In communities across America, clean energy benefits everyone—from renters and condo owners to local businesses, schools, institutions, and municipalities. One way that community solar delivers these benefits is by lowering electricity rates with bill credits.
But getting to those lower rates requires a lot of complicated accounting. Here’s how it works.
How It Works
So, how does community solar work? While rooftop solar requires an upfront investment and can only be attributed to one home, community solar provides access to renewable energy for everyone. This helps create a more equitable and resilient electricity system by enabling individuals, families, local businesses, schools, religious organizations, and others to benefit from clean, affordable power that strengthens their communities.
With community solar, you can subscribe to a local community solar farm and earn electricity bill credits from its energy. Once the solar farm has produced a month’s power, your utility company will read the meter and allocate the credits to all subscribers. After the credits have been applied to your electric bill, they will roll over to future bills, so you’ll always reap the benefits.
Another important point is that you can cancel your subscription with most projects without penalties or fees. And if you move to a new home, you can take your community solar with you, so you won’t have to deal with the hassle of installing panels on your roof.
While there are still some barriers to community solar, progress is being made to remove them. For example, some community solar projects offer consolidated billing so that you can receive just one bill from your provider or utility company with your community solar credits reflected. Others drop credit check requirements, allowing people with low or no credit to participate in community solar.
When it comes to community solar, household income is a big factor. To help overcome this obstacle, community-based organizations can play an important role.
Most community solar projects have credit score requirements in the 650-700 range, as this helps developers ensure that their investments will be paid back. However, these requirements have been a barrier for many households. Thankfully, many communities are finding ways to make these projects more accessible.
One way is through program design that reduces upfront costs and offers a flexible subscription model. This helps to eliminate barriers for low-income households, especially those who may not have access to credit scores or bank accounts. Other important elements include avoiding flat fees that don’t align with the value of the electricity bill reduction and cancelation fees that make it difficult to leave the program.
Another way is through state policies prioritizing low-to-moderate-income participation in community solar, which requires that all approved projects reserve a majority of capacity for low-to-moderate-income households. This approach will require continued policy support and collaboration among states, cities, utilities, community organizations, nonprofits, solar developers, and financial institutions.
Developing community solar starts with finding a site for the project (typically a capped landfill or underutilized farmland) and then planning, permitting, and building the actual project over months.
Once the project is built, it is connected to the local utility grid, and an electric meter tracks the energy it produces each month. The solar provider credits subscribers’ electricity bills based on their ownership share of the project. This process is called a subscription model. The subscriber can also buy the energy directly from the project, known as an ownership model.
Community solar offers access to clean energy for people who can’t install rooftop solar, including low- and moderate-income households, renters, and communities of color. It’s important to reach these populations with clear and simple information about the program. Program design should avoid flat fees that don’t align with the reduction in energy costs and cancellation fees to unsubscribe, as these can discourage participation by low-income customers.
Other barriers include credit checks that shut out people with bad credit and eligibility requirements like income limits that can exclude large families. Fortunately, the industry is working to address these issues so more people can go solar.
Many community solar projects face a big challenge: ensuring subscribers receive the credit they deserve. This is because most community solar projects are rental or subscription-based, so customers don’t own their panels and can’t access incentives (though co-ownership models are on the rise). Billing these types of projects requires careful planning to ensure all stakeholders understand their timelines and responsibilities clearly. It also requires strong project managers with experience working with third-party aggregators and utility-specific processes.
Once you’ve signed up for a community solar program, it typically takes 1-3 months to see the credits reflected on your electricity bills. You’ll receive two monthly bills – one from your community solar provider and another from your utility company showing the total energy you consumed that month, minus the solar credits you received from your share of the community solar farm.
If you’re interested in going solar, check out the EnergySage Community Solar Marketplace to find a project that’s open in your area and meets your energy needs. Some people even choose to go solar with a project located within their home or business so they can feel closer to the impact of their decision. Either way, cost savings are guaranteed, and you’ll make a difference towards a more sustainable future.