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| Fig. 1: Nexamp Community Solar Farm located in Lunenburg, Massachusetts. (Source: Wikimedia Commons) |
As renewable technology becomes cheaper, solar and wind generation is being adopted as a main source of renewable energy. These energy generation technologies are built on the utility scale, but due to incentive programs and increasing affordability, they are being adopted on a more distributed basis. Net-metering, i.e. giving credits to solar energy system owners that produce electricity for the grid, has been implemented in California to incentivize PV system construction. While this has allowed for the fast spread of distributed solar, renters, apartment owners, and low-income households are unable to access the benefits. Community solar programs are a way to involve these households who may not otherwise be able to participate in benefiting from solar panel systems.
Community solar refers to local solar facilities shared by multiple community members (residents, businesses, etc.) that are usually less than 5 MW as seen in Fig. 1. Across the US, 22 states have passed legislation to encourage community solar projects. [1] By the end of 2023, there is an estimated 6 GW of community solar installation across the United States. [1] These programs usually operate under a subscription basis, where households/businesses pay for a share of the electricity being generated from the system. Community solar farms not only allow more access to PV systems, but they can also increase the willingness of a community to implement renewable systems who might otherwise be wary of utility scale projects.
In a comprehensive study of community solar farms across the US and UK, researchers Peter and Fudge stated that some of the most far-reaching community solar legislation in the US was in Minnesota. [2] Under their renewable energy requirements, 1.5% of the solar goal must be generated by photovoltaic devices with 20kW capacity or less with the idea of incentivizing community solar gardens. In the study, community members of different areas were surveyed to understand whether they supported community solar in their towns. The study showed that people were indifferent to where the actual solar site was, and mostly cared that it was run by and/or benefitted local community members. Participants were also excited about the possibility of using brownout sites or public infrastructure (schools, libraries, etc.) as places to put solar panels. [2]
Many solar panel incentive programs struggle to reach low to moderate income customers (LMI). Community solar has been one of the many programs proposed to increase access to lower and middle income communities as it provides a framework to participate in PV incentive programs that do not require house ownership or good credit scores. Many current community solar programs have high upfront costs and cannot guarantee cost savings in the long term. [3] Some states have introduced incentives for community projects to target LMI customers, like the SMART program in Massachusetts. Other states have provided financing options for community solar programs that are not as cost prohibitive like Rhode Island's LMI community solar customer grant program or tax incentives like the Community Reinvestment Act obligation in Colorado. [3]
California has around 45 Megawatts of community solar capacity as of 2022, and only one LMI community solar project. 31% of California residents live below or near the poverty line and could benefit from energy policy directed towards LMI customers. Installing Community Scale Solar (CSS) in California has been proposed as a way to include more LMI customers in renewable energy incentive programs.
The CSD Anza community solar project located in Santa Rosa, CA is the only LMI community solar project in the state and has a 77kW generation capacity. [1] According to the California Department of Community Services and Development, $2.05 million was allocated to fund community solar projects, i.e. the Anza community solar project in California, estimated to serve between 188 and 288 households. It is estimated to save those households 5.4 million. [4]
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| Table 1: Comparison of different LMI programs in California's Low-Income Weatherization Program. [3] |
While California has not been heavily investing in community solar for LMI communities, it has allocated more of the budget towards directly installing solar panel and energy efficiency systems into low-income households through the Low-Income Weatherization program. [4] As can be seen in the table above, the installation of both solar panel systems and energy efficient appliances was the most cost effective in terms of people served. Installing subsidized Solar panels to Single Family Households cost about $16,139 per household, while the Community Solar project was from $10,904-$7,118 per household depending on the amount of subscriptions into the project at one time.
