Last updated on November 12th, 2019
Community solar is sometimes hard to understand. There are different ways that community solar farms are shared amongst residents. Here’s exactly how community solar works, including a full pros and cons analysis of the asset and opting in for the energy savings.
How Community Solar Works: A Pros and Cons Analysis
When it comes to solar power generation, a community solar garden has gained much popularity in recent years. Usually, solar installations consist of a relatively large and privately owned solar panel array.
For community solar, the community dedicates a specific site for the installation of solar panels. For instance, a barren agricultural field, warehouse roof or deserted factory ground can be utilized for such an installation.
This type of community solar power facility generates electricity during the day and feeds the local grid. The subscribers of the community solar garden get the share of power produced through these solar arrays.
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On the contrary, this isn’t the case in the cooperative solar gardens. Here, the users are not the owners of the solar panels or any equipment associated with them. However, they get some financial advantage through ‘net metering’.
Net metering will reduce your energy costs on your meter readings through a discount or subsidy offered by your utility.
How Community Solar Works
In order to install solar panels on a large scale, you need a considerable amount of investment. Hence, solar energy isn’t free at all, as you need to buy expensive solar panels, equipment, and pay for their installation.
A private solar system cost $25,000 to $35,000, which is sufficient to meet the power needs of an average-sized home. This suggests that depending on the consumption of the house and efficiency of the solar system, it would take at least 10 to 30 years to break even the actual cost of solar installation.
Solar panels last a long time, which helps you retain much of the capital cost over time. Here’s a guide on the lifespan of a solar panel.
Community solar garden doesn’t require any upfront investment on the part of users. The subscribers or users don’t have to pay out of their pocket to start a community solar project.
Pay-As-You-Go is a common community solar business model. This involves charging some sort of onboarding fee that stays well under the three-figure range. This model allows subscribers to pay for power on a monthly basis.
There are a few solar gardens, which offer up-front or partial up-front fee options. If you pay up-front charges, it covers the amount of electricity you will use throughout the contract.
On the other hand, users may choose to pay the flat fee that is not tied to the projected consumption of electricity. In both of these payment models, operators do offer some sort of discount with reference to the kilowatt-hour rates.
The new subscriber has to pay considerable substantial up-front costs under any of these models. If you are opting for full up-front payment, it may reach into five-figure amount.
But the consumer gets the benefits in the long run by saving huge amounts each month. This is why people with modest incomes or limited savings, do prefer subscribing for a community solar garden.
Net Metering Explained
After getting community solar explained, it’s time to discuss the net metering. Net metering is a way to calculate and pay your utility in accordance with the net electricity consumption. If you have installed a good solar system, you can produce a sufficient amount of electricity to meet the needs of your home.
In this case, you only pay for the electricity that you have drawn from the grid. In addition, if the solar array manages to produce some excess energy, you can sell the surplus amount to your grid.
The limits of providing energy back to the grid and the rate per kilowatt-hour depends on the policy of the utility company. The subscribers of community solar gardens also enjoy the advantages associated with net metering.
See Related: Best Solar Panels to Buy and Use
Community Solar vs. Rooftop Solar Arrays
If you don’t have an idea that whether you should go for a rooftop solar array or community solar garden subscription, you can make a decision after considering the pros and cons of these options.
For this purpose, let’s dig into the community solar pros and cons.
Community Solar Garden Pros
Given below are some widely known advantages of subscribing to a community solar garden.
Suitable for Renters
In order to obtain the electricity produced by a community solar garden, you don’t need to get the permission of the landlord. If you are a tenant and living within the proximity of such a facility, you can subscribe and start saving. At times, you don’t even need to live close to a community solar garden to be able to reap the benefits.
No Infrastructure or Physical Equipment
Being a solar garden subscriber, you are not required to get physical equipment installed or build an infrastructure for obtaining solar power.
All the installations, upkeep, and repair work is the responsibility of the trained professionals hired by the solar garden operator.
It is good news for the renters, as they don’t have to acquire prior permission from the homeowner. What they need is to subscribe to the community solar facility and minimize the utility expenses.
No On-Site Installations
When subscribing for a solar garden, you can keep your rooftop free from unpleasant piles of solar panels. In fact, solar arrays can affect the curb appeal and overall aesthetics of your home.
Solar gardens are ground-based systems, which acquire large rural lots or abandoned factory grounds. This means subscribers can utilize their rooftop for any other purpose.
Solar Rating is Irrelevant
If you want to install a rooftop solar array, it is necessary to know the sun score or solar rating of your property. This relates to the time for which sun shines on your roof. The solar rating also explains the intensity of the sunrays.
It helps to analyze how much power one can generate through a rooftop solar array. However, the subscribers of the community solar garden don’t require any kind of solar rating.
As long as the solar garden receives the sunlight, you are good to use this facility.
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Up-Front Investment is Much Lower
With a view to subscribing to a community solar garden, you are not bound to make a massive up-front investment. What you have to pay is just the subscription fee, which is quite manageable.
