New to community solar? You’re not alone. Diving into the ins-and-outs of solar farms and subscription options can be overwhelming – but we’re here to make it as easy as possible!
We created this guide to give you a rundown of community solar basics: from what it is, to the most important factors to consider as you compare options. Throughout the guide, you’ll find additional resources devoted to specific topics or commonly asked community solar questions.
- Community solar = large solar farms that generate electricity for more than one property
- Community solar empowers more people to access the financial and environmental benefits of renewable energy
- Community solar is not available in every state, but the number of states passing favorable shared renewables legislation is quickly growing
- Explore local solar farms on EnergySage’s Community Solar Marketplace
What’s in this article?
- What is community solar?
- How does community solar work?
- Where is community solar available?
- How to sign up for community solar
- Comparing community solar options
- Community solar vs. green electricity options
What is community solar?
A community solar farm is a large, central solar power plant that generates electricity for more than one property. Rather than installing a solar panel system on your roof, you can subscribe to a “share” of a solar farm located in your area. As your portion of the solar farm generates clean electricity for the grid, you’ll receive credits on your monthly electricity bill for this energy and reduce what you owe your utility company – all while supporting local clean energy!
There are many reasons why we at EnergySage are big fans of community solar:
- It’s good for the environment: community solar expansion helps accelerate our country’s transition to 100% clean energy. Every new solar farm generates emission-free electricity for 25+ years – and every additional subscriber provides the buy-in developers need to promote and build even more of these projects.
- It’s local: you can only join solar farms in your electric utility territory. So, when you subscribe, you’ll directly support renewable energy development in your region, encourage job growth, and help further decarbonize the electric grid providing energy to you and your neighbors.
- It’s accessible: financial and property-specific barriers (like shade) have historically made it difficult for many people to take advantage of renewable energy. Enter community solar: subscribing requires no change in service, no upfront costs, and–in most cases–no long-term commitment. Rent your home? Not a problem – you don’t need to install any equipment or own your home to join a community solar farm.
- It’s an easy way to save on electric bills: it’s not just good for the environment – it’s also good for your wallet! Most people save between 5-15% on their annual electricity costs with community solar.
How does community solar work?
Conceptualizing community solar isn’t the easiest, especially since the solar panels subscribers take advantage of are in a remote location and not directly connected to homes or businesses. So, how are you able to save without feeding solar energy directly into your electric meter? Two words: bill credits.
Step-by-step: from solar farm to the grid to credits on your electric bill
- Solar farm generates emission-free electricity
- Utility companies distribute electricity throughout the grid
- Subscribers pay community solar providers based on the energy generated from their share of the solar farm.
- Utilities apply credits to subscriber’s monthly utility bill, reducing overall charges
After joining a community solar farm, you’ll still get electricity from your same ol’ utility company. You’ll also still receive a bill from them (sad, but true). However, your utility bill will be lower than what you’d otherwise pay because it’ll include credits for anything you bought from the solar farm.
All of this is made possible by a policy called virtual net metering (VNM). VNM, available only in certain states, empowers you to buy energy generated somewhere besides your property in the form of bill credits.
The billing process
Community solar providers and utility companies work together to track how much electricity a solar farm generates for the grid, and how to divide that up between individual subscriber shares. It’s a bit like this:
“Hey Utility Company! Community Solar Provider here – Subscriber A’s share of the solar farm produced X amount of energy for the grid, which is equal to a $X credit. Please apply this to their next bill.”
Separately, your community solar provider will charge you for the credits from your share. However, in most cases, you’ll pay them less than the credit value you see on your bill. This is because many providers sell the credits at a fixed discount. So, if your community solar subscription includes a 10% discount on bill credits, you’ll receive $1 towards your utility bill charges for every 90 cents you pay your community solar provider – and pocket 10 cents of savings!
We know…10 cents doesn’t seem like much. But over the hundreds or thousands you spend on electric bills each year, 90 cents for every dollar leads to some pretty decent savings.
