As you consider joining a community solar project, it's essential to understand how and when it will deliver value to you. This article breaks down the two main types of pricing models – ownership and subscription – to help you more accurately compare and decide between various offers.
A subscription is the first, most popular option for joining a community solar project. If you subscribe to a program, you will pay for your solar electricity monthly through a power purchase agreement (PPA) or a one-time up-front payment.
Most subscription-based community solar programs promise immediate or eventual electricity bill savings. In contrast, others may sell a subscription to support clean electricity (and not necessarily as a money-saver.)
Cost, savings, and size of share
Some programs focus on the environmental benefits of going solar, while others emphasize savings.
In addition to the payments for solar electricity, you may have to pay the following fees under a subscription program:
Membership fees: Understand any applicable membership or sign-up fees and how they will affect your potential savings
Early termination fees: Some programs charge fees if you exit before the term ends. If you have to move before the end of your contract term, will you still save money? What is the point at which the savings you've earned will be greater than the total you will have spent, including termination fees?
These considerations are critical if you may move out of state before the term ends. Your community solar company may allow you to avoid termination fees if you transfer your subscription to someone else in your area who wishes to subscribe and meets the necessary program requirements (credit score, etc.).
What subscription-based pricing model are you working with?
The table below provides an overview of the various subscription-based pricing models that you may encounter as you shop around, sorted by most to least commonly available:
TYPE OF SUBSCRIPTION
|Fixed discount||You lock in a set discount over your utility electricity tariff rate, typically 5-15 percent. The actual rate you pay for solar will therefore fluctuate with the utility rates but will always come at a discount.||Immediately, unless they charge a membership/signup fee.|
|Escalating solar rate||In year one, you agree to pay a set rate for your solar bill credits. In all subsequent years, your solar rates will gradually increase by a fixed percentage (e.g., 2.5 percent). It is reasonably assumed that your utility rates will escalate more quickly (e.g., 4.5 percent).||Immediately or in a few years – depending on the price of solar electricity under the program.|
|Flat per-kilowatt hour (kWh) solar rate||The rate paid for solar electricity never increases throughout the duration of the program. Your initial rate may be higher or lower than your current utility rate.||Immediately or in a few years – depending on the price of solar electricity under the program.|
|Flat monthly fee||Solar energy production is chunked into 'blocks,' for which subscribers pay a flat monthly fee while receiving a set number of solar credits on their bill. You receive savings as utility rates rise and solar payments remain fixed.||Immediately or in a few years – depending on the price of solar electricity under the program.|
|‘Lease to own’||You pay regular, flat monthly payments for solar, which cease after a set number of years, after which point solar credits are 'free.'||Immediately or in a few years – depending on the price of solar electricity under the program.|
|Partial up-front payment||You prepay a one-time, flat fee to lock in a deeper discount on ongoing solar rates compared to utility rates.||In a few years – once the upfront payment is recouped through monthly savings.|
|Full up-front payment||You pay for all projected solar electricity generation over a set duration (e.g., 20 years) at a set rate per kWh. Some companies offer a discount for up-front payments vs. ongoing payments. Your utility applies solar credits to your bill over the duration of the contract.||In a few years – this arrangement is akin to purchasing a system in that savings are deferred until the initial investment is recouped.|
It is common–and sometimes even required–for multiple participants to own a single community solar project jointly. If you own a share in a community solar project, you will pay a set price for it, and you can either pay up-front with cash or finance your share with a solar loan.
Once the solar project is operational, virtual net metering will kick in, and you'll receive solar bill credits on your monthly utility bill equivalent to your share (e.g., 2 percent) of the community solar project's total electricity output. After you recoup your initial investment through these electricity bill savings, you will continue to receive free electricity in the form of solar bill credits until you sell your share of the project or the project is decommissioned (which can be after 25 years or more).
Typically, installing solar panels on your property saves you significantly more money than owning a share of a community solar project. However, owning a percentage of a community solar project is an excellent option if you can't install solar on your roof but want to take advantage of solar power's financial and environmental benefits.
Cost, savings, and size of share
Community solar companies market project shares with various terms, including the number of 'panels,' 'kilowatts,' or 'watts' (1 kilowatt =1000 watts). It's important to pay attention to your proposed share's total size or wattage (W or kW).
How much will you pay per watt? Wattage is the measure that is indicative of power output. Knowing the price per watt ($/W) will allow you to compare community solar ownership offers apples-to-apples.
How much electricity will your share produce? As you evaluate different offers, you may find that one promises more solar power per watt than another because it uses solar tracking equipment or receives more sun hours. How much value will this add to electricity savings over time?
What is the estimated payback period for your share? How much will you save each year?
The share cost includes panels and all the other equipment, administrative, operations, and maintenance costs that comprise the solar project. Does the offer take all of these into account?
Although you may be eligible for state-based tax incentives, federal tax credits will generally go to the company developing the project.
Your subscription costs might be lower in certain states where solar renewable energy certificates (SRECs) are available.
Moving or selling your house
If you move within the same utility area, you can usually continue to receive the virtual net metering credits associated with your share. An early exit from the program will involve selling your stake or gifting it to someone with the same utility zone.
EnergySage is the nation's leading online solar marketplace: using our Community Solar Marketplace, you can compare local options, get a quick community solar savings estimate, and seamlessly subscribe to an open project in your area. Over 10 million people visit EnergySage annually to learn about, shop for and invest in solar. Compare your community solar options today to see how much solar can save you.