Planning March 2017
Here Comes the Sun
Community solar, or shared solar, is growing nationwide as a means of giving people a local source of solar energy, even if they don’t own a home.
By Charles W. Thurston
The Solar Energy Industries Association, based in Washington, D.C., notes that the U.S. generated over 300 megawatts of community solar power in 2016, following an initial boom in 2010. By 2020, that figure could shoot up to 1.8 gigawatts, six times the current generation capacity. One firm, GTM Research, reckons that New York State alone has a 1.8 GW community solar pipeline. Such growth could shift community solar's share of cumulative U.S. solar installations from less than one percent today to nearly five percent in just three years.
If that growth occurs, community solar could catch up to the installation rates of residential rooftop solar. The National Renewable Energy Laboratory estimates community solar could make up half of the distributed (locally consumed) solar market in 2020. NREL research also shows that about three-quarters of U.S. states can adopt community solar with favorable economics.
A new dawn in government support
The federal government is responding to the research. In November 2015, former President Obama held a community solar summit at the White House, setting a goal of fostering 1 GW of solar in low- and moderate-income communities by 2020 — a bump up from the 100-MW goal in Obama's 2013 Climate Action Plan. That meeting spurred the formation of the National Community Solar Partnership, with participation from a variety of federal, state, and private agencies. The group is also tapping philanthropic donors to fund pilot community solar programs in low-income communities.
At the state level, progress is also being made. So far, five states — California, Colorado, Massachusetts, Minnesota, and New York — lead the way in enacting legislation that encourages local community solar projects, while nearly two dozen states have enabling legislation in place or in process.
But state support for community solar goes beyond merely enabling legislation. In California, the Public Utilities Commission recently approved a plan for utility companies PG&E, San Diego Gas & Electric, and Southern California Edison to add 600 megawatts of community solar farms. California is one of 29 U.S. states to have adopted renewable portfolio standards, mandating that utilities sell a certain amount of renewable electricity.
Still, in some places, communities are ahead of government efforts. "We have no direct legislative mandate to us for community solar," says Tim Dempsey, director of planning in East Lansing, Michigan. "As a university community, however, we have a large interest in and a high priority for renewables and green infrastructure, and community solar is a good fit."
Local siting quandaries
Planners like Dempsey are helping foster community solar at all levels of government and through a variety of measures that dovetail with broader mandates and philosophies, including renewable energy plans and incentives, low-income housing goals, special zoning considerations, and tax incentives. Where they typically and specifically come into play is, of course, siting community solar projects.
"Solar gardens are the next generation solution for renewables development, but it gets tricky talking about land use," says Susie Strife, the Boulder County, Colorado, sustainability coordinator. "You are looking for areas not zoned for open space, outside flood plains, avoiding sensitive agriculture, and not otherwise used — if not blighted," she says. "You also have to consider grid interconnections and proximity to distribution lines, so there are a lot of things to consider."
In Fort Collins, Colorado, Grid Alternatives, a community solar developer, was going to site a project as a ground-mount structure (as opposed to one on the roof) next to the city's water treatment facility. "But there were barriers with the planning processes that made the project cost-prohibitive," says Tom Figel, the policy and regulatory manager for the Oakland-based group. "We ultimately sited the project on a warehouse rooftop that belonged to the local utility, which allowed us to move forward more quickly but reduced the project's size and increased costs," he says.
Boulder County is an active participant in finding the right spot for community solar projects, offering up potential sites that the developers then vet by performing feasibility and utility interconnection studies. "It's a complicated dance, since we might provide 10 sites, but only develop one," says Strife. "However, we have exciting partnerships now in the initial stages with solar garden developers, schools, universities, and municipalities, to do community solar." Already there are well over 100 community solar installations in the county.
Affordable energy for affordable housing
A big reason jurisdictions are pursuing these community solar projects is to improve access for low-income housing constituents. Their motivation is to reduce infrastructure costs, including customers' electricity costs, which are frequently subsidized.
"More and more community solar developers are going into planning offices offering to include low-income access, in order to make the project as beneficial to as many elements of the community as possible," says Tim Braun, director of public affairs for the Clean Energy Collective, a Louisville, Colorado- based community solar developer with more than 100 projects in a dozen states.