>While CSS projects are exciting, they might not be the most cost effective ways to reduce energy bills for LMI households. LMI customers spend 5-10% of their household income on energy bills. [5] In theory, CSS programs could mitigate risk for LMI customers wishing to invest in solar panels by centralizing an array but still take significant initial investment. As CSS programs for LMI customers are still in their infancy there hasn't been enough examples to make strong conclusions on the success rates. [5]
In addition to the Low-Income Weatherization program which supported the Anza Community Solar Project, California also has two other extensive programs that give subsidies to lower income customers to assist in paying for energy bills. The California Alternate Rates for Energy Program (CARE) which subsidizes electric bills up to bills and the Family Electric Rate Assistance Program (FERA) which offers up to 18% off.
A new bill that recently was approved by the CPUC is AB 205 which creates income graduated fixed charging. Income graduated fixed charging means that there is a fixed rate every customer pays to be a part of the grid based on their income level, as well as a volumetric rate for how much energy a customer consumes. AB 205 proposed an income graduated scale with decreased fixed rates for lower income customers, but increased fixed rates for higher income customers. In a joint testimony between the National Resource Defense Council and The Utility Reform Network, they defended the reform saying it will, meaningfully reduce the gap between current inefficient and inequitable average cost based volumetric rates and SRSMC, and realize significant improvements in the regressivity of electric bills. [6] Opponents of higher fixed rates claim that they disincentivize energy conservation.
In addition to AB 205, many Californians this year are facing increasing electricity bills this new year as PG&E has just been approved by the California Public Utility commission for another rate increase which is $32.5 per month for the average customer. PG&E requested the increase in order to underground transmission wires in high-fire risk areas, add more renewable infrastructure, and keep up with inflation. [7] While rate increases are smaller for lower income customers, even with subsidies there will still be an increase in customers' electricity bill. Balancing grid infrastructure modernization necessary for the energy transition while also keeping electric bills affordable is an incredibly difficult balancing act especially in a world with increasingly frequent natural disasters.
Last year, California passed the Community Renewable Energy Bill (AB2316) that is meant to bring more community solar power to the state. Support from the inflation reduction act can allow as much as 40% - 50% the cost of an installation in tax credit if the community solar farm serves LMI customers. The state first must provide an approved plan to implement these measures before it has a chance to access these funds. While community solar farms for LMI customers may be a possibility to expand incentive programs, they tend to only save customers 5%-15% on their electricity bill in the long run. [1] Traditional subsidy programs may still be more effective in alleviating the cost of energy for LMI households as they offer up to 35% subsidization, especially with the new income graduated fixed charging rates being introduced in California. On the other hand, community solar programs still provide benefits for renters or customers who are otherwise unable to install solar directly at their house and allow them to participate in renewable energy incentive programs. Implementation of CSS is one of many innovative ideas that could incentivize continued participation in the renewable energy transition and build greater equity in energy policy, but it doesnt solve all of the problems associated with assisting LMI households participate in the renewable energy transition.
© Adri Kornfein. The author warrants that the work is the author's own and that Stanford University provided no input other than typesetting and referencing guidelines. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.
[1] M. J. Coren, "Half of Americans Can't Install Solar Panels. Here's How They Can Plug Into the Sun," Washington Post 10 Oct 23.
[2] M. Peters et al., "Community Solar Initiatives in the United States of America: Comparisons With - and Lessons For - the UK and Other European Countries," Energy Policy 121, 355 (2018).
[3] J. J. Cook and L. Bird, "Unlocking Solar for Low- and Moderate-Income Residents: A Matrix of Financing Options by Resident, Provider, and Housing Type," U.S. National Renewable Energy Laboratory, NREL/TP-6A20-70477, January 2018.
[4] "Low-Income Weatherization Program (LIWP) Impact Report," California Department of Community Services and Development, February 2020.
[5] G. Chan et al., "Design Choices and Equity Implications of Community Shared Solar," Electr. J. 30, 37 (2017).
[6] "Opening Testimony of Mohit Chhabra and Sylvie Ashford, Sponsored by the Natural Resources Defense Council and the Utility Reform Network Addressing Options for an Income-Graduated Charge," Natural Resources Defense Council, April 2023.
[7] J. Johnson, "PG&E Bills to Soar Nearly $400 a Year in 2024 For Millions of California Households," San Francisco Chronicle, 17 Nov 23.
