Community Shared Solar

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On this page:

• Examples from the Field
• Program Characteristics
• Reaching Underserved Communities and Addressing Consumer Protections
• Roles and Responsibilities
• Getting Started

In a community shared solar (CSS) program, a large solar photovoltaic (PV) system provides power or financial benefit to multiple community members. CSS programs can expand access to solar power for renters, those with shaded roofs, and those who are unable to install a solar system on their home or business for financial or other reasons. CSS programs are beneficial to low- and moderate-income (LMI) customers, who can face several barriers to installing rooftop solar panels such as the high upfront costs, low home ownership rates, suboptimal roof conditions, and limited access to credit. In typical CSS programs, the utility or a third party owns the solar system and therefore the participating customer (subscriber), typically has no ownership stake. Rather, the subscriber purchases the power generated by the system and sometimes purchases the clean energy attributes from the system. Without the purchase of these attributes, the subscriber may not claim the use of electricity from a renewable source.

Utility-sponsored CSS programs differ from traditional utility “green power” programs, which sell green power from a variety of sources through renewable energy certificates (RECs)¹ rather than from a specific community solar array. CSS programs typically sell electricity for a fixed price for the duration of a subscriber’s participation. Programs may offer other pricing options such as electricity prices at a fixed discount from the retail utility rate or at a fixed price for an established timeframe plus a yearly escalator after this initial period.

CSS programs generally share the following key features:

• They allow subscribers to purchase “shares” of the solar system’s electricity output over a set time, which provides credits on the subscribers’ monthly bill, thereby permitting customers to meet some or all their electricity needs with solar energy.
• They expand access to solar energy to customers who cannot or choose not to install solar panels on their own roofs.
• Projects are generally developed by utilities or third-party developers, not state or local governments.
• Programs receive oversight by state utility regulators, city councils, or cooperative boards.

CSS programs may be administered by the following entities:

• Utilities – In utility-sponsored programs, customers participate by contributing either an upfront or ongoing payment through their utility bills to support a solar project owned, installed, and managed by the utility. In exchange, customers receive a payment or credit on their electric bills that is proportional to (1) their contribution; and (2) the amount of electricity the solar project produces. Utility-sponsored programs can help make solar power more accessible by allowing customers to obtain ownership over a specified amount of solar energy (e.g., a number of panels or kilowatts) and by enabling customers to purchase solar electricity in monthly increments. All customers, including LMI customers, benefit from streamlined billing options where subscription payments and electricity use payments can be paid on the same bill. Customers may initially pay more than the credit supplied from the CSS or, depending on the size of their subscription, offset only a portion of their electricity bill, like rooftop solar energy.
• Third-Party Developers – In a third-party model, a private or nonprofit entity (or group of entities) owns, installs, and manages the CSS system and then bills the customers directly for their portion of the solar output. The customer then receives a credit on their utility bill based on the reported monthly solar system output. The utility and third party typically share customer information and billing details with one another to ensure credits are applied to the customer’s utility bill.

Typically, state governments enact enabling legislation or regulations, and then the utility or third party implements the program. Depending on the utility type and authorization in the local jurisdiction, utilities, such as cooperatives, may be able to voluntarily implement CSS programs without any new legislation.² A local government can support efforts to pass enabling legislation or regulation where it is needed and may also directly subscribe to a CSS project in their jurisdiction.

States across the United States have adopted the CSS model quickly. In 2010, CSS accounted for just 0.01% of total operating solar energy nationally. Between 2013 and 2017, CSS deployments experienced a compound annual growth rate of over 50%.³ Nineteen states and the District of Columbia (DC) have enabling legislation for CSS, and 41 states plus DC had at least one operational CSS project as of the third quarter of2022. Over 5,300 megawatts of CSS were installed nationwide through 2022, driven by enabling policies, incentives, and innovative business models.⁴ Key barriers to additional uptake stem from a lack of enabling policy, initial program design, and overall market maturity.