"Some regulatory bodies are addressing this [issue] with code: Colorado has a five percent carveout for low-income households in its Black Hills program, for example," says Jonathan Fitzpatrick, director of land management for CEC.
It was certainly important to local leaders in Spencer, Massachusetts. "Offering solar to renters is one of the goals of [our project]," says Drew Warshaw, the vice president of community solar at NRG, an energy company based in New York. In fact, NRG has "contracts with several public housing authorities in and around Spencer. It's a great opportunity for [the other cities] to take advantage of the project without having the land themselves; that's part of the magic of community solar."
At the time of the inauguration of the Spencer project, located on 200 acres of St. Joseph's Abbey, John Stevens, the chairman of the Spencer Board of Selectmen, said, "Generating electricity from renewable energy offers significant public benefits, energy price stability, and health dividends."
Going (and earning) green
The Spencer project was lauded by Massachusetts state planners for its environmental contributions. "The Commonwealth is a national leader in solar energy, harnessing the full potential of clean energy innovations to reduce costs and carbon emissions," said Matthew Beaton, the state energy and environmental affairs secretary, at the commissioning of the project. "The Baker-Polito administration is committed to working with our municipal partners across Massachusetts to expand community solar projects, saving ratepayers and taxpayers thousands of dollars annually that can be reinvested into the community."
Municipalities often lead states in setting ambitious environmental goals to which community solar can contribute. "Boulder has a goal of being 100 percent renewable by 2030, but we are limited in terms of available land, so customers can buy into community solar if the project is in the same county, or neighboring counties," says Matt Lehrman, Boulder's energy strategy coordinator.
Better use of blighted or idle land often is another contribution of community solar projects. East Lansing, Michigan, planners chose to site one community solar project at the Burcham Park landfill and another at the BWL Wise Road Water Treatment Plant. The locations were previously maintenance cost centers but now produce revenue for the community.
Similarly, the landmark 1922 Fort Madison Middle School in the Iowa city of the same name was nearly lost to the bulldozer, but thanks to developer Todd Schneider and state-administered funding from a federal Community Development Block Grant, the building was converted into new housing and is now a showcase of renewable energy.
Designing green definitely helped finance [the Ford Madison] project, because the CDBG is a competitive loan that is scored on a point system, so more points for our green design, including renewable energy, pushed us to the top of the pile," says Schneider, who notes that project got $3 million of the $12 million in funds available statewide as part of a disaster relief grant. "We discount [residents'] utility bills by 20 percent," he notes.
Some municipalities or counties may choose to entice solar developers to site in their communities through substantial tax breaks, but others see solar as a fiscal necessity. "Our community solar project represents a revenue stream for the city, and it generates a considerable amount of tax — we call it our hidden industrial park," says Jack Healy, the administrator for the town of Freetown, Massachusetts. "The Massachusetts Municipal Association also is working hard to make sure the state legislature doesn't cave in to giving the solar developers tax breaks they don't need," he says.
NRG's Warshaw says, "There is a tax revenue component in most community solar projects. Municipalities gain revenue but without the huge demand on them for services, as with most other types of development. The panels are passive, not sucking up limited municipal resources."
Making the money work
Participants can directly fund a community solar project in a variety of ways, including purchase of solar panels, panel leases, and power purchase agreement — or, via a combination of all three, crowdfunding.
In the San Juan Islands of Washington State, "people in the local community bought shares through microloans to the local conservation district, which raised $200,000 from individuals and organizations," says Jay Kimball, who advised local cooperative utility Opalco on its project. The loans included an $11,000 loan from the nonprofit Odd Fellows Lodge, under a zero-interest, 10-year payback arrangement, says Kimball, the principal at 80/20 Vision, a local consultancy.
State funding is also vital. Opalco recently won a grant of $1 million from the Washington Clean Energy Fund to add a 2 MW/hour commercial battery to their community solar project as a grid stabilization measure.
Other projects tap federal funding. In July 2016, the U.S. Department of Energy announced plans to finance $287 million worth of solar projects in low- and moderate-income communities, and Housing and Urban Development's CDBG program may be the largest source of federal aid for community solar.
"We created a low-interest renewable energy loan program through a local credit union that was backed by a DOE loan loss reserve," says Strife of Boulder County. "And we just passed a sustainability tax for the county."
