Community Solar Is About to Get a Surge in Federal Funding. So What Is Community Solar?

On a farm field east of Faribault, Minnesota, a 1.3-megawatt solar array provides electricity to serve about 180 subscribers.

The project, which occupies about six acres, is an example of community solar—also called “shared solar” or “solar gardens”—a kind of development in which subscribers receive credits on their monthly utility bills for the solar electricity produced.

Community solar is poised to become much more common thanks to a new $7 billion fund tied to the Inflation Reduction Act. The EPA began the process of setting up the fund last week.

I’ve found that one of the biggest challenges in writing about community solar is explaining what it is, so I turned to Maria McCoy, a researcher for the Institute for Local Self-Reliance, a nonprofit that closely tracks the programs.

“Community solar is meant to be an option for folks who can’t put solar on their own roofs, whether they don’t own a home or have the financial ability to put solar up there or have a lot of shady trees,” she said.

The large majority of subscribers and projects are in six states: Colorado, Illinois, Massachusetts, Minnesota, New Jersey and New York. About 20 states have active programs and many of the rest have rules that limit the ability of developers to do subscription-based projects.

Community solar has its origins in ideas about democratizing access to clean energy, which has translated into laws mostly in blue states.

McCoy, whose organization’s main office is in Minneapolis, has an up-close view of one of the largest and oldest community solar programs in the country, which exists in the territory of Xcel Energy, Minnesota’s largest utility.

The program, started in 2014, has nearly 30,000 subscribers across the state who have signed up to participate in one of about 850 solar projects.

Faribault Community Solar went online in 2019, developed by Cooperative Energy Futures, a Minneapolis-based nonprofit that builds projects to serve low- and moderate-income households. The city of Faribault is about 50 miles south of Minneapolis.

Customers get a monthly bill credit from Xcel, and the savings is one of the main selling points for subscribing.

This model is designed to encourage development of solar power while also providing savings.

While you might imagine electrons flowing from the solar projects to their subscribers, it doesn’t work that way. For nearly all community solar projects (and utility-scale solar and wind), the electricity goes into the grid for use by anyone, and the subscriptions and credits are a matter of bookkeeping.

The Xcel program’s successes and growing pains have served as lessons for other states. One of the biggest criticisms of the program has been that it doesn’t do enough to provide benefits to low-income households.

Minnesota is no longer the national leader in community solar, at least as measured by the number of projects or the generating capacity of those projects. That title belongs to New York after substantial growth in 2022. The New York program has gained momentum thanks to initiatives by the state government and the nonprofit sector, including some that focus on giving low-income households access to solar.

The state had 728 projects online as of the end of the third quarter of 2022, according to the Institute for Local Self-Reliance.

One example is a 1.2-megawatt project in Brooklyn built across 40 New York Housing Authority Rooftops. The project serves about 500 low- and moderate-income households, although most community solar projects do not focus exclusively on low-income communities.   

Several states are in the early stages of setting up community solar programs. One I’m watching is California, where a 2022 law directs the California Energy Commission to write rules to encourage community solar, which the office is working on now. California leads the country in rooftop solar and utility-scale solar, and should have a large market for community solar.

Some states have programs that they describe as community solar, but which clean energy advocates say are utility-controlled efforts that only mimic some attributes of community solar. A good example is Florida Power & Light’s SolarTogether program, which one group, Solar United Neighbors, says is “fake community solar” because consumers pay a premium to participate and don’t receive any bill savings while the utility is able to earn a guaranteed profit by building the systems and charging customers for the electricity. (When I said that about 20 states have community solar, I wasn’t including Florida.)

The federal government now has $7 billion that can go to community solar through the Greenhouse Gas Reduction Fund, which was created by the Inflation Reduction Act signed by President Joe Biden in August.

The EPA has said the fund will award up to 60 grants and that it “will prioritize delivering financial and technical assistance to projects that deploy residential and community solar, associated storage technologies, and related upgrades.”

McCoy expects that the states that already have community solar programs will be best equipped to benefit from the fund. The applicants can include states, cities and Tribal governments, among others. If they are successful in getting grants, the next step likely would be to work with a developer to build a project or projects.

The grants have the potential to substantially increase access to community solar. For perspective, developers spent about $1.3 billion on U.S. community solar projects in 2022, according to the research firm Wood Mackenzie.

