What is Community Solar?
A community solar project is a solar project whose electricity is shared by a community of people. While the size of a residential solar (or rooftop) solar installation is measured in kilowatts, community solar projects are measured in megawatts (one megawatt = one thousand kilowatts). This means that a single community solar project can provide hundreds of homes and businesses with access to clean energy.

Many community solar installations are built on capped landfills, open fields, or the roofs of warehouses. Community Solar projects in Delaware have a maximum size of 4 Megawatts (MW)technology, a general rule of thumb is that a 1 MW before municipal/county code buffers.

Community solar projects allow local communities to benefit from solar energy, without installing panels on individual homes. Community Solar is also often referred to as roofless solar, solar gardens, or shared solar.

Why choose community solar?
Community Solar allows individuals to enjoy some advantages of solar energy without installing their own solar energy system.

  • Homeowners:
    For many customers, going solar is a cost-effective, environmentally friendly way to buy electricity. But some homeowners are prevented from installing solar on their homes due to credit scores, the size of their roof, the direction the roof is facing, the strength of sunlight, and so on. Due to these factors and others, community solar is well adapted to address this market.
     
  • Community Solar & Renters:
    Community solar allows everyone to benefit from solar energy, even if they can’t put panels on their own rooftop. In areas where solar power is less expensive than traditionally generated electricity, consumers can save money on their monthly bills. If subscribers move to a new home within the same utility service territory or county, they can typically continue to benefit from their community solar share. 

  • Community Solar and Businesses:
    Much like residential community solar participants, commercial organizations can participate in community solar. Community solar subscriptions are by utility account so even if you don’t own your building you can still participate in community solar by signing up a property location you may not own.
     
    Commercial agreements tend to provide better monthly discounts since your subscription may be larger than a traditional homeowner. With that in mind there are generally more strict cancellation terms, including a cancellation fee as well as a more aggressive term length of your contract. For a large enough subscription, these terms can be negotiable. It is also a good idea to shop around to ensure the offer has the best terms for your particular situation.

 

Who owns a community solar project?
Community solar projects can be owned by utilities, co-ops, or third-party developers (private owners). The owner of a community solar project is known as the “asset owner”. The asset owner may differ from the developer, which is the entity who plans and builds the community solar project.

Common ownership arrangements include:

  • Utility-sponsored model: Utility owns or operates a community solar array and utility customers may voluntarily participate.
  • Special purpose entity model: Individuals come together to form a business entity to develop a community solar project, which allows the business entity to take advantage of state and federal tax incentives.
  • Nonprofit model: A nonprofit entity administers a community solar project to benefit members or donors.

I’m interested in Community Solar – how can I participate?
Access to a community solar project is generally presented in one of two designs: an ownership model or a subscription model. At a high level, when you join a community solar project, you either purchase a certain number of panels in the array, or you purchase a specific amount of electricity as a subscription. This may be at a discount compared to your normal utility rate.

  • Ownership: This model allows participants to purchase a select number of panels or a portion of the community solar project. The owners receive electric bill credits from all of the power produced by the solar panels owned.

    Ownership-based community solar models are very similar to purchasing a rooftop system as you will still own set number of panels, but rather than installing them on your roof, the panels will be offsite as part of a fixed larger solar array. The panels themselves cannot be moved, but you can sell your ownership if you move out of the territory or choose not to participate in the project going forward. If participating in an ownership model it may be wise to work with an accountant.

  • Subscription: Instead of owning panels or a share of the project, you subscribe to a percentage of the project’s output. This is the most common community solar business model.

    • You make a monthly payment to the solar company which supports the solar facility, known as the “subscription manager”. Your subscription manager can be the utility, a third-party community solar developer or asset owner, or a third-party organization specializing in subscription management.

    • Your electric utility company may add solar bill credits to your monthly utility bill. You are still responsible for a monthly utility bill, but the charges may be reduced due to the solar bill credits.

