Community Solar on State

Influences on community solar development

Thu, 09/07/2017 - 14:20 -- bpf5082
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Adapted from research by Jesse Cohen and Dr. Jeffrey Brownson (2015).

 

Community solar has been described as a solar development method able to provide access to a wider portfolio of investors (e.g. those who live in apartment buildings), but many factors contribute to development of a shared solar project. Cohen and Brownson set out to determine which factors are most influential to community solar, and from their efforts, established regions most applicable for projects.

The following factors were analyzed:

  • Solar resource: how much “sun” is reaching the array
  • Alternative prices: the local price of other electricity sources
  • Government intervention: policies or regulations set by a level of government (may have positive or negative impacts)

Each of these factors were compared to a map of shared solar projects (Figure 1) to determine their relative influence.

Figure 1. Map of shared solar projects in the U.S. (Community Solar Hub, 2017)

 

Solar Resource

The solar resource map below (Figure 2) represents data collected by the National Renewable Energy Lab (NREL) demonstrating the relative amount of solar energy incident across the United States. As one may have assumed, southern states generally receive more intense solar resource, but it is also true that western states typically receive more solar irradiation than their eastern counterparts.

Figure 2. Solar resource in the United States (courtesy: Billy J. Roberts and NREL)

What may be surprising is that the difference in annual electricity which can be generated between regions is less than it seems. Data from the table below shows that the difference in solar potential between Orlando and Sacramento is negligible, and even the central Pennsylvanian city Harrisburg obtains over 80% of the solar that is irradiant over most of California.

Locale

Annual solar resource

Percentage of CA

Sacramento, CA

1,623 kWh/kW

----

Orlando, FL

1,606 kWh/kW

99%

Harrisburg, PA

1,313 kWh/kW

81%

Table 1. Comparing the solar resource in the U.S. (NREL, 2017)

An intuitive guess may conclude that a greater solar resource provides a significant advantage for community solar, but a review of the current shared solar projects suggests this is not the case. Washington (6), a state known for clouds and rain, has twice as many shared solar plants as California (3), a notoriously sunny state. Massachusetts (11) and Minnesota (7) are two of the nation’s leaders, while Texas (2), Florida (2), and New Mexico (1) struggle to have an impact.

State

Shared solar projects

Massachusetts

11

Minnesota

7

Washington

6

Arizona

4

California

3

Texas

2

Florida

2

New Mexico

1

Table 2. Various states and their shared solar projects (Community Solar Hub, 2017)

Although the south western states may have the greatest solar resource, the amount of solar energy is still comparable to most parts of the nation. Interestingly, shared solar projects appear to be distributed largely independent of the solar resource; many concentrations of projects are located in the north east with some of the “weakest” resource in the nation. It is clear there are more powerful factors in determining a viable site for community solar.

 

Alternative Prices

As suggested by Brownson in Solar Energy Conversion Systems, the price of alternatives is often a more accurate means of gauging the potential for a solar project. Alternatives represent the other options a consumer has to receive the same service. For solar photovoltaics, this is typically electricity from coal, natural gas, or even hydropower, that is distributed by the utility. When the alternative price is high, it is more likely that solar will be successful in the locale because solar will provide financial savings. When the price of alternatives is competitive, it is more difficult for the solar technology generate an impact. In other words, people will seek out other means of electricity (e.g. solar) if they feel their bill is too expensive.

Residential electricity rates from some cities are listed below in Figure 3; these prices are positioned over the amount of community solar projects that are located in the state. Figure 3 exemplifies a clear trend: In states with high electricity prices, community solar is more popular.

Figure 3. Comparing concentrations of shared solar projects with local electricity prices (NREL, 2017) (Community Solar Hub, 2017)

The concept that solar is more abundant where alternatives are expensive is not surprising, but the extent in which alternative price impacts community solar is significant. With just a few cents/kWh rise in electricity, shared solar quickly becomes a solution groups are pursuing. The trend is not perfect because there are other determinants for community solar, but local electricity prices certainly play a notable role in the development of shared solar.