On the contrary, the cost of an average-sized rooftop solar array may settle for five-figures.
Even if you take a home equity loan or use a low APR credit card to finance this project, this financial burden will continue to bother you for years to come.
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Community Solar Gardens Cons
Following are the disadvantages or cons of getting a community solar garden subscription. You better read them before making any decision.
Complex Contract Structure
When buying a solar system and installing it on your rooftop, you may need some sort of loan. However, the legal aspects of purchasing a solar system on lease are relatively less complicated as compared to the solar garden subscription.
First, you have to enter into a power purchase agreement (PPA). It is a framework, which binds the utilities and community solar garden operators. These contracts stay intact for more than 25 years.
In addition, the community solar contracts are confusing, making it difficult for the subscriber to reach a decision. For example, there are lock-in periods, hefty exit fees, lowest share sizes, and some other restrictions.
No Concept of Projected Savings
Although the community solar operators do guarantee minimum cost savings, these ratings never appear to be true. Some of the operators offer savings close to the amount of baseline bills, but others don’t.
If the contact doesn’t identify minimum savings, the subscriber can’t oppose abrupt price changes. This may reduce or even eliminate the chances of savings.
This is the reason why some subscribers regret their decision of choosing a solar garden facility. Nevertheless, you can avoid such issues by taking into view the dubious claims made by an operator.
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Requires Excellent Credit Score
In most of the cases, solar garden management appears to be quite strict with reference to subscriber’s credit score. For example, if the FICO score is lower than 680, it would be hard to enter into a deal with the solar garden operator.
Therefore, prior to thinking about this option, make sure that your credit history is in good shape. A community solar subscription is a type of financial deal; hence, the utility or solar garden operators look for the subscribers with clean financial history.
There are some other community solar garden providers out there that do not require very high credit scores.
One of the biggest disadvantages of getting a solar garden subscription includes geographical restrictions. This means that if you leave the territory of a community solar garden, it isn’t possible to take the subscription with you.
In this situation, you have to find someone else who can take over your existing contract with the community solar garden operator.
Moreover, you also need to bear the transfer fee, which alone can disturb your saving.
Little or No Tax Benefit
Since the solar industry is booming, the tax credits or benefits are lowering. These benefits were used as a way to assist in solar energy development and produce greener energy.
The solar garden developers and commercial entities associated with solar industry use these credits to complete their community solar projects.
However, this facility is not available to the subscribers or they can’t take advantage of these tax deductions.
Lack of Control Over Output or Operations
The solar garden subscribers are not allowed to take control of solar power operations. They are not even in a position to know the actual output their solar garden is producing.
Similarly, in case of natural calamity or system failure, your garden will go offline. As a result, the production or supply of electricity to the grid will become zero and your savings for that time also go to zero.
These problems may also arise in the rooftop solar arrays, but you have complete control over it. You can simply call a technician and get your solar system fixed within a couple of hours.
Huge Termination Costs
Most of the Community solar garden charges a hefty termination fee. This fee is even higher for the new subscribers. On the contrary, you can unplug your rooftop solar system any time, without worrying about paying any termination fee.
Self-Sufficiency Isn’t a Reality
Despite all the debates and environment-friendly tags, community solar isn’t doing much at the moment. In fact, even after subscribing to the solar garden, your home will still be dependent on the grid.
Hence, it is important to stay hooked up to the grid unless you have other options like a diesel generator. If you are keen to live off the grid and attain the stage of self-sufficiency, a home-based solar array should be a viable choice.
See Related: Best Books on Green Living
Conclusion on How Community Solar Works
With the advancement of technology and innovation, we are more concerned about future proofing than ever. The improvements in the existing technologies are making them more efficient and less expensive.
Talking about the solar industry, the biggest issue with this business is future proofing. The solar panels do have an extended life expectancy. This allows them to produce high-rated efficiency even after two decades.
This appears to be great for the owner or buyers of a solar panel, which allows them to minimize the maintenance cost of running a solar system. But who knows whether this technology will be viable for the next few years or not.
The fast pace advancement in the solar industry is giving us a clue that what kind of solar panels we may expect in the future. Tesla, for instance, has been working on roof tiles that work as the solar panels.
The rooftop solar arrays and community solar gardens offer their own benefits. Similarly, they do have some sort of cons. The only way to get the maximum advantage out of these resources is by knowing your usage and paying capacity.
If you don’t have the funds to buy and install a solar system, it won’t beneficial if you take a loan for this purpose. All your initial savings will go into the bank’s interest. On the other hand, you should act wisely when entering into a contract with a community solar garden.
You need to be extra cautious about the terms of such a contract and take into account the elements that are not in your favor. By doing so, you can utilize this facility in a proper way and save more.
Furthermore, you need not worry about the community solar garden or rooftop solar system, as you are not alone. There is a wide range of people who are using the private solar system or taking advantage of a community solar garden.
At least, you can hope for the best in the future, when solar energy may turn out to be truly free.
Do you now know how community solar works? Let us know in the comments below. We’d love to hear from you!
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