On August 15, 2012, at 8 a.m., Colorado’s Xcel utility opened up its registration for a new solar gardens/virtual net metering program. It took just 30 minutes to shut the doors on applications. The utility had received 13.5 MW in those 30 minutes, more than triple the 4.5 MW allowed. This excitement is one reason why I believe that community solar is the key to widespread U.S. solar adoption, but let’s go through all of them…plus the challenges to it ever happening.
Right now there are relatively few solar gardens/net metering/community solar programs in the United States. The most notable and successful ones are in Sacramento via the SMUD, as well as an earlier solar gardens program in Colorado. Currently, California law allows for community solar on site, limiting roof space on buildings. However, a new bill, SB 843, will allow off-site solar virtual net metering, a.k.a. community solar.
Another reason why I’m bullish on widespread community solar is Solar Mosaic, a new company that allows individuals to invest in solar through a Solar PPA model. Here, instead of a utility bill directly benefiting from the watts, a consumer invests in a large solar PPA project and basically becomes an equity partner, earning an ROI.
In the two models above, roof or property ownership is not required, so renters and tree-lined-street lovers can enjoy solar benefits and savings. Also, because the actual solar installation is off-site, perfect insolation, roof age, home-owner vanity, and belligerent home owner associations are no longer in the way of sales. In addition, unlike physical PV, these panels can virtually follow you to a new residence, though typically within the same utility area.
Although the formulas for crediting your utility bill (or bank account in the case of Solar Mosaic) will vary by state and utility, one constant remains: Consumers or businesses can buy or lease a part of a large solar PV farm and benefit financially, regardless of location or property ownership.
From a solar market and marketing perspective, the above paragraph is revolutionary. On the surface, community solar models completely democratize solar power. Capital, access to loans, or a good credit score will still be required, but beyond those qualifications, community solar models could be accessible to millions of renters in large urban cities, or even rural off-grid residents who can invest and indirectly save on energy costs via a solar mosaic-type model.
Even more exciting from an untapped solar market perspective is the latest National Renewable Energy Laboratory (NREL) report, which estimates that the annual technical potential in the United States for urban utility-scale PV is 2,232 terawatt-hours (TWh)! For rural utility-scale PV, there is an estimated U.S. technical potential of 280,613 TWh!
Sounds fantastic, eh? But we can’t get giddy just yet.
Four little things stand in the way of solar PV nirvana, and that’s where you, dear solar capitalist reader, will have to roll up your sleeves and work very, very hard. Because, while these models and technical solar potential exist, the industry will have to overcome the following general challenges:
1) Energy politics. California being the leader that it is in solar, I have high confidence that SB 843 will pass both state legislators and be signed by Governor Brown. But the same model will not be adapted in Alabama or Mississippi, or even the blue state of Illinois. Fossil fuel interests and utility monopolies will not see their revenues and market share decrease without a battle with their legislators/regulators and on their local airwaves.
The solution: Diving into energy politics. Solar companies, large and small, can’t sit on the sidelines. Not only must they lobby and get to know their state legislators, they must spend the time to rally public opinion and explain the value of these models. And that brings me to:
2) Public education. Even without mentioning virtual net metering, the vast majority of U.S. rate payers are still believing in the 1980’s mindset of expensive and unreliable solar. Some don’t know the difference between solar PV and solar thermal. While the old mindset is slowing getting modernized, we’re far from there yet. On top of traditional models, now we have to add education about community solar, community solar purchasing versus a leasing model, and the Solar Mosaic option. Solar marketers and educators are already challenged, but sure, let’s pile on community solar.
The solution: Educate customers now. While this may appear to conflict with current sales, the public needs to understand their solar options, as well as be able to support legislative efforts to make virtual net metering available everywhere. To do your part, have a section on your website that explains and keeps track of local community solar initiatives. Link to local community solar advocates who are pushing for your local legislation. Bottom line, explain community solar and get people excited about the concept.
3) Outdated utility business models. Related to #1, but more specific. American power is currently stuck in a very old business model where a single energy provider collects and distributes grid-connected power to homes and businesses. In Germany, sign a two page agreement, and anyone with a solar panel or wind turbine can sell power to the Utility. Here in the U.S., the “smart grid” and its related technologies will slowly change the way we create, deliver, consume, and pay for energy, but we’re not even close to any new utility business model. Utilities know they will lose revenue when customers participate in community solar farms. And yet, the grid costs money, especially if it’s to be improved…some day.
The solution: There’s no easy one here. Utilities and solar companies just have to start thinking about creating new energy business models that complement each other. Both businesses need each other for now, although battery storage technology may one day eliminate the need for net metering for some customers. For others, grid-tied storage services and distribution services, either from deserts or rooftops, will be required. Nevertheless, utilities have the monopolies today, and that limits consumer choice. So, until consumers have a choice of distribution services and community solar is available to all, any argument in 2012 that solar customers must pay more for “their fair share” of grid distribution is ridiculous. When the utilities open the doors to true energy choice via community solar, then public utility commissions can discuss consumers paying extra for solar energy transmission and the fair value of that service.
4) Improving grid infrastructure. #3 above is about business models. Here, we have a physical and economic problem. The American grid is old and inefficient. The more solar farms we grow, the more updated smart power technology and power lines will be needed. So, while we may be able to change political minds, educate the public, and create new utility business models, little happens without physically building a new, modern electric grid, especially in rural sunny areas that have the most solar production potential.
The solution: The solutions are 1, 2, and 3 above. Utilities will either need to be forced to create updated grid infrastructure via legislation and taxpayer/ratepayer funding, or they may voluntarily do it with an innovative business model that shows an ROI. Either way, the smart grid and new transmission lines won’t happen without political advocacy, public education, and win-win community solar business models.
Want a great resource for implementing Community Solar? Then go to Vote Solar and see their terrific community solar tool kit.
One more thing about community solar’s main-streaming potential: Besides democratizing the grid and solar power, community solar will benefit all sectors of the solar industry. Obviously, the more solar farms created via new laws, the more solar products manufactured, distributed, sold, and installed, creating jobs and profits.
Implementing community solar not only has growth potential for solar businesses, it’s also a personal goal. Because as much as I’m a part of the solar industry and a passionate solar advocate, I grew up in Manhattan and lived most of my adult life in various Los Angeles residences where solar was either not possible (apartment) or practical (trees). Community solar can change that for me and for millions like me. The change starts with all of us tackling the above steps… and UnThinking Solar.