakeholder outreach required to secure and adequate subscription rate for a new community solar program, utilities should begin their consideration and analysis of the business case for community solar as soon as possible.