Category Archives: Community Solar

The solar option that’s REALLY ready for prime time

Since I dabble in energy stuff, friends frequently ask my opinion on such mundane topics as:

  • Should I get one of those cool looking programmable thermostats?
  • Is that thing that the utility uses to control my air conditioner making my house hot?
  • Why do I get those reports that compare my energy use to my “neighbors”?
  • Is now the time to go solar?

Of course, these topics aren’t so mundane to me. I find this last one particularly interesting and timely. And, to be sure, my friends aren’t the only ones who wonder about going green, as evidenced by Gallup polling on energy topics.

Question: Which of the following approaches to solving the nation’s energy problems do you think the U.S. should follow right now — [ROTATED: emphasize production of more oil, gas and coal supplies (or) emphasize the development of alternative energy such as wind and solar power[1]]?

POLL DATES Oil and gas Alternative energy Both Equally (vol.) Neither/Other (vol.) No opinion
% % % % %
2017 Mar 1-5 ^ 23 71 4 1 1
2016 Mar 2-6 ^ 21 73 3 1 2
2014 Mar 6-9 ^ 32 64 3 1 *
2013 Mar 7-10^ 31 59 7 1 2
2012 Mar 8-11^ 34 59 5 1 1
2011 Mar 3-6 ^ 26 66 6 1 1
^Asked of a half sample; * Less than 0.5%; (vol.)=volunteered response

Solar energy has made some pretty tremendous technological advancements in recent years and, when combined with aggressive marketing, innovative financing (“no money down”) and ample sun, can be an appealing option for one’s rooftop. Simple paybacks on investment can be as low as 5 years (or immediate if one opts for the no money down third-party financing approach – see SolarCity’s description). But, putting black panels on your house isn’t the only way to take the solar path to an alternative energy future.

Other options in many states include doing nothing (and relying upon the utility to invest in solar on its own), selecting a utility-provided solar product, or buying from a solar garden. In the case of the first two examples, utility-scale solar (think very large fields of panels or technological masterpieces like those mentioned on this site) tends to be the least expensive on a cost per kWh basis and, as such, pushing your utility to add solar to its supply portfolio is a good option. Now, in this case, the solar power will be blended with other resources and your power will, therefore, come from solar, other renewables (e.g. wind), and fossil-fueled resources.

Yet another option is the utility-provided solar product. Utilities like Xcel Energy and Portland General Electric offer residential customers, for a small premium (“green tariffs” or “green pricing” – not exactly the same. See this study (p. 11) for differences), the opportunity to designate the percentage of their power that comes from renewable resources. Driven by customer purchases, the utility, in turn, invests in more solar power production. Note that there are more green purchasing programs targeted to larger (non-residential) customers. In addition, customers in states with deregulated retail electricity markets generally have the option of purchasing 100% renewable electricity (see Pennsylvania, Texas and Massachusetts for examples).

Then there are solar gardens (also known as “community solar”), which are modestly-sized solar fields that sell to residential and commercial customers. For example, in Minnesota (the primary focus of this post), developers are currently building community solar installations and selling “shares” to customers at prices lower than retail rates. In other words, a customer who prefers not to (or can’t) put solar on her roof can select 100% solar and immediately cut her utility bill. Although the savings are not dramatic, it still means going all in on alternative energy and saving money. This is possible because the Minnesota PUC requires that utilities provide credits to customers (based on a metric that approximates retail rates) that are higher than the prices community solar developers charge. Talk about an easy (and financial no brainer) way of encouraging alternative energy! There are some catches, though.

For one, the contract with the solar provider will include an annual escalation rate (e.g. 2.5%) which will remain lower than the utility credit as long as the utility’s rates continue to increase (not a bad bet)[2]. In addition, most providers charge “exit fees” if the customer moves out of the area or decides they no longer want to participate. These exit fees generally only apply if the provider is unable to sell your obligation to another customer (customers can also transfer their subscription to another eligible customer – say, the person buying your home). This is understandable given that the provider is investing in a solar system and needs to recover their costs. A typical customer contract is 20 years. Exit fees vary between providers. Some waive the fee.

Information about Minnesota community solar is plentiful and organizations such as the Clean Energy Resource Teams (CERTS) provide a nifty calculator (see “Crunch numbers with calculators” section) to estimate one’s potential savings over time. I modified the CERTS spreadsheet tool for Xcel Energy customers to include pricing information I was able to obtain from four of the current providers. It should be noted that the providers do not have unlimited openings for customers since they will only develop a certain number of solar fields within each county. In addition, customers are restricted to buying from gardens in their own county. Once a field is obligated, the provider will stop taking new subscribers unless they are able to build a new field. You can enter information into this spreadsheet to get a sense for what you can save.

Our caution to readers is that the prices are from the week of September 18, 2017 and a provider may no longer have available subscriptions for one’s county (Xcel periodically updates this spreadsheet (Firefox users may need to right-click and select “Save Link As …) with the planned projects and their availability). Still, it’s worth checking out. The current options and future for solar are bright.

[1] If, like me, you were wondering what “rotated” means in this context. Apparently, polling folks mix up the way and order in which questions are asked to ensure that responses are not biased by order or wording.

[2] The rate at which the utility’s rates increase is a factor here. Put simply, if the utility’s rates increase at a lower rate than the solar provider’s escalation rate, at some point the credit may be lower than the utility rate.