Community solar comes of age across Colorado and the West
March 29, 2015
Nancy Lillquist was never optimistic that solar panels would work on her roof in Ellensburg, Washington, a college town on the Cascade Mountains' dry eastern slope. The neighborhood's big conifers blocked the sun. As a city council member, she noted the irony: Even as she and her fellow council members advocated for solar, they were also encouraging planting more trees for shade.
Then Lillquist found another option: In 2006, she invested $1,000 in a solar-powered renewable energy park the city's utility had just built. The project, which would grow to 109 kilowatts over the coming years — enough to power a dozen homes — occupied open city-owned ground near soccer and baseball fields. Lillquist's contribution paid for about one solar panel in the facility, whose output would earn her and about 100 other residents a credit on their utility bills.
When the Renewable Park came online, it was by many accounts the birth of "community solar." The concept addresses a basic problem: While many homeowners support clean energy, the majority of residential rooftops lack sufficient solar exposure. Renters usually can't install solar panels, no matter how sunny their rooftops, and some homeowners simply can't afford them.
Ellensburg's idealistic experiment cost more than $1 million to complete. And because the city bought in just before solar began a steep price drop, its solar electricity costs seven times more than the cheap local hydropower. Subscribers like Lillquist will probably never recoup their investments. Nevertheless, she says, "it feels good to make energy locally."
"People were coming from all over the country to look at the project," she says. Other cities followed Ellensburg's lead. Municipal utilities in Ashland, Oregon, and St. George, Utah, soon created those states' only community solar arrays. In 2007, the Sacramento Municipal Utility District filled its 1-megawatt community solar program — roughly nine times larger than Ellensburg's — with 600 subscribers. More than 20 other Western utilities have since adopted shared solar, some with projects many times the size of Ellensburg's.
Spurred by dramatically lower solar panel prices and rising demand, community solar "has reached a tipping point," according to Becky Campbell, a senior researcher at the Solar Electric Power Association. That means solar energy is on the cusp of being available to everyone. But it also means that Ellensburg's ideals are feeling the strain of going mainstream.
Community solar hasn't had an easy path forward. Most people are served by for-profit, "investor-owned" utilities, which are accountable foremost to their shareholders and are heavily regulated by states. In those utilities' territories, community solar frequently encounters "regulatory underbrush," says Joseph Wiedman, a solar law expert representing the nonprofit Interstate Renewable Energy Council.
Some of that underbrush involves "net metering." Forty-three states require investor-owned utilities to reimburse customers with solar on their property for the electricity they supply to the grid. But in most states those policies don't apply to customers who fractionally invest in a community solar project. Some community solar organizers have instead tried to distribute the returns to their investors as cash — an approach that turns their projects into profit-seeking ventures and exposes them to securities laws. These projects have to register with state or federal authorities — a process that can cost anywhere from $100,000 to $1 million — or else apply for complicated exemptions that often require costly help from lawyers and accountants.
Even states that encourage community solar have problems. Linda Irvine and 35 residents of Whidbey Island, Washington, scraped together $430,000 to build a 50kW solar array near a community garden in 2011, selling the energy to the local utility and collecting a 2009 state incentive for community solar. But navigating tax laws and getting exemptions from securities laws made the whole experience "a bit overwhelming," Irvine says.
The city of Portland, backed by the U.S. Energy Department, tried to build 80kW of shared solar in 2011, but the effort bogged down in state securities laws and other financing hurdles. Andria Jacob, who oversaw the project for the city, says: "You come up against too many barriers."
By 2010, the price of solar panels was less than half of what it was in 2006, and consumer interest was growing. Community solar was poised to become a big business — if only someone could bring an easy, replicable model to utilities that might not otherwise take the initiative.
A company called Clean Energy Collective, founded in 2010, approached the local electric cooperative in rural northwestern Colorado and proposed a community solar project. Electric co-ops, like municipal utilities, have regulatory autonomy and a mandate to serve their members, and Clean Energy Collective made the utility an offer it couldn't refuse: The company would build the project, assume the financial risk, even calculate the bill credits, as long as the utility agreed to buy the electricity and distribute the credits on customers' bills.
Clean Energy Collective learned to navigate securities laws and claim federal tax credits, and built a 78kW solar array near the local wastewater treatment plant. The project turned a profit. Clean Energy Collective went on to partner with more rural co-ops, including one in New Mexico, where it created that state's first community solar project for a Taos school in 2012.
It got a boost when a Colorado law, the "Community Solar Gardens Act," cleared state regulators. The law, first passed in 2010, requires investor-owned utilities, including Colorado's major utility, Xcel Energy, to build 6MW of community solar per year into their already existing state renewable mandate of 30 percent by 2020. It was the first legislation in the country to establish clear policies for how community solar should work. Between 2012 and 2015, Clean Energy Collective constructed 11 projects hooked to Xcel's grid, most around 500kW in size — roughly five times bigger than Ellensburg's Renewable Park. Colorado now leads the nation in community-owned solar, and 75 percent of the state's electricity customers have access to a project.
That's made Colorado into a model for other states. Passing laws like the Community Solar Gardens Act is probably the most direct way to expand community solar, says Wiedman.
But that's "a pretty heavy lift," he adds. Investor-owned utilities often resist, lobbying hard. In 2012, for example, California's two biggest utilities crushed a bill that would require utilities to fold up to 2,000MW of shared solar into their renewable energy requirements. Advocates pushed through a more modest bill in 2013, paving the way for up to 600MW of shared solar in California by 2019.
Now, even investor-owned utilities are joining the community solar game, albeit on their own terms. "A lot of it is purely economics," explains Jason Coughlin, a financial analyst for the National Renewable Energy Laboratory. Ellensburg's Renewable Park cost more than $9 per watt, while today the installed cost of solar — solar-panel cost plus construction and permitting — has dropped to less than $3 per watt.
"Utilities feel a lot more comfortable with (community solar) now," says Solar Electric Power Association's Campbell, who's working with more than 50 utilities now considering new programs.
Susannah Churchill, a policy director for the nonprofit advocacy group Vote Solar, says big utilities are also getting smarter. "(They're) seeing that people want the ability to decide where their energy comes from," she says. Unlike an individual homeowner's rooftop solar, shared solar, if managed by the utility, lets the utility be the middleman and turn a profit.
Even Pacific Gas and Electric, one of California's big three investor-owned utilities, proposed a community solar program while it fought the state's shared solar law. To Churchill, the proposal was little more than another green power program, in which customers would pay a premium for generic solar energy from utility-solicited projects. PG&E continued to push that model as California's Public Utilities Commission considered rules to implement the state's 600MW of new shared solar, but Churchill and others pressed for options that would favor smaller and more local projects.
In January, California regulators issued a split decision: Utilities will be allowed to sell power from their shared solar projects, but they're also now required to buy electricity from third-party developers like Clean Energy Collective that could site projects locally on brownfields or schools. The decision is "a really important moment" for shared solar as it expands across the country, Churchill says.
It's also a nod to community solar's hardscrabble roots in Ellensburg. After all, it was there that the ideal of not just clean, but local, energy took off in the first place.
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