So far, there are only a small number of community solar-friendly states that have markets we’d consider competitive. Consumer choice is still limited, and most shoppers have only one community solar program offering available to them, if any.
But community solar markets are poised for expansion throughout the country. As you’re comparing your options, this article will help you evaluate community solar one community solar offer from another.
Key factors to compare in community solar offers
If you’re considering community solar, you probably hope to save money on your power bill, as you would if you were looking into rooftop solar. While all programs offer essentially the same environmental benefits, some community solar projects promise bigger savings than others. And even if you only have one option, you should clearly understand its benefits before signing anything (and don’t forget to compare it to the option of installing solar panels at your property!)
Below are some factors to consider and questions to ask when reviewing and comparing community solar offers:
How much solar energy do you need?
With community solar, you will be signing up for a ‘share’ (in kilowatts, kW) of the community solar project’s capacity. Your share’s solar output will vary from month-to-month, and usually be higher in summer, lower in winter. This means that in some months, your overall electricity costs may be more than they would have been without solar, while in others they will be lower. Over the course of a year, this balances out and allows most subscribers to save 5-15 percent on their annual electric bills.
Most community solar providers will recommend a subscription share that will meet close to 100 percent of your current annual electricity needs. However, depending on your circumstances, you may be able to ask to have a smaller or slightly larger share. For instance, if you expect your electricity to fall in the future, you may want to ask for a smaller share in the project – this is usually easier to do this before signing up than after you subscribe. You don’t want to be stuck paying for solar electricity that you don’t need.
Similarly, if your electricity usage is likely to increase in the future, you may want to subscribe to a larger share. However, if you do so–and don’t end up using the extra electricity–you may not be able to recover those extra costs.
Is it an ownership-based program or subscription-based program?
Will you pay for the system up-front with cash or take out a loan to purchase your share of the community solar project (either a number of panels or a number of watts), or make ongoing payments for the electricity it generates under a ‘subscription’ model? Subscription-based programs are by far the most popular option, so don’t be surprised if there aren’t ownership-based programs available in your area.
Questions about subscription-based programs
Subscription-based programs come in a variety of forms, but you can compare them against one another by looking at estimated savings over a set period of time. Some programs offer more certainty about future savings than others. Also, penalty fees for early termination of a contract will vary by subscription.
Prior to signing up for a subscription, remember to ask:
When will you start saving money?
Some programs may start you at a community solar subscription rate that is higher than your utility rate, promising that you’ll save eventually as inflation drives higher utility rates. They may also include an escalator for the rate you’ll pay for solar credits, albeit at a lower annual percentage (e.g. 2.5 percent). Other programs will set a fixed, flat rate for solar, or offer a fixed discount on all the solar energy you buy (i.e. 10 percent less than utility rates.) If you have a choice, fixed flat rates and fixed discounts offer the most certainty for what you will pay throughout the duration of the program.
Is there an upfront fee to join the program?
If so, how much is it, and how far into the future will it push the point at which you start saving? Fortunately, most community subscriptions are free to sign up for – but it doesn’t hurt to double check!
Will you be penalized for late payments?
Receiving electricity from a community solar project is not always the same as buying energy from public utilities, so you may not have the same protections in place if you happen to run behind on your bills. Check the terms of your contract so that you’re prepared for this scenario.
Can you cancel your subscription at any time? And are there any penalty fees for an early exit from the program?
Many community solar providers allow you to terminate your subscription at any time, but may require a minimum cancellation notice or a small fee to do so.
Can you transfer your subscription to your new address if you move?
Most community solar programs will let you ‘take it with you’ at no additional fee if you move within the same utility area.
Can you take the panels home with you at the end of the term?
Although you do not technically ‘own’ the panels in the array, some programs will let you take your share of panels home after the project is decommissioned. It’s better to consider this more of a friendly ‘bonus’ rather than a core benefit for signing up, however.
Questions about ownership-based programs
Purchasing a share in a community solar project is like making an investment in a rooftop solar system: you make a payment now in order to save money on future power bills.
Before signing on the dotted line, ask yourself:
What’s the gross cost per watt ($/W)?
Knowing the $/W price for a share will allow you to meaningfully compare pricing offers.
Are you eligible for any tax incentives or rebates?
This will depend on what’s available in your state and utility, as well as the pricing structure of the project itself.
How much will you pay for electricity after buying a share?
What rate will your utility credit you for generating solar power? Does it fluctuate over time, or stay flat? In most cases, this will be dictated by the state’s net metering policy.
Are there any additional fees? Ongoing or upfront?
Maintenance and administration costs are usually included in the purchase price, but it’s important to confirm because moving forward.
Can you get a loan?
Solar loans can be a good option if you don’t have the spare capital to pay for a community solar share upfront. In the best-case scenario, you could pay zero down while saving money from the beginning, eventually owning your share of the solar project.
What’s the estimated payback period?
How long will it take before you recoup your initial investment? All of the above factors will play a role in determining this. A good quote will give a transparent, conservative estimation of payback time.
Can you take the panels with you at the end of the term?
Ownership-based programs will generally let you take your share of panels home after the project is decommissioned (but not before!) At that point you may use them as you wish, but keep in mind that the panels are just one small part of what you paid for initially (inverters, cables and mounting equipment). Think of this as a small ‘bonus’ for participating in the project.
How do the costs and savings compare to installing a rooftop system?
If your roof is a good fit for solar panels, we recommend comparing in installation options for your property before making a decision to buy a share of a solar project.
Start your solar journey today with EnergySage
EnergySage is the nation’s leading online solar marketplace: using our Community Solar Marketplace, you can compare local options, get a quick community solar savings estimate, and seamlessly subscribe to an open project in your area. Over 10 million people come to EnergySage each year to learn about, shop for and invest in solar. Compare your community solar options today today to see how much solar can save you.