Posted on Thursday April 20, 2017
A transformational change has become evident across the energy industry, with disruptive forces moving faster than many utilities, regulators, politicians, and certainly, customers can imagine. There is bipartisan demand for renewable energy, coupled with a massive increase in customers seeking choice in their energy products and providers; revolutionary technologies like solar, battery storage, and electric vehicles are transforming the way utilities serve customers.
A trend shared by stakeholders across the board is the widespread enthusiasm for community solar. This “truly democratic” DG model is rising up the curve of its hockey-stick shaped growth projections, sprouting up in new markets with new and diverse champions. Utilities big and small are announcing programs in a variety of regulatory markets, and nearly every solar company with aims of growth has announced an interest in community solar.
Community solar is still some ways from mainstream status, however, and reaching its gigawatt-scale destiny requires focusing on the areas that foster innovation and expanded partnerships. Here are three:
1.Program Execution – Getting it Right
Economics will determine how much fuel will be injected into the community solar growth engine. Solar equipment costs are continuing to fall and economies of scale are making facility development costs more palatable. Moving forward, rapid integration and management of multi-megawatt projects and portfolios will come from streamlining processes from end to end, infusing a level of consistency and standardization that further maximizes efficiencies, lowers costs, and minimizes risk.
Progress is accelerating in the areas of consumer and market intelligence, product design, facility monitoring and on-bill crediting systems, and long-term customer engagement. An enterprise-level software is providing utilities, developers, and asset owners the tools to navigate complexities of community solar programming, including customer acquisition, program and regulatory management, billing integration, facility O&M, and customer E&M (the long-term engagement and management of program participants).
This new software-driven community solar industry is enabling an environment where soft costs can and are moving down as quickly as hard costs and significantly improving the value proposition for developers, asset owners, and utilities alike.
2.Empowering Utility-led Programs
Community solar has passed muster as a solution that can bridge the divide between the solar industry and utility interests. The model is politically attractive, operationally attractive, and good from a retail perspective. Developers (should) understand and respect that the first responsibility of all utilities is providing safe and reliable operation of the electric grid, but aggressively pursuing ways to help utilities deliver greater value to their customers is…or can be…a close second.
Utility-led community solar programs are showing significant activity and growth. Some of the country’s largest IOU’s and most advanced co-ops and municipal utilities are turning to community solar solutions because they provide the ability to offer cost-effective renewables programs in a way that allows them to meet their RPS requirements, protect against retail rate erosion, and maintain a grid-tied connection with their customers. For utilities who spend a fair amount of time and resources combating self-generation and net-energy metering laws, community solar delivers a viable solution to that challenge, avoiding the contentious debates over NEM that are heating up in other states such as California, Nevada, and Arizona.
An example of this collaboration is the recently announced partnership between South Carolina Electric & Gas (SCE&G) and community solar solutions provider Clean Energy Collective (CEC) to develop a 16 MW community solar program in South Carolina. CEC will build, own and operate the facilities, and integrate its software and services offerings—including customer acquisition, system monitoring, production tracking, bill crediting, and ongoing subscriber engagement. Through this partnership, SCE&G will enable more residents, businesses, schools, churches and municipalities to support renewable energy generation than ever before. And, while South Carolina residents currently pay 25 cents below the national average for electricity, the deployment of community solar facilities will allow them to save even more money on their electric bills.
Importantly, the SCE&G program is of significant enough size to serve a meaningful amount of customers and achieve economies of scale in array development. Utility-led community solar can do big things – provided utilities dream big enough to lower costs and serve many customers.
3.Regulatory, Policy Consistency
With increased demand for procurement of solar (whether regulator or customer-driven) and pressures on rate reform, the evolution of solar policy nationwide is at a turning point, able to easily accelerate quality community solar program adoption and aggressive growth or apply the brakes and delay broad market penetration.
The industry is looking for new mechanisms to facilitate community solar’s capability to provide broad and equal access to local clean energy generation to the three-quarters of U.S. households and businesses that are unable to do rooftop solar. Flexibility in the types of project sponsors and business models that are allowed to operate is encouraging innovation and market diversity. More options are better for customers, and competition is good for improving economics and efficiency.
State-level policy and regulatory attention are focusing on several areas that, when done right, are opening new markets and new opportunities. Specifically, we are seeing more attention on fair and competitive benefits for participating customers. There is market proof of project-level and policy-level benefits from making certain a diverse mix of customers can participate in projects, with smaller-scale customer carve-outs ensuring the full “community” is able to participate while larger customers act as anchor tenants that reduce financing risks and costs. Regulators and policy makers are recognizing customers deserve transparency and long-term certainty that benefits (on-bill credits, etc.) will be provided over the duration of contracts (e.g., 20+ years). And progress is forthcoming on interconnection management processes that provide a clear path to facility interconnection with reasonable costs and appropriate timing, i.e. prior to full subscription.
Optimism in community solar’s rapid growth is clear and strong. Solar providers, regulators, utilities, and advocates, need to continue to push towards these goals – broad access, product innovation, customer protection, and streamlined interconnection – as these will be the factors that ultimately decide community solar’s large-scale success or failure.
Join the campaign to bring community solar to every neighborhood in the nation. Gain access to the tools that will make your projects a success. Share the details of your developments for others to see and repeat your achievements. Contribute to your community by providing the choice of clean and affordable electricity to everyone.