Community Solar Subscription Billing:
Community Solar bills are provided as dual bills (utility charges and community solar charges are on separate bills). The dual-billing system is historically how community solar projects are billed although consolidated billing, meaning receiving one electricity bill, is becoming popular.

Under the popular two-bill system you will continue to receive your electric bill from your utility, but bill credits will be applied. Your subscription manager will reconcile the utility’s bill with your community solar subscription and provide you a second bill which when netted will equal any discount provided by your subscription.

Community Solar in Delaware
Community solar has been approved in Delaware since 2010, yet the state saw few community solar projects built. In an effort to grow the resource, Senate Bill 2 was signed into law on September 17, 2021 by Governor Carney. As a result of this bill, community solar is expected to grow significantly and provide access to many more customers in the state. For more information about community solar policy in Delaware, please view our Delaware Solar Policy page.

I’ve been approached to join a Community Solar project, what’s next?
The first step in enrolling in a community solar project is understanding your electric usage. Your usage will define the size of your subscription. You can look up your annual usage on your electric bill or by contacting your utility. You should also contact your utility to express your interest in community solar and to make sure it is supported by your utility. If your community solar subscription is sized larger than your annual electricity usage, you won’t receive bill credits for the extra energy, but you will still pay a subscription fee to the organization managing the subscription.

How much does it cost to participate in Community Solar program?
Costs vary by project, subscription type, and subscription size. When you enroll in a community solar program you will sign a subscription agreement that will dictate the terms of your enrollment.

As a subscriber, you will earn bill credits on your electricity bill for your portion of the energy generated by the solar project in the previous month. Since these rates are per kWh, subscribers may see some variance in their total bill credits from month to month depending on how much electricity was generated in that month.

When you participate in community solar, you are usually required to sign a contract. It’s important to make sure you are comfortable with the terms of the contract and understand the potential risks. Below are some key questions to ask as you are evaluating your options. 

a. Is this developer reputable?

  • How long has the developer been in business?
  • Does the developer have positive reviews online?
  • Is the developer likely to be in business for the length of the contract?

b. Is the subscriber manager reputable?

  • How long has the subscriber manager been in business?
  • Is the organization likely to be in business for the length of the contract?
  • Does the subscriber manager have positive reviews online?
  • Does the subscriber manager own the contract or will an asset owner own the contract?
  • Does the organization have recorded complaints with the state?

c. Will the contract be sold to another asset owner at some point?

  • Who owns your subscription agreement?
  • Does the subscription agreement contain an agency clause (a clause that allows the contract to be sold to another organization for a commission)?

d. Who will manage my subscription day-to-day?

  • Who will you work with day-to-day on your subscription?
  • Who will provide billing?
  • What is the expected response time if reaching out to the organization?
  • Is you choose to cancel how long does it take to process?
  • What is the organization’s history, if any, of back-billing (an energy ‘back bill’ is a catch-up bill that will be sent from your Community Solar subscription manager if you have not been accurately charged for your energy use)?

e. When are you expecting to be placed onto a Community Solar project?

  • Some organizations are in the business of aggregating contracts to sell at a future date, check with the organization you are working with when you will be actively enrolled in a Community Solar project. Check to see what communication are in place before ahead of enrollment.=

f. What are the contract terms?

  • Review any discounts promised and, if changing anything with your utility, if that will impact your rate.
  • Review cancellation terms
  • Review the length of the contract
  • Check to see if there are annual escalators
  • Can the contract owner resell your subscription?
  • If savings are guaranteed, are they market rate?
  • Does the subscriber agreement provide the subscriber manager with agency?
  • How often will your subscription size change?
  • What fees are there?
  • How are savings calculated?
  • What are the payment options and fees associated with payment?

g. Is there potential to be billed multiple months at a time?

