Policy Toolkit for Community Programs

The following toolkit provides essential resources for designing community solar programs.  Considering that very state and utility territory is different and that community programs need to dovetail effectively with existing policies, it is important to understand a state’s renewables programs and policy options before working to make legislative or regulatory changes.

Policy Primer

Virtual net metering (VNM) is a core policy that can be used to distribute the benefits of a shared solar system across multiple electricity meters. Through VNM programs, multiple energy customers can receive credit for solar energy generation from a shared onsite or remote system as if they had invested in a single solar energy system. VNM allocates the benefits of a community solar system to its participants through their monthly utility bills.

Because allocating the benefits of this type of community solar system can be complex, programs should be administered by utilities, which are best equipped to manage complex billing systems, and should apply to customers within a single utility distribution territory.

Another important consideration for establishing an effective community solar program is the manner in which the energy generated from a community system is valued.  Rather than using kWh offsets, assigning a full retail rate value to the credits can deliver economic benefits to the customer and simplify administration for the utility, particularly for territories with time-of-use rates.

System size eligibility requirements should not be capped to low. PV systems up to 2 MW in size should be allowed to participate in community solar programs. This maintains economies of scale in terms of installed cost and allows for relatively low-cost interconnection procedures on most utility distribution systems.

With so many different types of customers interested in the benefits of solar generation, having a broad definition of “community” will ensure that these opportunities are inclusive for a wide customer base.  While establishing a minimum number of participants in a community system may make sense, the IREC model rules recommend that community solar policies provide for unlimited participation.

Community solar policies should also support a variety of ownership models including direct, third-party, and utility ownership. Considering that renewable systems represent a significant investment and that community programs are rapidly evolving across the country, allowing for various ownership structures will help to ensure that incentives and financing mechanisms are maximized.

Diving Deeper

IREC Model Program Rules for Community Renewables (PDF): These guiding principles cover many of the basic issues facing community renewables programs, including: renewable system size, interconnection, eligibility for participation, allocation of the benefits flowing from participation, and net metering of system production.

Using virtual net metering (VNM) to allocate benefits of participation onto a customer’s monthly electric bill;
Allowing kWhs generated by a community renewables project be given a monetary value that can be applied to a participant’s bill;
Valuing kWh credits received by customers who are on the same distribution circuit as the community renewables project at the participant’s full retail rate;
Requiring utilities to include system purchase costs, operations and maintenance, necessary investment returns and other costs related to a utility-owned system in their offerings to potential participants; and
Allowing utilities to administer a community renewables program.

Additional Resources

A Guide to Community Solar: Utility, Private and Non-profit Project Development November, 2010: Sponsored by the U.S. DOE’s Solar America Communities Program.  Prepared for NREL by Northwest SEED, IREC, Stoel Rivers, and the Bonneville Environmental Foundation.

Bonneville Environmental Foundation and Northwest SEED’s Northwest Community Solar Guide

Institute for Local Self-Reliance’s Community Solar report

DSIRE’s database of existing solar policies & incentives

NNEC’s Freeing The Grid report card on state net metering and interconnection standards (December 2010)

U.S. DOE’s Solar American Communities Program