Annual savings estimates: why community solar savings vary every month
It’s important to remember that community solar is an annual savings product, not monthly. The sun shines more in the summer than the winter (sorry for stating the obvious here), and the solar panels in your share of the solar farm won’t generate the same amount of credits for your electric bill in June as it does in October. Plus, your electricity consumption varies by season, so it’s impossible to have a perfect match between the credits you buy from the community solar provider and what you owe your utility company each month.
But here’s the good news: a 1:1 match isn’t necessary since you can rollover credits onto future electric bills. Your community solar provider will size your allocated share based on your annual electricity spend, not monthly. Subscribers often pay for more community solar bill credits than they need during the summer months, but it’s essentially pre-paying for bills during darker, colder months – it all evens out over time!
Where is community solar available?
As of 2021, there are 41 states with at least one community solar farm live. But before you get too excited about that number, know that many of these states don’t have solar farms open for new subscribers. This will change in the next few years as more and more states enact policies to expand access to community solar.
Community solar state superlatives (2021)
- State with the most community solar farms: Minnesota
- State currently projected for the highest community solar installation capacity: New York
- State with the first ever community solar pilot: Colorado
- State with the largest solar farm: California
- State to most recently pass new community solar legislation: New Mexico
To date, the majority of community solar adoption comes down to four states: Minnesota, Colorado, Massachusetts, and New York. However, new states are quickly coming into the fold – over the next five years, forecasters at Wood Mackenzie estimate that the country will add more than 4.3 gigawatts of total capacity, with markets below leading the charge.
|State||Forecasted installed capacity from 2021-2026 (MWdc), estimate||Local policies and open solar farms|
|New York||1,200||Learn more|
|New Jersey||575||Learn more|
The data for this table were obtained from Wood Mackenzie.
Is your state missing from this list? Don’t fret – it doesn’t mean community solar isn’t an option for you! These are simply the heavyweights in community solar; it’s very possible that your state or region is on the smaller end, with less space for a ton of new, large solar farms (looking at you, Rhode Island and D.C.) On our Community Solar Marketplace, you’ll find the largest set of eligible community solar farms open for subscriptions – simply enter your zip code to see options available in your electric utility territory. Keep in mind that we’re always adding new options onto the Marketplace – if we don’t have open solar farms in your area yet, you can sign up to receive notifications as new projects become available in your region.
How to sign up for community solar
EnergySage’s Community Solar Marketplace is essentially a one-stop-shop for community solar: you can get a savings estimate, get answers to frequently asked questions, compare options, see provider reviews, and enroll in a local solar farm – all in one place!
- Enter your zip code to see a tailored list of open solar farms in your area.
- Dive into Project Details pages for more information on specific solar farms, including cancellation policies, billing info, environmental impact of the solar farm, location, and more.
- Choose a subscription offer, and fill out a basic enrollment form. (Heads up – you’ll need your utility account number for this step)
- Finalize subscription directly with your community solar provider. We’ll be there to help you through this step as well!
We know that providing a utility account number isn’t a small task (and if you happen to know it off the top of your head, consider us impressed!) We don’t like to ask for hard-to-find information, but community solar providers need details like this to wrap up your subscription. For one, they need your utility account number to coordinate the bill credit process with your utility company. Second, the amount you spend on electricity each year is key to determining what size share you need of the solar farm. Community solar providers will look at estimated production of the solar farm and carve out a share that will generate enough energy–and bill credits–to match ~90% of your annual needs.
Comparing community solar options: choosing the best one for you
Compared to rooftop solar, community solar requires far less commitment: rather than installing equipment that will be on your roof for 25+ years, you’re entering a Netflix-like arrangement, but for solar power and without the binging. Despite the relatively low risk, it doesn’t hurt to do a bit of research before subscribing.
Here are a few key factors to compare when evaluating one community solar subscription against another:
- Location: Where is the solar farm located? In our opinion, the more local, the better!
