Published on April 11th, 2019 |
by Charles W. Thurston
April 11th, 2019 by Charles W. Thurston
Community solar projects are sweeping the nation, enabling individuals to benefit from solar energy even if they don’t have panels on their house or apartment building. The financial design of a community solar project may vary widely, however, which can make or break any savings that a system could yield for the consumer.
One model that has recently emerged in Oakland is that of a member-owned cooperative that shares a residential installation and includes both savings and investment dividends. This model, which can stretch to include a variety of installations within the coop, could help accelerate community solar projects in dense urban areas, where siting larger commercial-scale PV systems can be problematic.
People Power recently commissioned its 7 kilowatt solar system (pic above), serving 50 members of the special-purpose cooperative. “This is a new model, and we believe it is the first residential solar system in the country that is cooperatively-owned,” says Subin DeVar, the Director of the Community Renewable Energy Program at the Sustainable Economies Law Center, in Oakland.
The Center provided legal and other support for the People Power project pro bono, thanks to a grant from the California Energy Commission (CEC), using California Clean Energy Funds. The CEC program that provided the financing is the California Sustainable Energy Entrepreneur Development Initiative (CalSEED), which helps innovators and entrepreneurs working to bring early-stage clean energy concepts to market.
The design of the People Power coop is based on a goal of delivering electricity to members at a rate that is 15% lower than that charged by the local utility. Coincidentally, a 15% savings was the suggested savings that SolarCity offered to potential lessees before the company was purchased by Tesla.
Electricity from the People Power installation is consumed by the duplex homes that host the array; any excess is exported to PG&E under the current net metering standard. The investing members provided up to $1,000 each for the project, with flexible options for becoming an investor. The project also provides a return to the investors, for which the goal is a ceiling of 3%, says DeVar. “The idea is to be competitive with savings accounts,” he adds.
“We covered the predevelopment costs, business modeling and planning costs of developing the coop,” says DeVar. “Our model as a non-profit legal center has been to offer legal services to promote communities that are more self reliant in terms of energy,” he says.
Other models for community solar include utility-owned projects, third-party-owned projects, and not-for-profit projects. While utility-owned community solar has spread rapidly thus far, the incentive is missing for the utility to offer electricity at rates lower than it sells non-solar electricity, unless some government subsidy is involved.
Third-party-owned community solar is typically a solar developer project, in which the developer retains ownership of the generating assets, sells power to users under power purchase agreements, and determines what the mix of commercial and residential users will be. In some cases, few residential customers are involved in a community solar project. In other cases, low-income customers are included with a percentage carve-out, especially where legislation requires. And in yet other cases, no low-income residents are included.
In the People Power coop, there are some low-income members, but a community solar project including many or mostly low-income members is possible without an ongoing government subsidy. “We have been in conversation with different low-income groups, and are working on a cooperative structure in which someone that can’t afford to buy any share, could pay over time rather than upfront,” DeVar says.
The Sustainable Economies Law Center worked on the People Power project for several years, and is now considering the replication of the model elsewhere in California, and beyond, says DeVar.
The Center is considering the addition of more arrays within the People Power coop, including residences and other privately owned sites. The Center is also considering variations on member-owned community solar, including scenarios in which there could be a large anchor customer as primary user, including local businesses, churches, or other entities, DeVar says.
While the People Power project does not include energy monitoring and management software other than what is provided by the inverter company, virtual net metering is a possibility for member-owned community solar when consuming members are spread geographically, DeVar notes.
While California is likely to support more member-owned community solar on some level going forward, other financial partners could replace a government subsidy role. “Over time we will look at other investment sources, including institutional investors looking at mission-aligned investments,” DeVar suggests.