By Aviv Shalgi, CEO of Solar Simplified
What would you say if I told you that you could slash ten percent off your monthly energy bill at no upfront cost? What if I said you could do so by using solar energy, but that you don't have to install a single solar panel on your home or apartment building?
Are you waiting for the catch? There isn't one.
The promise of community solar, also known as shared solar or solar gardens, does seem too good to be true. Yet, by distributing solar energy across a network of consumers and leveraging tax-funded state initiatives, we’ve found that community solar helps consumers reduce their energy bills by as much as 10% per month. Still, lagging consumer education and wariness of solar scams are preventing greater participation in shared solar programs—solar accounted for only about 2.3% of all American energy production in 2020.
Consumers’ skepticism is one reason why we’ve yet to see the rampant adoption of community solar programs. The fact is, shared solar isn't too good to be true. Consumers must consider that their tax dollars help fund state-initiated community solar programs from Hawaii to New York. Accounting for this tax investment, community solar credits that reduce subscribers’ monthly energy costs are not as inexplicable as they first appear.
There’s no catch to community solar. As awareness of shared solar spreads and consumers overcome any lingering apprehension towards renewables, households and society alike will realize the promise of shared solar power.
What Is Community Solar, Exactly?
Say rent an apartment or home, or you own a house that is heavily shaded. Perhaps you live in a home that is readymade for solar panels, but you don’t have the money to purchase or install panels of your own. You’re stuck relying on fossil fuels and paying the same old rates for energy, right?
That’s what a significant number of Americans assume, but they’re wrong. Community solar programs provide access to solar energy to those who can't, or don't want to, install panels on their own homes or businesses. By subscribing to a community solar program (at no upfront cost), participants gain access to an off-site solar farm strategically located to absorb vast amounts of solar power. Once they’re enrolled, subscribers can purchase solar energy credits which are deducted from their monthly energy bill.
The distributed solar farms connect to the main power grid in your region. By purchasing solar credits, you are essentially choosing to use (and support the production of) solar energy coursing through the grid rather than the energy produced by fossil fuels or other non-renewable sources.
State and federal subsidies, paired with the fact that solar is now the cheapest form of energy generation (even without subsidies), mean that community solar subscribers are saving money by going renewable. What’s really special about community solar: neither a person's financial status nor geographical location prevents them from saving money while consuming in a more environmentally-friendly way. So long as you live in an area serviced by community solar, you're eligible to participate.
The Dam of Community Solar Is Ready to Break
We know from our latest report, Consumer Perceptions of the Solar Industry (2020), that about 66% of consumers have considered going solar because they want to save money on energy. The average monthly energy bill for American households in 2019 was $115. The average price per kilowatt hour (KwH) has risen over the past decade, suggesting that traditional energy costs will continue to inflate. Yet only 6% of households had installed solar panels as of 2019, suggesting that cost (and other barriers to installing residential solar panels) are prohibitive for most consumers.
As consumers fret over rising energy costs and the various roadblocks to residential solar, a clear solution exists: community solar. The U.S. Department of Energy affirms that community solar can save consumers money, and a marked difference between community solar and residential solar is that community solar programs come with no upfront cost. Community solar subscribers do not pay for panels, let alone their installation or maintenance.
The demand for cheaper, renewable energy is strong. 35% of consumers are eager to adopt solar so long as their budget allows it. The leading motivation for solar adoption is, by far, saving money on energy. The environmental benefits are important, but are typically secondary to savings.
Those who participate in community solar can save as much as 10% on their monthly electric bills, supporting cleaner energy in the process. Let's get this straight: consumers want to save money using solar, and community solar is proven to provide consumers savings at no upfront cost. And yet, “community solar” is still not a household phrase.
It’s clear that most consumers lack awareness and education of shared solar’s availability and promise. In the grand scheme, this lack of clarity is a detriment to consumers, solar energy innovators, and the environment.
Dispelling Skepticism Will Spark Greater Participation in Community Solar Programs
Community solar provides tangible benefits to all parties involved. Consumers save money and feel better about the way they consume energy. Companies that install and service solar farms benefit financially. Legacy energy providers can diversify their offerings while pivoting to the renewable energy sources of the future. Workers will benefit from the continuing jobs boom in the solar sector, which currently provides a paycheck for more than 230,000 Americans.
In order to realize these benefits at a greater scale, consumers must lessen their skepticism that community solar is just another confusing solar rouse riddled with hidden costs. They should know that they can join these programs at no cost, and that they can depart at any point without penalty. Really, that's it.
They must better understand how community solar benefits them specifically (cost savings). To help consumers along, you can present hard data, real customer testimonials, and logical explanations for why savings are likely for each consumer. This may dispel the “too good to be true” veneer that can deter customers from solar projects.
As more consumers join shared solar programs, realize that the savings are legitimate, and spread the word, the floodgates should eventually break. Throughout this process, Americans may become more receptive to the promise of renewables beyond solar. Solar can, and should, lead the way in re-shaping both consumer attitudes and the fabric of the American energy landscape.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.