 

Government Interest in Solar

Government intervention with solar can have a positive or negative effect on solar development. Sometimes local governments impose harsh capacity limits or require arduous permitting processes which slow or even completely halt solar installations. Other times, multiple levels of government will present large tax credits or rebates to offset the initial investment. Although the solar industry is rapidly maturing and can generally support itself, the government, for better or worse, is currently a crucial component to solar development.

Most solar policies impact traditional solar and shared solar alike. However, Cohen and Brownson identified one policy that particularly targets community solar: virtual net-metering (VNM). Virtual net-meters allow community solar owners to experience the benefits of net-metering (an extremely common practice for solar) (Figure 4). Without net-meters, the economics of a solar array are often compromised.

Figure 4. Net-meter versus a virtual net-meter.

Unfortunately, VNM is not a standard offering from utilities and rarely exists. Yet, some state governments require utilities to provide a VNM option for consumers. In 2015, the Center for Sustainable Energy compiled a list of states with VNM options for solar. The top three community solar producing states each have strong VNM policies established at a state level. Additionally, out of the 24 states that do not register a single shared solar project, almost none have a coherent VNM policy for residential consumers.

National Rank

State

Number of projects

VNM

1

Colorado

43

Yes

2

Minnesota

11

Yes

3

Massachusetts

7

Yes

Table 3. States with the highest concentration of community solar (Solar Market Pathways, 2015) (Community Solar Hub, 2017)

Analysis shows that VNM is not the only element necessary for community solar, but it is one of the most common characteristics shared among projects. Community solar is far more likely in states that allow VNM, and far rarer in states without such mandates. Innovative research projects engineering alternative methods VNM to facilitate the development of community solar, but for now, VNM is a significant influence on community solar.

 

Study conclusions

Restrictions to community solar are not physical; they are inherent to the local markets and government policy. The difference in the solar resource, even the north east to the south west of the country, is less than many would assume. There is plenty of sunshine all across the nation for solar to thrive. Many locations that pursued community solar also have expensive utility rates, and it is likely that community solar will continue to rise in locations wishing to avoid high electricity prices. Finally, states with VNM are generally the hosts for community solar. VNM allows shared solar to be very competitive, and most community solar projects have this practice in place.

Summary of conclusions

  • Solar resource has negligible impact on community solar development
  • Community solar is more popular in regions with high priced electricity alternatives
  • Virtual net-metering (VNM) is a common component of successful shared solar projects
    • Governments that set VNM mechanisms experience the greatest concentrations of shared solar projects.

With these conclusions, regions primed for community solar development can be identified. A promising shared solar project is most likely to be successful in a region with (1) above average electricity prices and (2) a supportive government that establishes a statewide VNM process.

Community solar can still develop regions outside this criteria (see: the UAJA 2.6 MW community-led project), but these projects face an uphill battle. Engineers are developing new methods to enable community solar in regions without VNM (see: Catalyzing community-led solar or the Community Solar on State Workshops) so that all communities can participate in the shared solar experience!

 

 

Bronwson, J.R. (2014) Solar Energy Conversion Systems (First ed.). Oxford, U.K.: Academic Press. Elsevier Inc. ISBN-13: 978-0-12-397021-3

Cohen, J., & Brownson, J. R. (2015). NUANCED ANALYSIS ON THE IMPACT OF SOLAR RESOURCE, ELECTRICITY RATES AND VIRTUAL NET METERING AFFECTING COMMUNITY SOLAR SUCCESS IN VERMONT, PENNSYVLANIA AND MISSISSIPPI. The Pennsylvania State University, JOHN AND WILLIE LEONE FAMILY DEPARTMENT OF ENERGY AND MINERAL ENGINEERING. University Park: Schreyer Honors College.

Community Solar Hub. (2017). Community Solar Project Map. (S. Shot, Producer, & U.S. Department of Energy) Retrieved from Community Solar Hub: https://www.communitysolarhub.com

NREL. (2017). Systems Advisor Model (SAM). 2017.1.17. Golden, Colorado : U.S. Department of Energy.

Solar Market Pathways. (2015). Virtual Net Metering Policy Background and Tariff Summary Report. Center for Sustainable Energy, California Solar Energy Industries Association, Interstate Renewable Energy Council. Center for Sustainable Energy.