Solar power has become a low-cost electricity source for homeowners, allowing a significant reduction in power bills. However, one market segment has been very challenging to serve: residential consumers who don’t own a rooftop, such as apartment renters and condominium owners. Even when these clients live in highest floor of a building, the rooftop is normally a common area – solar systems are rarely allowed, and the limited space available is often crowded with mechanical equipment.
There is a simple solution for the issue described above, but first it must be allowed by local regulations. Homeowners can simply use electricity from a solar system located somewhere else, such as the rooftop of a warehouse or parking building.
New York City has developed an interesting community solar program, which provides a great example of how clean and low-cost electricity can benefits homeowners without a suitable area for a photovoltaic array.
New York City has some of the highest electricity costs in the USA. Although kilowatt-hour prices are not as high as those of Australia, NYC residents are often charged electric tariffs above 200% of the USA average. As a result, solar generation is extremely valuable.
The business case for solar power in NYC is improved with the local incentives: photovoltaic systems are exempt from both the sales tax and the property tax, while earning you a federal tax credit equivalent to 30% of their cost. In addition, there is a state tax credit of up to 5,000 USD per installation, and there are also cash rebates similar to Australia’s Small-Scale Technology Certificates (STC).
In spite of the favorable conditions for solar power, NYC has a serious limitation: there is no space. Since construction costs are the highest in the world, developers prefer tall buildings, leaving many residential power users with no way to deploy solar power. The community solar program was designed precisely for the needs of these users.
To make the community solar concept possible, four key players are connected:
Like in any other solar power project, finding a suitable site is very important. The rooftop must have a large unshaded area, and its structural condition must be suitable for solar panel installation. The number of participants must also be matched properly with the generation capacity of the solar system – if too many apartments are linked to the same project, the savings per user are lower.
One of the main advantages of community solar power is mobility. The solar photovoltaic system is linked with customer accounts, not with their physical address. As long as they remain within the area covered by the program, they can move to another apartment and the power bill savings move with them! Currently, the NYC program covers all five boroughs.
Community solar power is also attractive for property owners with large rooftops, who would not be able to consume the full output of a commercial solar array by themselves. For example, if you cover a warehouse completely with solar panels, it is very likely that generation will exceed consumption. In this case, renting the rooftop for a community solar project can be a better deal.
Larger solar arrays also achieve economies of scale: although a large installation is obviously more expensive than a small one, its cost per kilowatt is normally lower. For example, if 500 kW of residential solar capacity will be deployed, a single 500-kW system will have a much lower cost than 100 systems rated at 5 kW each.
Even if there are customers and large rooftop owners who want to participate in community solar projects, the concept cannot be deployed unless local utility companies collaborate. The benefits are delivered to customers using power meters, and these are operated by electric companies.
Community solar power can be considered a modified version of a solar Power Purchase Agreement (PPA). Electric companies purchase electricity from a commercial solar array at an attractive price, and a portion of the savings is passed on to consumers. Since a physical connection between the solar array and individual dwellings is not possible, the connection is accomplished virtually through the use of smart power meters and the existing network.
The community solar power business models provides yet another example of how photovoltaic systems can be used to benefit all the parties involved. Apartment dwellers get lower power bills, utility companies can get a profit for allowing use of their power lines and meters, and the solar system hosts get rent payments. In other words, the value created by the project is shared among all the stakeholders involved.