Clean energy is the next frontier in America’s sharing economy.
For energy consumers who rent, who have roofs that aren’t well-suited for solar, or who for a variety of reasons are unable to commit to having a renewable energy system installed on their own property, the traditional panels-on-your-roof approach to solar just doesn’t work.
With solar costs low and consumer demand high, the number of potential renewable energy customers could quadruple overnight if providers can find a way to serve those who can’t put renewable energy on their own property. Shared renewables arrangements offer these customers a pathway to clean energy.
One of the more popular shared renewables models involves enabling participating customers to subscribe to a shared renewable energy facility, and then receive a credit on their utility bill for the energy production from their share of the facility. Depending on the program specifics, developers may be able to offer a number of attractive features to customers, including a cash-flow-positive value proposition from day one, and a short-term or no-strings-attached contract for customers who need flexibility. The result is a clean energy solution that fits the lives of many more Americans.
Figure 1: Shared Renewables Arrangement
This diagram shows a shared renewables arrangement using an on-bill credit. A shared renewables project might be a 200-kilowatt solar system on the roof of a local grocery store or a 5-megawatt system on an old brownfield.
Seven states have already passed legislation to implement shared renewables via an on-bill credit, and campaigns are underway in a number of states to enact new shared renewable energy legislation this year. The model here is California, where SB43/AB1014 are calling for a 500-megawatt to 1,000-megawatt shared renewable energy program. Unlocking a market that size will spur intense competition and innovation to develop the most successful shared renewable energy business models, which is bound to have positive ripple effects across the nation.
The District of Columbia, Georgia, Hawaii, Maryland, Minnesota, Nebraska, New Mexico, and Washington all have shared renewables bills in play this legislative session as well. Vote Solar continues to explore the best shared renewables program design for New York, which could unlock massive new private sector investment by customers in the rooftop-limited New York City market.
To keep track of all the action, Vote Solar and clean energy consultant Lee Barken launched a new website this week which tracks the latest on shared renewables policy and projects.
Solar advocates are learning more about what does and doesn’t work when designing a shared renewables program, and we’re turning those lessons learned into a resource for the broader policy community. The Interstate Renewable Energy Council (IREC) and Vote Solar will release an update to our Model Program Rules for Shared Renewable Energy in spring 2013. The revised model rules will reflect evolution in shared renewables policy and markets since the first edition was published in 2010.
One of the important considerations covered in those model rules is how to calculate the credit participating customers receive on their electric bills. Some states have experimented with achieving shared renewables arrangements through expansion of net metering laws. Other states have viewed shared renewables as an entirely different framework than net metering and are designing programs to reflect the distinct characteristics of these shared projects.
Our take is that the jury’s still out on the best approach, and it may well vary by state, but that what is critical is that the bill credit reflect all the benefits shared renewable energy facilities provide: clean, local electricity that offsets the need for grid upgrades and avoids line losses, and health and environmental benefits associated with offsetting new polluting generation. Local stakeholders may also wish to advocate for providing a value for other societal benefits such as local job creation, community-building, and equitable access to clean energy.
This kind of interplay between shared renewables programs and existing renewable policies is the subject of much discussion -- and rightly so. But we think the opportunities that shared renewables offer make the process well worth it. In states that are struggling to meet existing Renewable Portfolio Standard (RPS) goals, enabling shared renewables can help get more clean generation built faster. In other states, like California, shared renewables programs are an exciting way to go beyond RPS requirements and boost renewable energy installations without state subsidies.
In this era of rapid innovation in renewable energy and the policies that enable it, we’re likely to see a variety of approaches as states sort out the best ways to connect more residents and businesses with the clean energy they want.
What is clear is that the concept of shared renewables has struck a chord, and companies and policymakers are racing to find ways to make it work.
Vote Solar is a nonprofit grassroots organization with the mission of fostering economic development and combating global climate change by bringing solar energy into the mainstream across the U.S. Hannah Masterjohn leads Vote Solar’s work on shared solar business models.