The following toolkit provides essential resources for designing shared solar programs. Considering that every state and utility territory is different and that shared solar 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.
The key to making shared solar work is finding a way to deliver the benefits of the solar energy production to the customers who are participating in a project. Business models and policies are rapidly evolving to help achieve this with the lowest transaction costs possible.
On-bill crediting. One of the more promising shared solar models involves enabling residents and businesses to subscribe to a portion of a shared solar facility, and receive a credit for their share of the energy production from the facility on their utility bill.
One of the most important considerations for establishing an effective shared solar program is the manner in which the energy generated from a shared system is valued. Rather than using direct kWh offsets, it may be easier for participants to receive monetary credits on their bill based on the energy production from their share of the solar facility. This delivers economic benefits to the customer while simplifying administration for the utility, particularly for territories with time-of-use rates. Some states have viewed shared solar as an extension of net metering, and provide participating customers with a bill credit equivalent to the customer’s retail rate. Other states have recognized the unique characteristics of shared solar arrangements call for a different bill credit value, and have assigned their public utility commissions the task of calculating what that value should be.
With so many different types of customers interested in the benefits of solar generation, policies should be designed to ensure that these opportunities are inclusive for a wide customer base, including residential and commercial customers. While establishing a minimum number of participants in a shared solar system may make sense, model rules from the Interstate Renewable Energy Council (IREC) recommend that shared solar policies provide for unlimited participation.
System size eligibility requirements should not be capped too low. PV systems up to at least 2 MW in size should be allowed to participate in shared 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.
Shared solar policies should also support a variety of ownership models including direct, third-party, and, where appropriate, utility ownership. Considering that renewable energy systems represent a significant investment and that shared solar programs are rapidly evolving across the country, allowing for various ownership structures will help to ensure that incentives and financing mechanisms are maximized.
Because utilities are generally well-equipped to manage customer billing, it often makes sense for the utility to administer the billing for shared solar programs. It is also typically most straightforward to limit participation in a shared solar project to customers within the same utility distribution territory.
Shared Renewables HQ: Want to learn more about what individual states and communities have done to enable shared solar? Shared Renewables HQ tracks the latest shared renewables policy and projects.
IREC Model Program Rules for Shared Renewables (PDF): These guiding principles cover many of the basic issues facing shared renewables programs, including: renewable system size, interconnection, eligibility for participation, allocation of the benefits flowing from participation, and net metering of system production.
Vote Solar is currently working with IREC to update these model rules to account for market and policy evolution. Expect a revised version in Spring 2013..
National Renewable Energy Laboratory’s Guide to Shared Solar
Freeing The Grid report card on state net metering and interconnection standards (2012)