What’s a Community Solar Array?
Vermont is one of a handful of states that allow multiple electricity customers to benefit from a single solar array. The fancy term is Group Net Metering; we call them Community Solar Arrays or CSAs. SunCommon makes use of this state program to build one-acre, shared Community Solar Arrays. Homeowners aren’t connected to the array with wires, but through their electric utility’s accounting function which divvies up the array’s output.
What is net metering?
When the sun is shining, the output from the CSA causes a member to run up a credit on her electric bill which gets drawn down when the sun doesn’t shine, like at night, or during the shorter days of winter. Depending on their share, CSA members seek to net out at zero over the course of a year, paying their utility nothing for electricity. They shift the cost of power from their utility to the Community Solar Array.
How does the billing work?
SunCommon CSA members sign up for a share of the array’s output, depending on how much electricity they use each year. So Jane Homeowner might sign up for credits equivalent to a 2% share of the CSA’s electric output. Each month, her utility credits her bill with “solar incentives” in dollars, equal to what 2% of that array’s energy would be worth.
What’s a solar incentive?
“Solar incentive” is a plain English term used by Green Mountain Power to describe the net metering credit or group solar incentive. It’s what the CSA members actually buy from SunCommon, as earnings toward their utility bill from the electricity the members’ array produces. A solar incentive does not mean you are using solar energy, but getting credit for your share of the array’s electricity output. A solar incentive also is not a renewable energy credit, explained more below. With us so far?
Who gets the electricity?
The short answer is that we don’t know who gets the electricity. The nature of electricity is that it’s physically untraceable. Once generated, the electricity flows into a common pool where it can’t be physically traced to its source or end use. No one knows if CSA members get electricity from the array, but we do know that they earn solar incentives on their utility bills. It’s those incentives that CSA members are buying.
How can this cost less than utility electricity?
SunCommon works to drive down the cost of solar, so that every Vermonter can be part of building solar in our state. To make this work for Vermont homeowners, SunCommon bundles a bunch of funding sources–typically money from an investor who owns the equipment, a loan from a bank or credit union, the sale of Renewable Energy Credits, and even the utilities chip in by paying a solar adder above the retail rate for electricity produced by the CSA. All of these are necessary to offer the discounted cost to SunCommon CSA members.
What’s with these RECs?
The CSAs produce two things: (1) electricity and (2) the environmental attributes resulting from not generating the same electricity from a conventional gas or coal-fired power plant. Renewable energy credits (“RECs”) are certificates that track the source of the renewable energy and are the legal attribute of renewable energy. In short, RECs are what make solar a “green” or renewable energy resource. The system of tracking attributes via RECs is the only legal way of characterizing the “renewability” of different sources of electricity. RECs can be separated, or “unbundled,” from the electricity and sold to anyone. Whoever owns the RECs owns the right to say they used or consumed “green,” “solar,” or “renewable” energy. Many states require their electric utilities to generate a portion of their power from renewable sources, which they can do by buying RECs. So a utility can satisfy its requirement by putting money into our CSA and buying the RECs, which makes it financially feasible to build clean energy here in Vermont at a discount to our CSA members.
Where are these utilities?
Utilities in Massachusetts and Connecticut have been required to contribute to renewable energy development across our New England grid for years. Vermont hasn’t had a Renewable Portfolio Standard like other states that require utilities to obtain clean energy. Since Vermont utilities did not need to purchase RECs produced here, they were sold to utilities in other states. Starting in 2017, Vermont law will require utilities to obtain clean energy, so RECs will be available to them to satisfy their requirements. But let’s be clear, our planet benefits from new clean energy facilities wherever they’re built. And utilities in Massachusetts, Connecticut or anywhere helping finance the creation of clean energy is a very good thing.
What is REC double-counting?
Whoever buys the REC owns the right to say that the electricity consumed from that project is “renewable,” “clean,” “green,” etc. So, a utility that buys the RECS from a CSA is purchasing the environmental benefit of that electricity, meaning they own the right to say they have solar or renewable energy. The CSA member, on the other hand, is buying a share of the “solar incentives” generated by the electrical output of the array. If both the REC buyer AND the CSA member claim the environmental benefits of the array’s output (like if both say that they use renewable energy), that’s double-counting and it’s not fair.
So what’s a CSA member’s relationship to solar?
SunCommon CSA members are helping to generate renewable solar energy. The CSA member’s monthly payment to the array is the revenue stream that made possible the finances to build the solar array. No customer, no solar array. The CSA member is supporting the construction of clean energy projects. For that, they earn “solar incentives” on their utility bills. And they can see and visit the solar arrays that their payments fund — those are definitely solar arrays the CSA membership helped build. As the Vermont Attorney General’s solar marketing guidelines confirm, “The sale of RECs in no way negates the fact that community solar arrays are in fact creating energy from a source that has renewable attributes.”
Does SunCommon sell the RECs?
Yes. CSAs are expensive to build, over $500,000 each. SunCommon bundles a variety of funding sources to pay for the construction: sponsor equity, debt leverage, income tax credits and RECs. All of those are necessary to make it possible for CSA members to save money compared to utility power.
OK, so what’s the right way to describe all of this?
Yup, there are many moving parts behind the scenes to make all of this possible. We at SunCommon have done a lot of legwork to figure out how to build Community Solar Arrays with memberships that save Vermonters money on their utility bills.
When Vermont does require RECs of local utilities, do you plan to leave the RECs in Vt?
Hi Doug – Starting in 2017, Vermont law will require utilities to obtain clean energy, so RECs will be available to them to satisfy their requirements. Yes, our RECs will be available to Vermont utilities, but it is up to the utilities where they purchase their RECs.
Thank you for this clarification. I am delighted to know that we are helping to create solar power! By participating in the CSA we belong to, instead of just paying our power bill we are helping SunCommon build the solar array. As long as the RECs are building solar, I’m OK with the bookkeepers letting someone else call it “their” renewable energy for the time being.
Thank you Kathie! We appreciate the feedback and are happy you found the Q+A helpful. Thanks!