December 19, 2022

For Energy Transition Equity, Communities Must Run Community Solar

Not just community solar, but specifically community-owned community solar, provides an example of what a more equitable, decentralized clean energy transition could look like.

In 2021, the median income of a rooftop solar adopter was $110,000 a year. That same year, the U.S. median income was $63,000.

The gap is closing — in 2010, the median rooftop solar adapter made $138,000 compared to just under $50,000 for the median American — but it’s not closing fast enough to get enough solar to the people who need it most. Low-income families who need their bills cut fast, communities of color historically choked by ash and soot, people who don’t own their homes or who don’t have the cash to put panels on the roof are all left out of this transition. And it’s a lost opportunity during a climate crisis that demands we get as many renewables on the grid as fast as possible.

Not just community solar, but specifically community-owned community solar, provides an example of what a more equitable, decentralized clean energy transition could look like.

In the report Community-Owned Community Solar: Opportunities and Challenges, written with the Environmental Law Policy Center, I lay out ownership models, methods for distributing benefits, barriers, and resources for community organizations and policymakers interested in pursuing or advocating for community-owned community solar.

This is just a quick look at why we should care about these programs in the first place.

The specifics of community solar programs vary wildly based on a particular state’s laws, the utility and the companies at play. The core is that a participant purchases a subscription for a portion of a utility- or third party-owned solar array, then receives a bill credit on their electricity bill for the power produced. By one estimate, a subscription to a community solar program can save customers about 10% in utility costs over the life of a subscription.

Community solar is just 3.6% of all installed solar in the U.S., but governments are paying attention. Three of the six actions the Biden-Harris administration announced in July to lower electricity bills for working families involved community solar, and the Department of Energy has a target of enough community solar to power 5 million households by 2025 and create $1 billion in energy savings. About a third of states have policies ranging from stepping stones to community solar to explicit community solar programs.

But community solar on its own is also fraught. Utility-run programs often stretch the definition of community solar and are designed to maximize profit, with community well-being and equity as an afterthought. To broaden and deepen the clean energy transition we need to provide the same decarbonization opportunities to disadvantaged communities that we do to comparatively wealthy homeowners.

Truly community-owned community solar can provide not only electric bill savings, but also utility bill literacy, energy efficiency funding, workforce development, and community empowerment. Most importantly, community ownership gives communities the chance to decide which benefits are most important to them and how they should be distributed.

Here are a few examples of community-owned community solar projects thriving in diverse state and regulatory contexts:

• In Minnesota, Cooperative Energy Futures has installed 6.9 MW of low-income accessible community solar that is owned through a for-profit cooperative model. This cooperative ownership model makes it possible to distribute profits to members (in addition to bill savings) without triggering securities regulations, a key challenge when distributing benefits. Indirect financial benefits include home insulation and upgrades, paying grassroots organizations to find more subscribers, and using 50% minority labor for all projects.
• Co-Op Power has installed 4.5 MW as of 2020. They expanded quickly throughout the Northeast due to their decentralized cooperative structure and the Mass Solar Loan, which allowed them to not rely on outside investors.
• University Park Community Solar was one of the first examples of a successful community-owned community solar project. Founded in 2010, they built a 22.7kW project on a church that was the primary off-taker and which purchased the project in 2021. In the absence of bill-crediting, they used a power purchase agreement. University Park Community Solar was able to distribute cash benefits to participants in the absence of bill-crediting.
• People Power Solar Cooperative in California has built community-owned projects on individual residential homes that serve as the sole off-takers. They highlight non-financial goals and benefits of community-owned projects such as democratizing the energy system and community empowerment.

An enormous obstacle for community ownership of community solar projects is financing them, particularly for already marginalized community groups. Groups that are unable to raise sufficient capital for projects must rely on outside financers, often tax equity investors. The small community organizations doing this vital work often don’t have the capacity or clout to attract these funders. This dearth of capital means work is left undone, the communities left unserved.

One potential solution to this is the recently-formed People’s Solar Energy Fund, a non-profit that finances community-owned projects while also providing technical assistance and training. Their goal is a $75 million per year pipeline of financing for solar projects. One of the Biden-Harris Administration’s six actions in July was the creation of the Sunny Awards for Equitable Community Solar. Unfortunately, the “Sunny’s” only contains a total of $100,000 for equitable community solar (up to $10,000 a project). We need more than that.

Increased funding from the Department of Energy for community-owned community solar projects would help projects increase and spread across the country, helping communities in need while speeding the global transition to renewables. At the state level, bill crediting, robust community solar programs, and carve-outs for community-owned projects will help make these projects feasible. For public health, the climate and the economy, the nation needs to transition to renewables. But we need to do it right, including the communities left behind under the current system. If we let the same economic forces that created these energy inequalities drive our transition to renewables, all we’ve done is fold coal’s injustices into solar.

This op-ed was originally published in Utility Dive on December 19, 2022.