By Liz Doherty
Solar photovoltaics are the fastest growing renewable distributed generation sources, but despite falling prices, solar remains widely unattainable for many communities. Low-income communities are particularly disadvantaged because they have limited access to capital, often rent their residences so have limited authority to install solar, and often live in cities and don’t have their own space for solar. Here at the Energy Clinic at Vermont Law School, we’re exploring solutions to this issue of solar access, with a vision for community solar that includes direct community ownership of the economic and environmental benefits associated with the solar facility, and an emphasis on the local economy.
To this end, the Energy Clinic has partnered with New Hampshire Sustainable Energy Association (NHSEA) to design a community solar model for resident-owned communities (ROCs) in New Hampshire. In 2008, the New Hampshire Community Loan Fund partnered with three national non-profit organizations (Corporation for Enterprise Development, NCB Capital Impact, and NeighborWorks® America) to create an organization focused on resident ownership, known as ROC USA®. The ROC USA model of ownership focuses on transitioning manufactured home communities from third-party ownership to resident-owned communities. After these communities have become resident-owned, ROC USA remains a resource by providing loans and ongoing technical support for improvement projects. The Energy Clinic is creating a comprehensive business and financial model that can be adopted by ROCs across New Hampshire to install community solar systems.
We believe that the ROC model has good potential for community solar, and is developing resources to help guide ROCs through the process. ROCs have the property ownership and green space necessary for ground-mounted community solar and are accustomed to community governance. The Clinic’s guide will lead the ROC through the process of obtaining financing and the technical and legal aspects of community solar ownership.
Ordinarily, to purchase solar panels for a home the consumer must own the home and have the financial ability to invest in residential solar in one of three ways. First, a consumer may have enough capital to buy their solar system outright. Second, he or she may have the tax appetite necessary to take advantage of federal and state tax credits, along with sufficient start-up funds, to purchase solar PV. Third, the purchaser may have a credit score healthy enough to take out a loan, or home equity line of credit, to finance the solar installation.
The Energy Clinic has identified financing as the key barrier currently facing ROCs that want to go solar. Most residents in resident-owned communities cannot fit into any of the three listed financial categories because they are typically low-income communities. The Energy Clinic is exploring several different avenues for the communities to obtain funding: a ROC USA loan, federal loan programs, a partnership-flip model, and more. A primary goal of this project is to make sure the solar facility is actually owned by the community members, and not a third party. This direct ownership allows the communities to directly earn the environmental attributes of their energy generation, known as Renewable Energy Credits (REC’s). Another benefit of direct ownership is the communities’ ability to take advantage of government incentives for solar. Finally, direct ownership means that once the community has recouped its installation costs, the community will own its electricity generation outright.
The Energy Clinic’s ROC community solar guide will also examine which business structure is best suited for community solar projects in resident-owned communities. Most ROCs are registered cooperatives with bylaws and boards of directors. Ideally, a community solar project would work within this cooperative framework with only a few additions to the bylaws. Most community solar projects that are not for communities already within a registered cooperative use a limited liability company (LLC) structure instead of creating a cooperative. An LLC model would protect the individual members from liability and would streamline the decision-making process, because they would not need unanimous approval for decisions.
The guide will be largely impacted by the outcome of the net-metering rules currently under consideration by New Hampshire’s Public Utilities Commission. The changes to net-metering rules may make community solar more easily attainable or push solar further from their reach.
The Energy Clinic is working hard to make this guide to community solar widely adaptable to many different ROCs across New Hampshire, and we hope across other areas of the country as well.