Examples from the Field

Tucson Electric Power GoSolarShares Program

• The GoSolarShares program allows customers to purchase solar shares in “blocks” of 150 kWh per month. Average residential households in the United States consume 886 kWh per month.⁵
• Program participants can choose to purchase some or all of their energy through the program.
• The program exempts participants from renewable energy and fuel surcharges and allows participants to offset a portion of their energy bill covered by solar shares for a period of up to 20 years.

SunSmart Community Solar Farm

• St. George’s Energy Services Department (a municipal utility) and Dixie Escalante (a neighboring electric cooperative) in Utah developed a 100-kWh community solar system, which more than doubled in size due to investment from the American Recovery and Reinvestment Act.⁶
• Program participants can purchase half or whole 1-kW units to receive energy credits on their monthly utility bill. The energy credits are provided at the full retail rate.⁷
• The utilities will expand the solar system in 100-kilowatt increments based on demand.

Xcel Solar*Rewards Community Program

• Through the Solar*Rewards Community Program, Xcel purchases RECs from solar gardens to achieve the utility’s renewable energy targets and provides solar garden subscribers with monthly credits on their electricity bill in relation to the number of shares in the solar garden.
• Customers can subscribe to third-party community solar gardens in their current county or in an adjacent county.
• Customers receive credits on their monthly utility bill⁸ for their solar energy, based on a value for solar bill credit rate.⁹

NYSERDA Solar for All

• The Solar for All program is a community solar subscription program for low-income customers.
• Subscriptions are offered to income-eligible customers at either no- or low-cost. Customers may choose to pay a portion of their cost savings back to the project sponsor in exchange for additional co-benefits, such as workforce training in low-income communities.¹⁰
• As of December 2022, New York State Energy Research and Development Authority (NYSERDA) has nine community solar projects participating in Solar for All, targeting 10,000 low-income subscribers.

Program Characteristics

Here are the typical characteristics of CSS programs.

Program types	Utility-owned; third-party owned
Target sectors	Commercial; Residential: Renters; Residential: Multifamily; Residential: Owners; Nonprofit; Public
Potential funding sources	Private lender or utility investment
Security required of borrower	None
Repayment mechanism	Can be up to a 20- to 25-year subscription period. More flexible arrangements allow subscribers to commit to shorter periods (e.g., 3–5 years) or exit contracts with a minor penalty.
Funding needs	Project funding varies based on the size of the project, as well as the financial structure
Enabling legislation requirement	On a state-by-state basis

Reaching Underserved Communities and Addressing Consumer Protections

While the financing mechanisms covered in this Clean Energy Financing Toolkit for Decisionmakers can provide specific benefits (e.g., lower energy bills, upgraded equipment, improved comfort) to underserved communities, including LMI households, these financing mechanisms could place LMI households at an increased risk if adequate consumer protections are not in place. This is because additional debt could overly burden LMI households and programs could disadvantage households if they face penalties for failing to repay program funds, have their power shut off, or receive negative credit ratings. Decisionmakers can implement consumer protection frameworks to address these concerns, including analyzing the applicant’s ability to pay, requiring disclosure of financing costs, and implementing protocols to ensure the LMI household fully understands the terms of the subscription contract.

When developing a financing program, considering the needs of underserved communities early in the process can help decisionmakers create a comprehensive financing program and incorporate consumer protections. Decisionmakers can evaluate how and to what extent marginalized communities and considerations of equity have been included in the policymaking process for developing a financing program by considering the following questions:¹¹

• Have marginalized communities, consumer protection organizations, and organizations serving marginalized communities participated meaningfully in the policymaking process?
• Does the policy help address the impacts of inequality or inequity, or does it widen existing disparities?
• How will the policy increase or decrease economic, social, and health benefits for marginalized communities?
• Does the policy make energy more accessible and affordable to marginalized communities?

CSS programs can implement additional programs to expand access to LMI communities. Some CSS programs have specific carveouts for LMI customers, requiring the system owner to provide certain shares to LMI customers in order to help them with bill savings and reduce their energy burden. Some programs offer a financial incentive (e.g., a rebate) to LMI customers to encourage and lower the cost of participation. As an alternative to credit checks, some CSS programs may rely on utility bill history to ascertain a borrower’s history of repayment. When designed properly, CSS programs do not increase the debt burden on LMI communities, but rather reduce the total amount of money customers pay for electricity. CSS programs may increase the debt burden on LMI communities by having long contract lengths or through the imposition of high early withdrawal penalties.

