Clean Energy Collective has just completed three new community solar projects, bringing added momentum to an emerging business model that could triple access to solar.
“Our model is not supplanting people who want to and can put solar on their house, but rather opening the market to the other 75 percent of electricity users,” explained Clean Energy Collective (CEC) President/Founder Paul Spencer.
Spencer will be speaking at GTM's Solar Market Insight conference in December about the opportunities for community and crowdfunded solar -- joining Greg Rosen, chief investment officer for Solar Mosaic and Anna Brockway, head of crowdfunded solar at the Department of Energy's SunShot Initiative.
Since 2010, when Spencer originated the community-owned solar project model, CEC has brought thirteen community-funded solar installations on-line totaling 5.3 megawatts. It has a pipeline of ten more projects totaling 5.2 megawatts. Two of the new CEC projects are 500-kilowatt installations for Xcel Energy ratepayers in Breckenridge. The third is a 400-kilowatt installation in Denver County.
In December 2012, CEC got $13 million in private equity financing from the New Energy Capital Cleantech Infrastructure Fund, Black Coral Capital and other investors.
The community-funded model targets homeowners without suitable roof positioning or solar resources. It could more than triple solar by bringing in house renters, multi-unit-building renters, lower-income homeowners, and small business ratepayers.
Community solar allows utility customers the opportunity to own solar panels within a grid-connected project, according to CEC spokesperson Tim Braun. A one panel minimum purchase costs $500 to $900, and CEC guarantees the panels for 50 years.
Community funded solar focuses on projects between 100 kilowatts and 2 megawatts. Such medium-scale installations make up more than 60 percent of the present U.S. project pipeline, according to the National Renewable Energy Lab’s A Guide to Community Shared Solar.
The model is simple on paper, but it's very complex in practice. The company “solved a Rubik’s Cube of variables -- corporate structure, securities and tax issues, tracking, and utility bill crediting -- to make this model exportable and scalable," reported NREL.
CEC creates a special-purpose entity (SPE) to manage each community-funded solar project. Unlike the LLC created by Massachusetts-based My Generation Energy, which limits participation to a few tax-motivated investors, the SPE allows any customer of the participating utility to buy project shares in the form of panel ownership.
CEC’s SPE sells the project’s Renewable Energy Credits upfront to lower the installed cost. It takes a percentage of the generation credit for handling operations and maintenance and business and system expenses.
CEC’s projects also take advantage of virtual net metering. “Similar to group billing,” the NREL Guide explained, virtual metering “allows net metering credits generated by a single renewable system to offset load at multiple retail electric accounts.” Through this metering structure, customers’ meters roll backward in proportion to their ownership.
To manage the utility-solar interface, CEC developed RemoteMeter. The proprietary software automatically does monthly calculations for each owner and integrates with the utility’s billing system. Both customers and the utility can monitor real-time solar production and account information online or via mobile devices.
In a different community-funded business model, the solar project is sponsored by a utility. The system is either owned by the utility or a third party, and customers buy rights to solar benefits. Sacramento Municipal Utility District’s SolarShares and Tucson Electric Power’s Bright Tucson programs are examples.
CEC’s model is not utility-sponsored, but the SPE is closely aligned with the utility that will buy the project’s power. Solar owners must be utility customers and cannot buy more than 110 percent of their yearly electricity consumption. Ownership is transferable. If an owner moves within the utility’s service territory, the bill credits follow. If the customer moves outside of the territory, panels can be sold to another customer or to CEC, or donated to a nonprofit.
Many utilities are re-examining support of distributed solar. Xcel Energy, Colorado’s dominant utility, has participated in more than half of CEC’s work, but recently proposed cutbacks to its incentive programs.
Innovations are providing ratepayers “better energy than what Xcel has been giving them,” said SolarCity Policy and Electricity Markets Director Meghan Nutting. These innovations are making solar accessible "as part of a solar garden or through community municipalization. It is disappointing that Xcel has proposed to undermine these choices," said Nutting.
In crowdsourced community-funded solar, aggregated small investments collectively finance the installation. Solar Mosaic is connecting investors with project site hosts that lease the solar. Investors are paid back over time by monthly lease payments and incentives processed through Solar Mosaic.
Want to know more about the potential upside and pitfalls of these models? We will be discussing the future of crowdfunded and community solar at GTM Research’s U.S. Solar Market Insight conference in San Diego on December 10-11.
“The future of community solar is the golden question,” said CEC's Braun. “But the upside is extraordinary.”