Community solar refers to solar energy projects with multiple owners, often living in geographic proximity to a project, who share the costs and benefits of investment in this shared resource. Often referred to as ‘shared solar gardens,’ community solar has been an emerging energy development across the U.S. in recent years, stimulated in part by an increasing number of states passing community or virtual net metering policies. This shared approach overcomes the significant barriers to physically owning a solar photovoltaic (PV) generating system such as site shading, roof orientation, zoning laws, roof/system size, lack of property ownership, etc. Beyond the high up-front costs to finance a solar PV system, such barriers are central impediments to more widespread PV deployment. Since 2013, 10 states have adopted community solar enabling legislation, half of which were passed in 2015 alone. Colorado has been a national leader in community solar, while the District of Columbia (2013) and Maryland (2015) have received praise for their more newly-implemented programs from the Interstate Renewable Energy Council’s Shared Renewables Scorecard. Nevertheless, Ohio is not yet one of the states to implement formal community solar enabling policies.
The community solar issue has stimulated numerous debates both across the country and in Ohio. Electric utilities, especially for-profit, investor-owned utilities (IOUs), have been at the forefront of these debates, noting decreased company revenues due to the increase of disparate, privately-owned energy generators feeding into their grid. They have also cited the difficulty for the grid to accommodate such non-dispatchable resources since community solar is usually deployed on the distribution grid rather than as a central power source (i.e., grid operators cannot reliably control its quantity and timing).
However, with a range of models, and increased accessibility and affordability, supporters argue that community solar is actually more economically efficient than traditional rooftop solar PV. They claim that aggregating consumers on larger projects to achieve economies of scale should also appeal to utilities, as community solar projects can be sited near substations or distribution feeders and reduce interconnection challenges.
The State of Ohio has been unsuccessful in passing formal community/virtual net metering laws or similar enabling legislation to incent the development of community solar through special purpose entities (a model in which individuals develop/join a business enterprise, and assume the associated legal and financial responsibilities to develop a shared solar project). However, some utility-based community solar programs have emerged, such as the 100 kilowatt OurSolar project in Delaware, Ohio. In essence, utility-sponsored community solar programs refer to when an electric utility owns and operates a project that is open to voluntary ratepayer participation. Some electric cooperatives, such as Consolidated Electric Cooperative for the OurSolar project, have been proactive to implement community solar programs for their ratepayers. However, Ohio’s IOUs, despite various announcements and commitments to deploy more solar and other renewables as part of their future generation portfolios, have largely ignored community solar as a market option. Instead, they have chosen large-scale solar PV projects as a fuel price hedge in their generation portfolios.
Localities or local/regional programs can also implement financial incentives and other solar PV deployment strategies, such as municipal property tax exemptions or abatements for residents or businesses who invest in solar energy. Independent of formal federal or state policies to encourage community solar, some localities and local/regional nonprofits have been promoting the expansion of community solar in Ohio. For instance, Ohio Solar United Neighborhoods (OH SUN) has developed several cooperative programs throughout the state, including ones in Appalachian Ohio (Athens area), Cuyahoga County, Dayton, Delaware County, Huntington area, Lorain County, the Mid-Ohio Valley, and Worthington. Even though these co-ops are not developing off-site shared arrays or gardens, they still meet community solar’s broadest definition by offering collective economies of scale in installation costs and the bulk purchasing of materials. These programs have helped accelerate solar PV growth in Ohio, particularly by overcoming market barriers such as high up-front costs and overall complexity of solar purchasing decisions.
UpGrade Ohio, a nonprofit in the Appalachian region, was recently awarded funding through the U.S. Department of Energy’s Solar in Your Community Challenge to initiate community solar in their region. Coined ‘Solar ACCESS,’ this project will employ a unique solar finance model that allows off-site investors to purchase shares in community solar arrays in the region. The first array, slated to be 704 kilowatts, will be cited on the Federal Hocking Secondary School in Stewart, Ohio. Though no formal state policy guides this process, the Solar ACCESS project still meets the common definitional requirements of community solar by providing power and financial benefits to multiple community members, allowing folks to participate in the solar energy economy without having to install a system on their own property.
It is through these types of local programs that Ohio can gain momentum in the development of community solar. The most far-reaching definitional bounds encompass models such as community group purchasing, on-site shared solar (e.g., PV on a multi-unit building), or community-driven financial models (e.g., ‘Solarize’ programs or solar co-ops). However, off-site community solar, such as through UpGrade Ohio’s new program, perhaps offers the largest benefit by opening market access to nearly anyone, typically within an electric utility’s service territory. These types of programs achieve two key factors that most analysts argue define ‘true’ community solar: 1) for solar PV projects to include community members and positively impact local economies; and 2) for solar PV projects to aid in the transition toward community energy independence.
Ohio’s community solar market may also develop through utility-based models such as the OurSolar project. The state specifically has electric utilities that may be willing to explore and implement such programs, such as AEP Ohio and several of its rural electric cooperatives. In fact, a large percentage of the community solar projects across the U.S. are run by electric cooperatives or municipal electric utilities. Seemingly, these types of utilities will play a major role in the expansion of community solar in the immediate future, especially considering how cooperatives have access to supplemental fundraising and are unique in how they retain economic benefits for their member-owners. Moreover, because cooperatives mostly service rural areas, their land resources are ideal for large solar PV installations.
Community solar run by IOUs may be a path forward for Ohio, but this model still faces several uncertainties in Public Utilities Commission of Ohio (PUCO) and legislative discussions. These IOUs will be able to leverage benefits even further once grid modernization (i.e., PUCO’s PowerForward initiative) fosters better systems and an increased awareness of the benefits of distributed generation.
Formal enabling legislation such as community net metering may never pass in Ohio without a sizeable shift in the energy policy landscape, but grassroots leadership via small cooperative and local programs may stimulate a new community solar narrative for the state. In the interim, state stakeholder groups should be formed to study community solar strategies for Ohio, including utility billing arrangement options, facility size caps, how to include low-income populations, consumer protections, and a suite of other related issues.
CE3 Blog by Dr. Gilbert Michaud, Adjunct Assistant Professor & Cluster Analyst, Ohio University Voinovich School of Leadership and Public Affairs. Edited by Elissa E. Welch, CE3 Project Manager, Ohio University. August 2017.