Community Solar and Landowners:
Community Solar projects can use approximately 5 to 7 acres for every megawatt (MW) of solar installed, so a 4 MW project would require 20 to 28 acres before municipal/county ordinance considerations. As a result, solar developers (“developers”) routinely contact landowners with an option to lease the landowners land to obtain sufficient acreage to develop a project.

Leases can provide extra income to landowners by turning unused or underused land into revenue generating opportunities. Leases also provide a way to preserve the land for future use.

But entering into a lease agreement is a significant decision for any landowner. Landowners should always understand the fundamental terms of the proposed agreement, how the lease will affect their property, and the right questions to ask developers.

Landowners should always seek legal and tax counsel before entering into any agreement with a developer.

Before entering any contract please visit energy.gov to review frequently asked questions

  • Have you completed similar solar projects in my state? Can you provide references?
  • What land will be leased?
  • What is the effect on non-leased land?
  • How long does the term run?
  • How is rent calculated?
  • Who pays for taxes and other expenses?
  • What if the land is mortgaged?
  • What protections might the solar developer’s lender want?
  • What happens to the developer’s improvements?
  • Who will maintain the land?
  • What rights (if any) should there be to water, minerals and other natural resources?
  • Whom should I contact if I have questions about the lease, especially following the installation?
  • How will the property be treated at the expiration of the lease?
  • Will the leaser be transferring the rights to the property to another party at some point in the future?
  • How will any screening or other permit or land use requirements impact future land use and value?
  • What if the developer sells the asset rights? 

Do Solar Panels contaminate the land?
Land can be reverted to agricultural uses at the end of the operational life for solar installations. The life of a solar installation is roughly 20-25 years and can provide a recovery period, increasing the value of that land for agriculture in the future. Giving the soil a rest can also maintain soil quality and contribute to the biodiversity of agricultural land. Planting crops such as legumes underneath the solar installation can increase nutrient levels in the soil.
*Taken from https://www.energy.gov/eere/solar/farmers-guide-going-solar

Delaware Electric Cooperative Community Solar Program
The Delaware Electric Cooperative (DEC) offers a community solar program to their members. Through this program their members will be able to power their properties with renewable energy without installing a solar system themselves. Through their program, residential members who sign up will pay an extra $10 a month on their electric bill. Commercial members who sign up can purchase blocks of renewable energy for $10 a piece. For more information on this program please visit the program website.

Important Key Terms:

Community Solar Subscription: A subscription plan to an offsite community solar project that allows homeowners, renters, small businesses, schools, and other nonprofits to support clean, renewable solar energy without the need to purchase a solar array or install  panels on their property.

Subscription Fees: The subscription fee is a charge by the Community Solar Subscription Agreement owner which could be your Subscriber Manager or the Community Solar project owner. The fee reflects the monthly cost to subscribe to the solar project.  

Agency: Some Community Solar subscription agreements have a stipulation that the contract owner has the right to adjust your subscription or move your subscription to a new project without needing consent ahead of time. 

Subscription Size (kW) is based on your annual household electricity consumption.

Solar Production (kWh) is the amount of electricity production from the solar project that corresponds to the proportion of the total project that you’ve subscribed to. 

Percent Savings are calculated as your annual solar savings divided by your annual electricity costs. 

Bill Credits: The bill credit rate is the amount in dollars that participants receive from their electric utility for the electricity generated by their subscription.  

Bill Savings: Calculated as the difference between bill credits and subscription fees. 

Subscriber: a customer who is signed up for/subscribed to a community solar project. 

 

Want to learn more about Community Solar? Check out these Resources!
Please note that these entities below are not endorsed by the SEU, the SEU board, or any member.

SunCast – SunCast Media has partnered with EDP Renewables to produce a special 5-part series focused on the fundamentals of the fastest growing segment of the solar industry – Community Solar.

Canary Media: What is community solar and how can you sign up?

NREL: Community Solar 101

Energy.gov

SEIA: Guide to land leases