Roles and Responsibilities

Typically, utilities or third-party sponsors will identify key locations for future solar development and fund the development and operation of CSS programs. In addition, utilities will establish procedures for interconnection of new solar systems and determine administrative accounting systems. As a CSS program begins operations, utilities or third parties will provide for ongoing system maintenance, market the system to potential subscribers, monitor the production of solar energy, and provide the bill credits to subscribers.

As utilities and third parties are mainly responsible for the financing, development, and operation of CSS programs, local and state governments’ key role will be to administering the permitting processes for solar systems. Local governments may also be involved in considering land use and zoning issues regarding potential projects. In addition, local governments may play a role in the taxation of CSS projects. Governments can also help advertise the CSS program to citizens.

Getting Started

State and local governments should consider these steps and best practices during the design, approval, and management of a CSS program:

• Determine if the program can be implemented under the current legislative and regulatory framework for the specific utility, market, and location.
• Engage with key stakeholders to inform the development of a CSS program.
• Create the policy and local regulatory framework to enable project development that is successful for developers and customers, as needed.
• Determine a basic approach for a utility-owned or third-party-owned CSS program and develop responsibilities for all key partners, with a special focus on the utility’s options, constraints, and administrative processes.
• Develop basic cost and pricing models for CSS power with comparisons to existing electricity tariffs to demonstrate net impact to ratepayers and potential subscribers.
• Describe the program’s potential economic and environmental benefits to the local, regional, or statewide area, depending upon CSS generation capacity. It is important to be clear about the ownership of RECs generated by the project, which conveys the ability to claim the use of electricity from a renewable source.
• Work with utilities to help them develop resources and expertise to sponsor and implement their own CSS program.
• Establish a process to efficiently manage interconnection processes for new projects to reduce time, effort, and costs for project developers.
• Establish and manage CSS billing processes that increase transparency and reduce the burden for customers, project developers, and utility staff.
• Streamline offerings so that the CSS program is integrated with existing energy assistance, energy efficiency, and job training programs to increase program participation and benefits for LMI customers.
• Establish robust customer outreach efforts with trusted partners to ensure equitable access in marginalized communities.
• Establish a program-wide LMI participation requirement or incentives and ensure affordable housing providers can participate.
• Incorporate robust consumer protections.

References and Footnotes

¹ Green power programs sell RECs to customers for voluntary purposes, beyond what is required by state renewable portfolio standards and other regulations and mandates for renewable energy. For more information on green power programs, see EPA’s Green Power Partnership Program.

² National Conference of State Legislatures. 2017. State Policies for Shared Renewable Energy.

³ Vote Solar. 2021. The Vision for U.S. Community Solar: A Roadmap to 2030 and Beyond.

⁴ Solar Energy Industries Association. 2021. 3.1 Gigawatts of Community Solar Have Been Installed in the U.S. through 2020, Community Solar.

⁵ U.S. Energy Information Administration. 2021. 6 The average size of a natural gas-fired power plant was 820 MW in 2017 and the average wind turbine capacity is 2.55 MW.

⁷ SunSmart. n.d. Delivering Tomorrow’s Power Today.

⁸ Xcel Energy. 2014. Northern States Power Company Minnesota Sample Bill Credit.

⁹ Xcel Energy. 2021. Solar*Rewards Community Bill Credit Rates.

¹⁰ New York State Energy Research and Development Authority. Solar for All Facilities (RFP 3802).

¹¹ Governments, agencies, and nonprofits have developed equity lenses and frameworks to ensure that issues of race and equity are incorporated throughout policy-making processes. These questions draw from the following frameworks: Institute for Energy Justice, “Section 2 – Energy Justice Scorecard”; City of Seattle, “Racial Equity Toolkit”; and Higher Education Coordinating Commission, “Oregon Equity Lens.”