Community solar is one of the easiest ways to save on electricity bills. However, as you compare your options, you’ll notice that most community companies won’t provide an average monthly savings estimate, and there’s a very good reason for this – truthfully, your bills and savings can vary quite a bit from season to season. We’ll dive into why below.
- Savings with community solar vary each month
- There will be some months where you pay your community solar company more money than you would otherwise pay on your utility bill
- You can save 5-10 percent over the course of a year with community solar
- Most community solar programs require two separate bills: one from your utility company, and the other from your community solar provider.
First, a quick explanation of community solar billing
A common misconception with community solar is that once you sign up, you’ll receive both your charges and benefits (i.e. solar bill credits) on one, consolidated bill from your utility company. While this is true in some cases, you often have to pay two separate bills with community solar programs: your traditional electricity bill–which will include solar credits–and a separate bill from your community solar provider charging you for these credits.
So, with two separate bills, how do you end up saving? Most community solar companies sell solar bill credits from their solar farms at a fixed discount (typically around 10 percent). Even though you buy these credits at a discount, your utility company credits them to your bill at full value.
Think of it like purchasing arcade tokens from your friend (i.e. community solar company) – even if you buy these tokens (i.e. bill credits) for a quarter each instead of the 50 cents the arcade (i.e. utility company) charges, the pinball machine (i.e. your bill) still only requires two tokens to play, and you save 50 cents!
When you sign up for a solar farm, your community solar company will assign you a “share” of their farm based on your annual electricity needs – ideally, you will receive enough credits annually to cover the majority of your usage. Each month, your community solar company will send you a bill for the credits generated from your allocated share of the solar farm. There will likely be times where you buy more solar bill credits than you need to cover your utility charges, but fortunately, you can rollover the credits to use on a future utility bill.
Now that we’ve covered the basics of community solar billing, let’s talk about the main factors that impact your costs and savings from season to season.
Solar panels produce more electricity in the summer
You’re probably thinking “yeah, that’s obvious” – but bear with us for just a moment!
During the summer, the days are longer and the sun is stronger (our sunburns can attest to that). In most areas of the country, summer also means fewer cloudy, rainy days. This is good news for people trying to get outside, and it’s also good news for solar panels.
Thanks to the nice weather, the project you subscribe to will generate more electricity overall, as will your share of the project. This means you’ll get more bill credits, and you’ll also receive a higher bill from your community solar company. Come winter, electricity production of the solar project will drop off – with billing, this translates to fewer bill credits and lower charges from your community solar provider.
Like we mentioned, any unused solar bill credits will rollover; even if you pay for more credits than you need in July, your utility will bank these credits for you and you can use them during December when your community solar share doesn’t generate enough electricity to meet your needs. This brings us to the other main reason why community solar savings vary monthly: electricity consumption habits.
Your electricity usage varies by season
Maybe you have electric heat, or maybe you blast your air conditioner during the summer. Either way, just as solar production varies by season, so does your electricity usage.
Depending on when you use electricity, your utility bills might more or less match up with the timing of your community solar credits – high summer electricity bills will benefit from more solar credits in the summer, and lower winter electricity bills may be covered entirely with a month’s worth of solar bill credits despite the lower electricity output of the solar project. However, it’s unrealistic to expect that your allocated bill credits and energy usage will match up 1:1 every month…in fact, they probably never will.
Thankfully, because unused credits will roll over on your utility bill, the 1:1 match isn’t necessary–your community solar provider will size your share according to your annual electricity usage, and compliment that to the expected annual output of the solar project. Over the course of a year, your subscription can help you save 5-10 percent on your overall electricity costs.
Example: Kerry’s annual community solar savings in MA
It can be hard to grasp just how much seasons and electricity consumption habits impact community solar savings, so we’ve broken it down into some numbers below.
Kerry (that’s me!) uses 8,591 kilowatt-hours (kWh) of electricity over the course of a year, typically consuming more in the summer months thanks to window AC units. She subscribes to a local solar farm in Westport, MA, and upon signing up, her community solar provider sizes her share to cover most of her electricity needs over her first subscription year (~90 percent).
|Month||Electricity usage (kWh)||Solar production of share (kWh)|
As you can see above, the electricity production of her share in the solar farm doesn’t exactly match up with her electricity usage. This means there are months where she buys more bill credits from her community solar company than she needs: April through September.
However, when you sum up her bills over the course of a year and take the rolled-over bill credits into account, she saves about $170 on her annual electricity costs (roughly 9 percent). In the table below, you can see that Kerry begins accumulating excess credits in April (see column “Utility Account Credit Bank”) – by the time October rolls around, she has $120 worth of credits in her utility account to use in the winter months when her community solar share generates less electricity.
|Month||Utility bill||Community solar credits||Utility payment||Community solar payment||Total payment||Utility account credit bank||Savings|
*Assumes a 10 percent discount on bill credits and a retail electricity rate of 22 cents per kWh
There are months where Kerry pays her community solar company more than she would otherwise owe her utility company, therefore has negative savings (May and June). But it’s easiest to think of this as a pre-payment for a future bill – the excess credits she buys in the spring and summer go on to help her save big come October and November. In these months, her utility payment is $0 even though she receives fewer solar bill credits than she needs to cover her electricity bill charges.
Explore local community solar options today
Want to compare community solar options in your area? Check out our Community Solar Marketplace, where you can see a list of open community projects near you and get a quick estimate of potential community solar savings. If there aren’t community solar projects available in your region just yet, you can sign up to receive updates as new projects go live closeby.