- Provider reputation: Does the community solar company have a proven track record for good customer service? Online reviews and customer testimonials can be an indicator of this.
- Subscription structure: What’s the pricing model for your subscription? Does your community solar provider offer a fixed discount? How much will you save?
- Cancellation policies: Is it easy to cancel your subscription? What happens if you move? Like we said, most community solar programs allow you to cancel for free, but some may require a minimum cancellation notice or charge a small early termination fee.
- Promotions: Do any of the companies have a special offer for new subscribers? Some providers give out special sign-up rewards, like e-gift cards.
Community solar vs. green electricity options
If you live in a deregulated electricity market, you’ve likely received mailings or less-than-pleasant cold calls about purchasing green power. These offers come from a variety of players, including retail energy providers (REPs), utility companies, or your local government participating in community choice aggregation (CCA).
Green power is an umbrella term used to describe “…electricity produced from solar, wind, geothermal, eligible biomass, and low-impact small hydroelectric resources” (says the Environmental Protection Agency). Given that definition, it’s natural to assume that community solar falls into this bucket. But it’s a bit more nuanced than that, and subscribing to a community solar farm is not the same as purchasing green electricity. There are a few similarities between community solar, green power plans, and CCAs, but there are also some important differences that give community solar a leg up on the rest:
Pros and cons of electricity alternatives, summarized
|Type of energy||Community solar||CCAs||Green power from REPs||Standard utility offering|
|Generates savings||Typically yes||Sometimes||Typically no||No|
|Supports local renewable energy advancement||Yes||Sometimes||Typically no||No|
|Has consolidated billing||Typically no||Typically yes||Sometimes||Yes|
|Is available nationally||No||No||No||Yes|
|Includes environmental claim/”green” benefit||Typically no||Typically yes||Yes||No|
Considering signing up for any of these options? First ask yourself:
#1. Where does the green power come from? With community solar, utility companies remain responsible for applying credits that you buy from the solar farm to your electric bill. Given their role in the process, you’re only able to join solar farms located in your electricity service territory. Of course, this means a more limited option set, but it also means the solar farm you support will be relatively close by, generating clean electricity for your local grid. Conversely, green power plans occasionally structure their plans using renewable energy certificates (RECs) from regional projects, but it’s not guaranteed.
#2. Will my purchase support additional renewable energy development? Every new subscriber to a community solar farm helps provide buy-in that developers need to build more solar projects in your area. On the other hand, companies selling green power often build these plans using RECs from existing wind projects across the country. While these options are better than solely buying brown power from your utility company, opting into a green power plan will not directly increase the amount of renewable energy generation in your community, or necessarily help further decarbonize our country’s electric grid.
#3. How much will I save, and are savings guaranteed? Most community subscribers save between 5-15% on their annual electricity costs thanks to the fixed discount offered by community solar providers. You’re much less likely to save when buying green electricity – many companies sell green power at a premium (a bit backwards if you ask us, considering renewable energy is consistently cheaper than fossil fuel electricity generation today).
More frequently asked questions about community solar:
Usually, yes! This largely depends on the state you live in, and how the billing is set up with your green power company. If you have consolidated billing (i.e. your green power charges are included in your utility bill), you can typically apply credits from your community solar farm to your overall costs, including both supply and transmission.
Risks are limited since most subscriptions involve no upfront cost, guaranteed savings, and allow you to cancel anytime without any penalty fees. This isn’t true for all community solar subscriptions, however, so make sure to review the program terms before subscribing.
Yes – commercial and nonprofit electricity customers can subscribe, but may not be eligible for projects built specifically for residential or low-to-moderate income (LMI) customers.
Explore local community solar options today
Want to compare community solar options in your area? Visit our Community Solar Marketplace to find a list of local solar farms accepting new subscribers. Looking for more information about community solar? Check out our Community Solar FAQ page, or leave us a comment with feedback on what we’re missing in this guide!