What Drives the Growth of Community Solar Market | Community Solar Hub

What Drives the Growth of Community Solar Market

Posted on Thursday July 14, 2016

Community Solar Hub - What Drives the Growth of Community Solar Market

The use of solar energy in the U.S. is still relatively small, accounting for just 1% of electricity generation. Within that figure exists the power generated from community solar programs, which, by the end of 2015 consisted of 181 MW representing less than 1% cumulative installed solar PV capacity. However, the market growth potential for community solar is huge. According to The National Renewable Energy Laboratory (NREL), that amount could reach 5.5 – 11 GW of shared solar by 2020. 

Why such an extreme forecast of community solar market growth?

Consumers and utilities, who in the past have been on the fence about community solar, are now starting to take notice of these programs. They are sprouting up across the nation, allowing more people to tap into this source of clean energy while feeding solar powered electricity back into the grid, and as a result, the future looks bright for utilities and their customers.  Community solar, also referred to as shared solar, is expected to see exponential growth and adoption in the coming years, resulting in utilities of every size offering renewable energy choice to their customers and members. As a result of this expected growth, there will be greater accessibility to solar energy, and a laundry list of benefits to both consumers and utilities.

If everyone could access solar energy in an affordable way, most households and businesses would probably choose solar energy over traditional fossil fuel sources. But unfortunately, not everyone has access to this clean source of power. Making solar energy accessible to more people is a driving goal of community solar programs (#Solar4All). Anyone with an electric utility bill can participate in a utility offered community solar program. It no longer matters if a rooftop is properly sited for optimum sun exposure. Renters and condominium owners can participate in community solar; not to mention non-profits, businesses of any size, and low or moderate income households.

Because of community solar, there is the opportunity for the 50% of U.S. households and businesses who cannot access rooftop solar to participate in solar. As stated by NREL in a study published in 2014, “by opening the market to these customers, shared solar could represent 32%-49% of the distributed PV market in 2020, thereby leading to growing cumulative PV deployment growth in 2015 – 2020 of 5.5 – 11.0 GW, and representing $8.2-$16.3 billion of cumulative investment.”  Rocky Mountain Institute’s projections are even higher, anticipating 15 GW of community solar by 2020.

The cost of solar equipment and development soft costs are continuing to fall and economies of scale are making the development costs of a project more palatable. According to GTM Research, overall system pricing fell 17% over the course of 2015 in the utility-scale market. Programs will soon be offered at a cost equal to or less than the cost of traditional fuel sources. This levelized cost of energy (LCOE) is what makes solar energy accessible to more people like low-income households, fueling the growth in community solar programs.

Lower development costs due to reduced equipment prices are improving a project’s bottom line, which has captured consumer’s attention. Consumer demand can be credited for community solar growth, rightfully so because they stand to benefit economically, environmentally, and socially. Through subscription, or pay-as-you-go programs, customers can start saving on their electricity bills from day one. Hedging against rising rates, savings on monthly bills, and in some cases, receiving tax credits and renewable energy credit (REC) payments are all examples of economic benefits attractive to participants. Environmental and social benefits come in the form of reduced dependence on fossil fuel energy sources and a reduction of carbon emissions.

Utilities recognize the benefits of community solar solutions because they provide the ability to offer a renewables program in a way that allows them to meet their RPS requirements, protect again 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-metering laws, community solar offers a solution to that challenge. Community solar is a way for utilities to retain their customers by meeting their demands of providing solar energy choices.

As utilities of every size recognize the benefits of and embrace community solar programs, the pace of adoption will accelerate, meeting and exceeding the growth expectations of industry experts. Consumers will continue to be the driving factor of renewable energy programs, and utilities will continue to respond to the solutions that help them retain and engage their customers. If you’re unfamiliar with community solar and your local utility has yet to offer a program, just wait. With upwards of 11 GW expected to be installed across the U.S. over the next four years, this market segment is poised for a bright future. 

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