Community Solar Energy

By Karl Kemnitzer

The Basics

Community Solar Energy is the placement of solar panels in a “shared” location, rather than on individual  homes. Using this approach, CSE can make solar electricity accessible to many more people than would occur using all-separate installations.  Shared installations allow owners of roofs that are shaded, don’t face south, or are historic, (about two-thirds of buildings),access to solar photovoltaic power. (It can also allow renters to participate in solar PV, assuming that property owners are willing.) A CSE installation can have better solar exposure than many homes, and so a shorter payback period. It can also lower the costs, due to economies of scale and maintenance, as well as factors of permitting and connections to the “grid.” It can also allow people to buy into solar at different levels. The reliability of a CSE as seen by the electric utility is much better than that of individual residential systems.

However setting up a CSE is not easy, and is best thought of as a business. While the underlying mechanism of  Group Net Metering is simple, the siting, design, and setting up of a financial and legal structure, funding, permitting, and finally procurement and installation of the facility, will take a dedicated group one to three years.     CSEs can range in size from 10 kW (a large home array) up to the 500 kW maximum allowed by Vermont law. A generic example would be at the threshold of 150 kW where state permitting becomes more involved and costly. A 149 kW array in a good location (97% solar exposure) will supply about 177,000 kWh a year, or electricity for 24 typical homes.. At approximately $5 per watt, the cost will be $745,000. Panels for this size of installation, if mounted on fixed racks, will cover slightly less than one un-shaded acre. More of the business aspects of a CSE are covered in another article.

Evaluating several sites can be done by the CSE group. A  no-cost (you must own a compass) shading evaluation form for our latitude and weather can be downloaded from Solar Hartland, which will give you the hours of sun per year, and the sites can be compared. (Note: this form does not include azimuth correction, and CSEs should face true south and not need correction. You can factor in azimuth using PV Watts.) Besides looking for minimum shading (95% exposure to the sunlight that is possible), the site needs to be near a three- phase power line. There should be year-round access for repairs, and long term permission for  use must be arranged.

The Business!

Funding is the next step, as the legal structure will be designed around it. For the 149 kW array (below the 150 kW threshold, and which we mentioned in the previous article), participants need commitments for at least $372,500 (half of $745,000), before looking for a loan. This is almost impossible with many small subscribers. The Securities and Exchange Commission also limits public offerings to 35 members before a very expensive registration process is mandatory (with an instate exception). Also for SEC requirements the CSE may not represent  that it is an investment; it has to be presented as a service contract or a pre-purchase. For this example, 35 members would need to pay $11,000 to meet basic funding, and a survey (Mad River Valley Energy) has found that most people (37%) prefer to pay $1,000 to $2,500. In addition, the project cost is set by the price of grid electricity, and at that price the federal 30% Investment Tax Credit, as well as MACRS depreciation need to be used.

Many of the small subscribers will not have passive income to do this. The Vermont Incentive will pay for only five percent  of the project ($36,000). To solve these problems, five CSE efforts in Vermont are headed towards partnering with one large member, which has the ability to fund a project, and the’ tax appetite’ to use the credits. Five efforts in Vermont are examples: Middlebury, which has Co-Operative Insurance Companies; Coop Power which has has Brattleboro Coop; Norwich,which tried using the municipality with a Clean Renewable Energy Bond instead of tax benefits; , Hartland, which is talking with a few businesses; , and Poultney, which is looking to Green Mountain College.) Also included in financial plans should be:

• legal fees for setting up the group and making changes later to membership;
• an administrator position who does yearly reports, tax filings, monitoring, and is the contact person for the Net Meter Group;
• cost of the loan;
• yearly maintenance;
• insurance;
• inverter replacement at 20 years;
• decommissioning;
• taxes (VT Bill H.679).
• Finally, a long-term plan for the kWh allocation is necessary.

There is no one ownership model, but the trend is to put all these elements together into an LLC or L3C with an ownership that leases or flips, which allows tax benefits and incentives to pass through correctly.   Income is in kWh, but expenditures are in cash. Green Mountain Power is the only utility that will issue a check for kWh, but they discourage net-metering overproduction for this reason. In Vermont Bill H.468, Solar Renewable Energy Credits (SRECs) for net-metered systems go to the utilities, and thus cannot be used for CSE income. All expenditures must be built-in at the beginning as a fund, unless the large member agrees to include them as budget expenses or the small members agree to fees, thus monetizing the kWh credits, and increasing the cost of the kWh. There are no stand-alone CSE coops in the US. PACE can be used for a CSE account, as long as it has a separate lien with a specific amount of money.

Middlebury CSE project.

Please send questions to Karl Kemnitzerat:  karl@solarhartland.org
Publications that can be downloaded are: “A Guide to Community Solar: Utility, Private, and Non-Profit Project Development”, US Dept. of Energy “Community Solar Power, Obstacles and Opportunities”, John Farrell, New Rules Project
“Financing Non-Residential Photovoltaic Projects: Options and Implications,” Mark Bolinger, LBNL

Contacts for CSE groups are:
Brattleboro, Tom Simon, Daniel Hoviss, www.cooppower.coop
Hartland, Karl Kemnitzer, Chuck Fenton, www.solarhartland.org
Mad River Valley Energy,  Peter Boynton, Steve Butcher, Gaelan Brown, www.mrve.net
Middlebury, Peter Carothers, Greg Pahl, Tom Dunne, www.acornenergycoop.com
Norwich, Linda Gray, Norwich Energy Committee: linda.c.gray@gmail.com
Poultney, Lukas Snelling, www.energizevermont.org