The community solar business model, which refers to local solar facilities shared by multiple community subscribers who receive credit on their electricity bills for their share of the power produced, has risen in popularity in the US over the last several years. In 2010, there was a single community solar project in existence. Between 2010 and 2013 there were less than 20 MW of installed community solar assets. Since then, the industry of community solar grew 68% year-over-year between 2013-2017 and grew 112% in 2017 alone. The Solar Energy Industry Association (SEIA) anticipates that there will be an additional 3,000 MW of community installed between now and 2025 – more than double the current capacity of 1,387 as of early 2019. The National Renewable Energy Laboratory also estimates that community solar will account for up to 49% of new installed, distributed solar capacity by 2020 with a total investment of over $16 billion.

As of the start of 2019, there were forty-three states with at least one community solar project in operation. There are currently nineteen states and D.C. which have recognized the benefits of community solar and other shared renewable power generating facilities and have encouraged their growth through policy or programs aimed at encouraging adoption.

The boom in community solar development within the U.S. is being driven by the American consumer’s ever-growing support for clean energy, corporates with aggressive sustainability and renewable energy goals, plummeting installations costs and increasing efficiency and States renewable energy generation power mandates. By making clean energy simple and appealing, the utilities and individual states have been able to generate ever-increasing demand for the product. Minnesota, Massachusetts, Colorado and New York have played the largest role in expanding the market for community shared solar by proving that it can be done both cost-effectively and at scale.

The success of these states in even more remarkable given they are some of the least sunny states in the country according to NASA data. These four states – MN, CO, MA and CO – have led the way in developing community solar, but they are not alone. Many states like Maryland, New Jersey and Pennsylvania are experimenting with pilot programs and other states are in the process of drafting policy.

One of the key components of successful policy is on-bill crediting, which enables residents and businesses to purchase electricity from a local solar facility and receive a credit on their electricity bills for their share of the power produced. These credits are either provided in the form of kilowatt hour offsets to each paying customer’s consumption, or monetary credits on the customer’s bill. Since customers already have a relationship with their utility, it makes sense to provide them a solution that is integrated into their current buying patterns. And it doesn’t hurt that they are saving money from day 1 with no capital required upfront!

Buy-in from the investors in community solar programs from has been just as important as the State policies in growing the market. Currently, 67% of community solar assets are developed, owned and operated under the special purpose entity model that allows for innovative financing structures combining traditional debt and equity with tax equity (i.e. a way to efficiently monetize the federal investment tax credit and depreciation).

Community solar as a solution for driving forward clean energy generation adoption makes sense for a host of reasons. On-site and rooftop solar by nature can only account for a small part of the total solar energy market. In fact, The National Renewable Energy Laboratory found that only 22 to 27% of residential rooftop area is suitable for hosting an on-site PV system after adjusting for structural, shading or ownership issues.

In the commercial segment of the market availability of roof area is much better, with an estimated availability of 60 to 65%, but that availability is offset by larger electricity loads from commercial entities. Outside of just the roof availability issues, there are several additional roadblocks for those seeking solar solutions. Renters are often prohibited from installing solar on the property; commercial buildings often have equipment on the roof obstructing installation; multi-tenant dwellings or businesses may not own their rooftop; the customer is not able to afford the up-front cost of a residential system or a company may be unwilling to invest the financial resources necessary to build their own system. Community solar solves these problems by providing access to solar projects that are off-site and require no capital upfront.

Additional states are and should adopt policy that has proven successful in the other markets to date. This will allow for individuals and companies to save money, meet sustainability goals and will serve as a job creation tool in local communities. Community solar is sure to be a key pillar in the energy transition that will continue to take place over the years and decades to come.