We recently were asked by a homeowner whether he should defer installing solar panels on his roof or wait for community solar to come to his area.
As the price of solar panels has dropped in recent years close to 200,000 homeowners have installed rooftop systems. Many more homeowners, however, have found that rooftop solar is inconvenient or unaffordable for a number of reasons:
- Poor roof conditions. Before a homeowner can install solar panels the roof must be replaced. Alternatively, the roof may be too steep.
- Shade. Roofs are shaded by trees and the homeowner does not want to cut them down.
- Aesthetics. Roofs of Spanish tile or slate are incompatible with aluminum solar panel racking systems.
- Permitting obstacles. Homeowners’ associations or local historic district regulations prevent rooftop installations.
- Small roofs. The roofs over apartment buildings over four stories are too small to fit enough panels to generate electricity for tenants or the building’s common areas.
- Renters. Apartment renters cannot justify the cost of building a solar system that they will not benefit from if they move.
- Cost. Small rooftop installations are too costly to justify the investment.
Community solar (or shared solar as it is sometimes known) opens the market for solar energy to homeowners and apartment dwellers for whom solar energy is impractical or unaffordable.
With community solar a developer builds a solar farm in the utility territory and sells the solar electricity production to the utility. The utility then credits the value of the electricity produced by the solar farm to consumers, that is, the community solar subscribers.
Consumers continue to pay for electricity delivered to them over the utility’s wires but they receive a credit on their bill for the value of the solar farm production for which they subscribed.
For those consumers who have a choice – whose roofs can accommodate solar panels but who can also subscribe to community solar – there are ample reasons to choose community solar over rooftop.
For example, a conventional rooftop solar installation requires a long term commitment, sometimes as much as 15-20 years to pay off loans which the homeowner takes out to pay for the system. For those homeowners who do not buy their solar system but rather finance it through third parties, community solar gives them greater flexibility to move at any time without the need to assign their solar lease or payment obligations to a third party.
Here is a quick summary of these comparative benefits:
There are two prevailing alternatives to rooftop solar: Ownership of specific panels and purchasing a block of kilowatts produced by the solar farm.
When consumers review the comparative benefits of those choices they frequently choose purchasing kilowatts rather than buying panels. The benefits of subscribing for community solar instead of buying panels on a solar farm are similar to those of community solar over conventional rooftop solar: Shorter term contracts, ability to cancel without penalty, ease of moving without worrying about finding a buyer for the solar panels.
In addition, subscribing to a block of kilowatts avoids the need to make costly down payments for the panels. A homeowner who subscribes to community solar pays only for the solar produced as it is produced. Moreover, the homeowner can cancel the contract at any time if he or she moves. New homeowners will always be ready to buy output from the solar farm, probably because they, too, perceive the benefits of community solar over rooftop solar.