The firm issued a forecast last week showing that the community solar market will double by 2027, with an additional 6 gigawatts of solar capacity coming online (the report was done in collaboration with the Coalition for Community Solar Access, a group that includes solar companies and clean energy nonprofits).

That’s a lot of new capacity, but it would be just the start of what’s needed if community solar is going to become a major part of the transition to clean energy.

Other stories about the energy transition to take note of this week:

Public Lands, Long Available to Fossil Fuel Companies, Are Now Being Offered to Solar Companies: The Biden administration has an opportunity to accelerate development of solar power on public lands in the West, but several issues stand in the way, including questions about what public lands are for and whether they are the best places to put utility-scale projects. This isn’t a new debate as my colleague Wyatt Myskow reports for ICN. Conservationists say that any development must be done in areas where they will do the least harm to habitats and species.

An Activist Group Is Fighting Solar Projects in Rural America: Citizens for Responsible Solar is part of a growing backlash against renewable energy in rural communities. The group, which started in Virginia in 2019, has helped local groups fighting solar projects in at least 10 states including Ohio, Kentucky and Pennsylvania, as Miranda Green and Michael Copley report for Floodlight and NPR. The group’s co-founder is Susan Ralston, who worked in the White House under President George W. Bush and still has deep ties to players in conservative politics. She has advised some of the people behind the anti-solar campaigns I wrote about last year, including the successful campaign against Birch Solar near Lima, Ohio. “Susan was a great resource for information and, probably more importantly, inspiration,” said Jim Thompson, an Ohioan who led the campaign against Birch Solar. “There’s times, you know, you get down in the valleys, and you don’t know that you’re making a darned difference. And you reach out to people like Susan and share your frustration, maybe get some insight as to what you might be doing wrong.”

Why It’s So Hard to Build New Electrical Transmission Lines in the United States: Building new interstate power lines in the United States is like herding cats, writes Catherine Clifford for CNBC. The challenge is that countless stakeholders need to compromise about where a line will run and who will pay for it. And, the parties at the negotiating table have competing interests, adding to the complications of a process that already was a slog. The stakes are high because the country needs to build many more of the lines to be able to accommodate growth in renewable energy and be able to run a grid that will rely more on transporting power over long distances.

Made-in-Ohio Solar Panels Benefit from Federal Incentives and Supply Chain Politics: Decades after scientists developed cadmium telluride solar panels, the technology is on the rise, along with two manufacturers near Toledo, Ohio, as Kathiann M. Kowalski reports for Energy News Network. Cadmium telluride is a combination of cadmium and tellurium, both of which can be obtained as waste products from mining. The material is well-suited to absorbing solar radiation, but it has long been a distant second in the solar panel market to crystalline silicon, which is cheaper and more efficient. Now, cadmium telluride may be about to gain ground thanks to decreases in costs and the federal government’s push to reduce dependence on other countries for solar materials. The two Ohio companies are First Solar, which has been around for decades and did much of the early research and development work on cadmium telluride panels, and Toledo Solar, which started in 2019. “The Toledo area, with its deep ties to the glass industry, was a natural incubator in the early years of our business,” said Kuntal Kumar Verma, chief manufacturing officer for First Solar.

‘Spiral Welding’ Could Transform the Way Wind Turbine Towers are Made: GE Renewable Energy and Keystone Tower Systems have begun operating the first wind turbine whose tower was built using spiral welding, a technique that takes flat-rolled steel and curls it into a cylinder. The process, developed with assistance from the Department of Energy, could allow for much more efficiency in the construction of wind turbine towers, as Michelle Lewis reports for Electrek. The efficiency comes in the form of lower costs and faster construction times. Companies would be able to build towers for wind turbines using just one machine, and the manufacturing could be done at the site of a wind farm. The first turbine using this method went online on the grounds of Keystone’s factory in Pampa, Texas, part of a development process in which GE Renewable Energy plans to begin using spiral welded towers in some of its projects.

Correction: California is writing new rules for its community solar program and hasn’t yet finalized them. A previous version of this story said the new rules were already in place.

Inside Clean Energy is ICN’s weekly bulletin of news and analysis about the energy transition. Send news tips and questions to [email protected].