Is Community Solar A Marketing Gimmick
Homeowners and businesses in eight states can now enjoy the benefits of solar energy without incurring the cost and inconvenience of rooftop installations. More states are embracing the idea.
Are these consumers buying solar energy? Or are they simply buying conventional electricity dressed up to sound like renewable energy?
Marketed under the names “community solar” or “shared solar,” developers and in some cases utilities themselves have built solar farms that usually produce between 1 and 5 megawatts and deliver the output to the local utility. The utility then credits willing consumers via net metering with a portion of the output.
The solar farms – which could be installed on large rooftops as well – must be located in the utility territory. That way the same utility that purchases the power provides the offsetting credits to its customers.
Customers of community solar projects continue to pay their utility for their electricity, reduced by the amount of the credit. At the same time, the consumer pays the solar developer.
There are two kinds of payments to the solar developer. The consumer could pay a price per kilowatt produced at the solar farm. Or the consumer could buy the solar panels themselves that are used to produce the energy.
In either case, the solar electricity is put into the utility grid and the consumer receives electricity over the utility grid.
At the same time, the utility can provide two kinds of credit: A monetary credit or a volumetric credit. The consumer can use a monetary credit to offset both supply costs and transportation and distribution costs. By contrast, in the case of a volumetric credit, the consumer would continue to pay a transportation and distribution cost for their total electricity consumption. After all, the same amount of electricity is being purchased off the grid.
Does community solar differ from any other form of utility generation? Not really. A coal power plant and a community solar farm work the same way: The electricity they generate is sold to the utility and the utility sells it to the consumer.
Without doubt solar farms have benefits that carbon-based generation does not. But to be fair it is the utility that is purchasing renewable energy, not the consumer.
Consumers would probably not agree to pay a solar developer for community solar if the price of the solar was not attractive. Utilities also look for a bargain. If the price of solar is attractive the utilities will incorporate it in their generation mix and pass the cost onto their consumers.
To some extent that is exactly what is happening with community solar. But instead of including the benefits in their pricing for all customers the utility goes out of its way to provide crediting to some customers.
The terms “community solar” and “shared solar” have a nice ring to them. They have sparked a movement of consumers who wish to obtain the benefits of solar without the cost and inconvenience of rooftops.
But let’s give credit where credit is due. If the utilities did not want to diversify their generation mix there would be no renewable energy. And if they did not want to provide credits to consumers there would be no community solar.
Imagine a world in which all consumers participated in community solar projects. Now imagine a utility that purchased an equivalent amount of solar from solar farms. Any difference in the production, flow or consumption of electricity? None.
For advocates of renewable energy it is a nice fantasy: A time when there is no community solar. Just 100% renewable energy. Brought to you by your local utility.