Community Solar FAQs for Facility and Finance Managers
What are Community Solar Gardens?
A community solar garden (CSG) is a solar array built at a “host” site, where several households or businesses can “subscribe” to a portion of the energy produced, which Xcel Energy per program rules must reimburse at a specified rate per kWh (kilowatt-hour). This credit is then directly applied to the subscriber’s electric bill. Any agency, institution, faith community, local business, resident, or other energy user that has their own electric bill, gets electricity from Xcel Energy, and resides or has a business located in the same or an adjacent county to the CSG can be a subscriber. Thus, subscribers are not required to own property on or in immediate proximity to the CSG.
How might a supporting agency participate in one? What are the overall benefits?
A supporting agency, faith community, or business entity can be a part of a community solar garden in any of the following ways:
- Host site: The entity could host a CSG on its roof, parking lot, or land and receive lease payments from a CSG developer for use of the space.
- Subscriber: The entity can subscribe to a CSG, whether or not located on its own property, for up to 40% of the production of that CSG, but no more than 120% of that entity’s energy use. This would result in bill credits that could completely offset its electricity costs if the subscription is paid for up front.
- Back-up subscriber: The entity can play this role to allow low-income households or those with lower credit scores, who would otherwise be seen as too high a risk by investors, to participate in a CSG. As a back-up subscriber, the entity would agree to temporarily or permanently take over pay-as-you-go subscription(s) in which another subscriber defaulted, and would also receive the associated bill credit(s).
- Intra-entity engagement: An entity with clients who could benefit from a subscription could recruit its clients, customers, or staff to be individual subscribers in a CSG, whether located at its own property or elsewhere.
- Inter-entity promoter: The entity would help promote the CSG to its external network, including other businesses, institutions, or agencies who may wish to play any of the above roles.
What is required to be a host site? What kind of space is needed?
Ground-mounted or parking lot CSGs need at least two acres of unshaded space. Rooftop CSGs will need at least 25,000 square feet or more of roof space that is not shaded or obstructed by trees, roofs, or large rooftop units. Further, the lifespan and the structural integrity of the roof will need to be analyzed to determine its feasibility to support an array. Roof membranes that will not require major renovation during the 25-year lifespan of the array are most suitable. Developers can help assess the viability of a site.
What are the costs and benefits of being a host site?
There should be little or no cost to being a host site. If an entity is willing to sign a lease, indicating their commitment as a host site conditional upon the engineering assessment of their roof’s viability, then the developer should bear all costs for the roof assessment. If this assessment is done before the lease is signed, the host site would likely be responsible for its cost. The financial benefits to being a host site are modest revenue from a roof lease, usually between $1,000-$5,000/yr depending on the size of the array. In some cases, this may be converted into a small free subscription. For rooftop CSGs, panels also extend the life of the roof membrane by blocking UV radiation.
What happens after 25 years?
At the end of the 25-year warrantied life of a CSG, the host site and CSG developer can negotiate what happens next among a series of options:
- The developer can dismantle and remove the array.
- Ownership, energy savings benefits for the remaining life of the panels, and maintenance responsibility can pass to the host site. Solar panels are warrantied for 80% of production at the end of 25 years, so they will likely retain substantial generating ability for 30-40 years.
- The CSG can be restructured as a “new” project with new panels that by then will likely be on the market and much more efficient.
What are the costs and benefits of subscribing to a CSG?
An entity can subscribe either by buying a subscription up front, or paying monthly through a “pay-as-you-go” subscription. Costs and benefits differ with each type:
- Up front Subscription: This requires an up-front payment entitling the subscriber to bill credits from the subscription for 25 years. Depending on energy usage and the developer’s price per share, buying an up-front subscription to cover the full electricity use for a home could cost $5,000-$12,000 (around one-third the cost of installing solar directly on a house). Depending on energy use, the resulting bill credits will result in a savings of $500-$1,500. Additionally, the bill credit increases directly with the cost of electricity, creating more savings over time.
- Pay-as-you-go Subscription: Instead of an up-front payment, a household or agency is charged a monthly fee, which is usually a 5-15% discount on their current electricity rate. While paying monthly results in less overall savings over 25 years than the up-front model, it also avoids up-front cost, creating savings from the start. Some developers also use price schedules that flatten over time, essentially allowing a subscriber to lock in fixed electricity prices for 25 years and insulating them from cost increases, which have risen on average 4.6% per year over the last decade.
What happens when a subscriber moves or their circumstances change?
- For subscribers who move to a location that is still served by Xcel in the same or adjacent county to their CSG’s location, their subscription will transfer with them to their new location.
- For those who move out of the allowed area or no longer have their own electric bill, their shares can be sold (if purchased up front) or transferred (if a pay-as-you-go arrangement) back to the developer who will then make them available to another subscriber. They can also be willed in through an estate as long as the recipient is an eligible subscriber.
- Many developers also allow subscribers to bequeath their shares either to individuals or organizations of their choosing who are eligible subscribers.