Massachusetts has created a legal structure that says investor-owned utilities must allow Community Solar via Virtual Net Metering. There are two basic models – the Participant Ownership model and the Public Lease model. However a project is legally structured, the basic mechanics for delivering benefits to the projects participants is the same, thanks to virtual net metering.
Once a community solar project has been commissioned, the utility measures how much electricity is produced, and then credits the accounts of the beneficiaries (owners or participants) based upon their amounts of ownership. Seems simple enough on the surface, but it took a lot of legal work from the State Legislature to create that benefit.
Participant Ownership of Community Solar Projects
“Participant Ownership” is the term used when a system is constructed with monies from, and will be owned by, the homeowners who will benefit from a community solar project. The solar power system feeds its electricity into the power grid.
There are a couple of reason people would do this instead of installing their own modules. For one, community solar can be much more cost-effective than roof-mounted solar panels. While a rooftop install can cost between $4 and $5 per watt, a large-scale installation can see the price drop down to the $2 to $2.50 range. That’s a big difference. Secondly, many homes may not be ideal candidates for rooftop solar for a many reasons – tree coverage, a too-small or complex rooftop may impede installation. And third, condominium and apartment dwellers who are interested in solar simply may not own an actual rooftop to install panels onto.
There is still one more benefit for the Participant Model – the owners get to benefit from the three main benefits of going solar: SRECs, Tax Credits and Depreciation. These are VERY strong financial benefits – they are why solar power is being built in Massachusetts. These financial benefits mean your initial money invested will come back to you within three to five years.
The Public Lease Model
The second pathway to Community Solar is called the “Public Lease Model.” In this model, the customer simply signs up with a “Competitive Supplier” and sees their cost of electricity supplied go down. In exchange for that simplicity, the customer loses out on the many benefits that will accrue to the systems owner over its lifetime, such as the Federal Investment Tax Credit, SREC-II generation and sales, and depreciation.
Owners of these projects receive these rewards because of the costs and complexities they face: They must find land, lease the from the owner, find financing to build the project, find customers that are interested in buying the energy, manage the project for 20-25 years (or more), and then decommission the project at the end of its lifetime. In a way, it’s a win-win – the owners of the project gain the tax benefits and the state-level incentives in exchange for this long-term responsibility – the end-users get solar power and a lower electricity bill.
This model gives a lot of flexibility to end users – while still giving the investor the chance to make money. An end user who leaves their electricity providers load zone can simply cancel their service. Likewise, in this model, solar power is only a phone call away to anyone who is interested, homeowner or renter.
This is the fundamental benefit of Community Solar – if buying a solar power system or investing a lot of cash in a shared installation isn’t realistic, the public lease model of Community Solar can still offer a better price than National Grid or Eversource.
Each system works best for certain people. Do you have the cash? Do you own a home with a solid roof? Might you be moving soon? City dweller with a condo? Not own a place? Want cheaper electricity? Just like the concept of being part of the solar movement – but not so interested in dealing with everything else? Any one of these reasons could be your reason – and every one of them is a good reason. Give your politician a pat on the back for developing these tools.
Community Solar is the democratization of solar power, and everyone can be involved, rich or poor.
**Here is a great checklist put together for community solar projects in Minnesota if you are interested in the Participant Ownership model – not everything is exactly the same as Massachusetts, but it is close enough that if you have these points answered – you should feel secure.**