Amid a patchwork of state rules, new research provides a floor for how much community solar will be needed —particularly to benefit low-income customers.
President Biden’s newly released framework for infrastructure and climate includes a historic level of investment for clean energy technologies and distributed generation, including community solar. With a proposal to direct $555 billion toward clean energy and storage, the robust and extended investment tax credit (ITC) in the plan – among other policies – would give the DG sector a boost toward fulfilling the president’s aggressive climate and equity goals. These incentives will be important because a growing body of research shows that in order to meet the administration’s goals at the lowest cost, the country will need to at least double its solar capacity in the next decade, and that development of distributed generation like community solar must accelerate.
In early October the U.S. Department of Energy announced a goal to power the equivalent of 5 million households by 2025 with community solar, creating $1 billion in energy bill savings.
Calling community solar “one of the most powerful tools we have to provide affordable solar energy to all American households,” Energy Secretary Jennifer M. Granholm highlighted the importance of making renewable energy accessible regardless of income level, or whether customers have their own solar-enabled roof.
“Low-income households often face the highest energy burdens,” says John Bernhardt, director of policy and market strategy for Pivot Energy. “A unique aspect of community solar is that it provides access to the economic benefits of solar for those unable to have on-site solar. It is great to see new programs encouraging, and even requiring, income-qualified participation in community solar projects.”
According to a new report by Wood Mackenzie, which tracks market trends for community solar, that increased accessibility—and the corresponding education that it will require—will be necessary to continue growing the sector.
“A lot of states are really prioritizing making sure that a portion of their community solar is benefiting low-income individuals and families, and even multifamily housing,” says Rachel Goldstein, who authored the Wood Mackenzie report. She says that the enhanced protections and benefits for low-income customers have to be paired with trusted voices from the community.“ Low-income individuals might be more skeptical of these programs,” she adds. “There’s an element of needing to ensure that there is trust built with the customer.”
She cites New York and Massachusetts as states that have taken effective advantage of incentive programs, and says other states can learn from their example. Similarly, a handful of states have done a good job of streamlining requirements for low-income customers to qualify for community solar, and that provides a model for signing up customers without an onerous qualification process.
The resulting cost savings can be appealing, particularly to those for whom rooftop solar panels are not an option.
“The Summit Ridge team is of course supportive of residential rooftop solar. But the reality is many folks can’t, or won’t host solar on their homes,” says Steve Raeder, CEO of SRE. “For these individuals, the ability to access green energy savings from remotely sited community solar farms is extremely compelling.”
Unfortunately, the economic argument for community solar—and even Biden and the DOE’s directive—won’t be able to sustain the industry’s growth alone. The Coalition for Community Solar Access has been working to ensure that policies—which need to be enacted at a state-by-state-level—keep pace with the technology’s demand.
“The trends show tremendous growth on the horizon, but they also point to the need for continued work and policy mechanisms to grow these programs,” says Jeff Cramer, the Coalition for Community Solar Access president. “Without continued policy, these programs and their growth won’t last forever.”
“We’re expecting to see current incentive programs built out quite a bit between now and 2023,” adds Wood Mackenzie’s Goldstein, but her report found that without an expansion of programs, the market will start to see a decline in 2023.
Fortunately, she says, though state-by-state differences mean a patchwork of rules and policies, certain states like New York, Massachusetts, New Jersey and Maryland, among others, have enacted helpful models for other states to follow and continue to make significant commitments to deploy more community solar capacity. By emulating the best-in-class examples, other states can contribute more effectively to the country’s overall renewable energy goals.
“The most important thing that legislators and regulators can do is enable more programs and larger programs,” says Bernhardt of Pivot Energy. “That’s the limitation—there is no shortage of customer interest or capital available to build projects. Community solar only exists insofar as policymakers make it exist, and they need to move faster and do more.”