Another way to finance such projects is through nonprofits. PACE, short for property assessed clean energy, is a way for cities or counties to lend home owners and building owners the funds for a system, with repayment stretched out over 20 or 30 years. Some pioneering counties, like Sonoma County in California, started out with a loan for their PACE program from the general county fund and repaid it from loan revenue. Their PACE program is now self-financing.
Commercial businesses can also be targeted. NRG does that in many of its developments, which can solidify the bankability of a project quickly.
In Minnesota, NRG has already signed up Ecolab, Land O'Lakes, Macy's, and U.S. Bank as customers. However, no single customer can own more than 40 percent of any site's total solar production.
One commercial participant in a CEC community solar project, Alpine Bank, not only meets its own internal environmental goals, but might also count the investment under its requirement to meet Community Reinvestment Act requirements as mandated by the U.S. Department of Treasury's Office of Comptroller of the Currency.
In short, a plethora of financing mechanisms and providers can be tapped for a community solar project, and now that the market segment is better known, perceived risk is diminishing and more participants are coming on board.
Investors are building plants to gain federal tax credits, utilities are welcoming community solar as a boost to grid reliability, cities are siting it to improve land use and gain lease or tax revenues, and all layers of government are using it to further their alternative energy and other green goals — and that's just the beginning.
Based on these first efforts, the future of community solar is looking bright.
Charles W. Thurston is a freelance writer based in Cotati, California.
Putting the 'Community' in Community Solar
By Tory Hanna, AICP
Community solar isn't always an easy sell, but there are some things planners can do to bring community members along — and even get them excited.
The biggest hurdle to adopting such projects continues to be their visual impacts. Large-scale, ground-mounted arrays can cover from five to 50 acres. Some have referred to their sometimes haphazard siting as "pastoral eminent domain," where a sea of ugly blue solar panels screwed into metal posts supplants a once-lovely rural or agrarian scene.
Planners can help by preselecting land and zones that are not located along scenic byways or near historic districts. Successful projects are typically sited on back wooded lots or underproductive farm fields far from high-traffic roads.
In several rural states, community solar is an exceptional accessory use, and provides ancillary income for farmers. That cash flow from leasing land to solar developers often allows multigenerational farmers to keep family-owned farms.
Cities can make room for them, too. Both Massachusetts and New Jersey have been successful in driving community solar to brownfields and capped landfills in urban contexts.
Model bylaws can help local planners determine how and where to regulate community solar. Massachusetts (tinyurl.com/hvhu8lr) and New York (tinyurl.com/ jckstoj) do a particularly good job with this.
Butte County, California, (power.buttecounty.net/SolarZone.aspx) and Gila Bend, Arizona, (tinyurl.com/jl45ck6f) use solar overlay districts, which have proven to be successful from the community's perspective, but are also good for the solar industry.
For solar developers, both standalone ordinances and overlay districts offer a tremendous benefit. The existence of regulations illustrate not only that a community supports large-scale solar adoption, but that it has spent time planning for it.
The challenges for developers and investors are real. Solar projects need to jump through the many hoops of land-use approvals and environmental and natural heritage permitting, while also winning the community's support. And financing frequently involves a complex mix of bank lending, tax equity deals, and long-term solar power purchase agreements.
Like any large infrastructure project, financing can make or break it, so the more facilitative communities can be toward permits and approvals, the more likely the project's success will be.
So work with your planning board or redevelopment authority to prepare an RFP for soliciting solar proposals. Contemplate devising a solar overlay district to call out as-of-right zones and parcels where community solar projects can be clustered (and stay largely out of sight).
Most of all, engage the private sector to devise your regulations. To attract investment and projects, the rules must be created in partnership with the solar industry, so we all can benefit from the sun.
Tory Hanna is a planner and currently the director of business development, marketing, and permitting lead for Origin Solar Energy. He can be reached at email@example.com.
SunShot Solar Outreach Partnership: www.planning.org/research/solar.
Planning for Solar Energy (PAS Report 575): www.planning.org/publications/report/9117592/.
National Community Solar Partnership: tinyurl.com/h2zdkuj.
12 Best Practices: A Roadmap to a Solar Friendly Community (Colorado Solar Energy Industries Association): solarcommunities.org/12-best-practices.
Solar Energy Industries Association: seia.org.
The National Renewable Energy Laboratory: nrel.gov.
HUD's Renewable Energy Toolkit: tinyurl.com/zocq3t7.