Community Solar: An Explainer

Rooftop solar has established itself as an attractive option for green transition enthusiasts who are also looking to bring down their energy costs. The last decade saw solar prices come down considerably, which made the technology even more attractive. However, Rooftop solar becomes unappealing to most lower-income households because of the higher cost per kilowatt for a smaller system, financial constraints, roof space availability, rental housing. Apartment living is another factor that has taken it beyond urban dwellers. On that front, Community solar may play an important role in bringing solar benefits even for those who do not have access to or afford a rooftop solar installation.

What is Community Solar?

Community solar arrangements allow customers to enjoy the advantages of solar energy without having to install their renewable energy system. The arrangement can be understood as a project that operates within a particular location, where multiple customers including individuals, businesses, and others receive the advantages of a solar energy project. Typically, customers benefit from solar panels that are installed in an off-site array.

How Does it Work?

Community solar follows regulations similar to those that provide tax incentives to homeowners installing solar panels on rooftops. Net metering allows individuals who generate their solar energy to sell it back to the power grid. For community solar projects, utilities use a mechanism known as “virtual net metering,” meaning that subscribers receive a credit on their utility bill when their share of the solar farm generates electricity as if they had produced it on their roof.

In areas where solar energy costs less than conventionally generated electricity, subscribers can save money on their monthly bills. If subscribers move to a new home within the same utility service area, they can typically continue to benefit from their community solar subscription. Programs may also offer options for selling or donating subscriptions. Furthermore, utilities may offer a credit for any additional unused watts, which can be applied to future energy consumption. When solar panels do not generate sufficient energy to meet 100 per cent of the energy needs (usually in winter), subscribers can use the saved credits.

Additionally, utilities benefit from this type of projects as most arrays are situated off-site. This enables utilities to strategically place the systems in areas of the grid that can benefit the most. Developing community solar projects also helps utilities to build better relationships with their customers and improve engagement.

As per the Council on Energy Environment and Water (CEEW), community solar models can be implemented either on a subscription basis or an upfront payment arrangement. The Non-Profit think tank also suggests that a differentiated subscription model is suitable for low-paying consumers who do not have roof ownership or have access to exclusive roof spaces. In India, to avoid red tape, it should ideally be in the same state.

Gaining Popularity

Community solar has grown in popularity in recent times, thanks to its inclusivity. For instance, the draft Delhi State Solar Policy has been recently released to meet 25 per cent of the annual electricity demand of Delhi through solar energy. The draft policy introduced community solar along with several new initiatives, such as Group Net Metering, Virtual Power Plants, P2P trading, and Hybrid RESCO model.

Husk Power Systems, a rural energy services company, is the first company to own and operate more than 200 community solar minigrids in Asia and Africa. The firm aims to double the portfolio to 400 minigrids by the end of 2023, along the way to building 5,000 minigrids by 2030in Asia and Africa.

The robust microgrids have also shown resilience in times of natural calamities. For example, in the aftermath of cyclone Amphan, Sundarbans plunged into darkness even after two weeks after the disaster. However, Satjelia island had shown resilience where the community solar microgrids, set up by WWF India, continued to serve communities in crucial ways. The microgrid was set up under the gambit of the project ‘Sahasra Jyoti’. These solar microgrids have a combined installed capacity of 84.12 kW and electrify around 700 rural forest fringe households, benefitting over 3000 individuals, out of which 60 per cent fall below the poverty line.

Community solar projects are gaining popularity worldwide. In the US, as of December 2021, community solar projects were located in 39 states and Washington, D.C. with a share of over 3.2 GW of installed capacity, while 22 states, plus Washington, D.C., had policies that supported such projects. Recently, OYA Renewables announced $216 million in funding for the construction of as many as 15 community solar development projects throughout the state of New York.