Just 15 percent of residential rooftops are suitable for solar -- but a new law and a new business model allows anyone in Massachusetts to be a solar owner.

Massachusetts’ Virtual Net Energy Metering (VNEM) law permits people to buy solar panels in a community-owned and -sited array. The law also requires investor-owned utilities to reduce the panel owners’ utility bills by an amount commensurate with the power sent to the grid by the community-owned solar arrays.    

By taking advantage of VNEM, the Colorado-based Clean Energy Collective expects to build 10 megawatts to 15 megawatts of new community-owned solar in Massachusetts by the end of this year, in 500-kilowatt to 2-megawatt increments.

“Virtual net metering provides the platform for our business model and the ability to build,” explained CEC founder and CEO Paul Spencer. “But it is our business model and our ability to partner with utilities in PPAs that gives us the foundation to go into new markets.”

Spencer developed the CEC business model in 2010 by working out the legal logistics of securities law through which individuals can own individual panels in an array. “Where there is no virtual net metering law, as in California, we have to arm-wrestle with utilities to get permission for community-owned solar projects,” Spencer said.

CEC will reach 85 percent of Massachusetts ratepayers by building in the territories of the state’s three IOUs: Western Massachusetts Electric Company, National Grid, and NSTAR, Spencer said. Municipal utilities are exempt from the VNEM law.

CEC has planned three ground-mounted projects in Hadley and one in Rehoboth totaling about 3.5 megawatts; the projects are scheduled for construction within 60 days. 

Real Goods Solar will build the projects, using 300-watt ReneSola modules, AE and SMA inverters, and RBI fixed-tilt racking. “CEC dictates brand choices,” Spencer said. “We will be responsible for those arrays for 40 years to 50 years, so the products have to fulfill their warranties.”

About 75 percent of all U.S. residential roofs are not suitable for solar, according to an NREL study, Spencer said, and 40 percent of the remaining 25 percent are rental properties. “That eliminates 85 percent of U.S. residences from rooftop installation.”

Through CEC’s community-owned solar plan, any ratepayer in the first four projects’ utility territories can buy a panel or panels. Western Massachusetts Electric customers will pay $4.30 per watt, though Massachusetts rebates take that down to $3.90 per watt, or $1,170 per panel, according to CEC. Because underlying project costs for the National Grid array are higher, its customers will pay $4.45 per watt, $4.05 per watt with the rebate, for a $1,215 panel price.

A Western Massachusetts Electric customer’s bill will be reduced by $85 per panel in the first year, a 7.3 percent savings, according to CEC. The National Grid customer’s bill reduction will be $120 per panel in the first year, for savings of 9.9 percent.

CEC’s return for handling operations and maintenance and business and system expenses is earned in the margin it receives for project module procurement. Before entering the Massachusetts market, CEC had built or was developing 29 community solar projects with thirteen utility partners across five states, representing 14.1 megawatts of solar capacity.

Crowdfunding of community solar is also emerging as a path of solar growth. The most recently announced example is SolarCity’s online investment platform which allows investors to own shares in solar projects. 

Mosaic is the dominant player in crowdfunded solar. It has raised $6.6 million from 3,000 investors around the U.S. to fund twenty projects.

It is not, as Spencer pointed out, actually community-owned solar. Instead, the crowd invests in Mosaic notes and Mosaic lends money to solar project owners. Investors earn between 4.5 percent and 7 percent per year. Mosaic takes a 1 percent fee.

Mosaic is not currently active in Massachusetts. “We can lend to solar project owners in any state without legal constraints,” CIO Greg Rosen said, “and can probably provide lower-cost capital and additional community engagement.”

A key difference in the business models is that, as a lender, Mosaic does not deal directly with utilities, so it doesn't require their cooperation or rely on net metering or other solar incentives. “We are a finance company, not a developer,” Rosen explained.

Mosaic has loaned to projects that sell electricity to utilities, government agencies, companies and nonprofits. Its biggest undertaking to date is a 12.3-megawatt military base installation, but it has also made loans for sub-100-kilowatt installations on affordable housing units.

Rosen said he sees overlap in the two solar financing models. “They are innovative. We are innovative. It is probably hard to take in all the innovation. But we are [in favor of] community solar models that provide good value to stakeholders and help get solar installed.”