The pursuit of renewable energy was once the focus of a niche group, now it has the attention of the whole world.  The sun is a freely available abundant energy source, so why not harness it!

There are various approaches for harnessing solar power. Community solar initiatives are standing out as the most inclusive and economic option. This blog will explore what community solar is, how the Inflation Reduction Act has made an impact, and why businesses and communities will benefit from these changes.

What is Community Solar?

Community Solar is also known as “shared solar” or “solar gardens.” It allows multiple participants to benefit from the output of a solar energy system without having to install panels at each property. This community-focused approach to renewable energy enables homeowners, renters, schools, municipalities, and businesses to participate in solar energy. This participation leads to many different types of wins, including environmental, economic, and reliability wins.

While the concept is simple, it is also powerful. A shared solar installation is set up within the community, and parties can subscribe to a portion of the energy produced. The participants then can receive credits on their energy bills.

This model helps to remove many common barriers to solar, including:

  • Installation costs
  • Property suitability
  • Complexities of maintaining a solar installation

Legislation and Solar Incentives

Legislation plays an essential role in shaping the growth of renewable energy. The Inflation Reduction Act (IRA) was signed in 2022 to curb the general cost of living AND provide tax incentives for solar energy, especially in the community solar sector. The incentives include tax credits, MACRS (depreciation mechanisms), and direct payment options for solar projects.

These incentives can make solar projects financially feasible for developers, subscribers, and financiers. Getting financial support can make community solar an even more attractive investment for established energy companies and newer renewable energy cooperatives.

Benefits to Local Communities and Businesses

Community solar initiatives have gotten assistance from the IRA and have brought new life to local economies, corporate social responsibility, and the resilience of the energy infrastructure. There are many advantages to investing in community solar, they offer various economic, environmental, and social benefits.

  1. Economic Advantages
    • Immediate savings on electric bills
    • Stable energy prices, often rates are lower than the local utility
    • Stronger relationships with the community and customers
    • Competitive differentiator in an environmentally conscious market
  2. Environmental Impact
    • Reduces carbon footprint
    • Lowers local air pollution
    • Decreases reliance on centralized fossil fuel-based power plants
    • Shows commitment to sustainability and local environmental goals
  3. Social Resilience
    • Diversified energy sources make energy systems more resilient
    • More distributed network
    • Safeguards communities against grid failures and weather-related disasters
    • Reliable locally-based energy source, beneficial to schools, hospitals, and emergency services.

Implementing Community Solar

The enhanced incentives provided by the IRA have opened a new chapter for community solar, but what does it take to implement or subscribe to a community solar project? Here is a roadmap that can guide stakeholders through the process.

  • For Developers
    • For energy developers, the first step is to identify possible sites for solar installations within the community. Then navigate local regulations, secure land rights, and acquire necessary permits. Concurrently, developers need a business model that will appeal to subscribers and be financially viable. Projects can be financed through grants, loans, or PPAs (Power Purchase Agreements).
  • For Subscribers
    • For individuals, to subscribe to the community solar project, they should make sure to understand the terms of the subscription, the process of crediting, and the financial benefits. Subscribers must also ensure that their local utility’s billing and metering systems will be compatible.
  • For Local Governments and Utilities
    • Local governments play a large part in the growth and support of community solar. They must streamline the permitting processes, provide marketing support, and enact favorable policies. Utilities need to collaborate with community solar projects, instead of seeing it as a competitor. Once the utility is on board, there will be more opportunities for developers and subscribers to connect to the utilities’ grids.

Although there are many ways to harness the sun for energy, community solar is standing out as an inclusive and economical option. With the help of the Inflation Reduction Act, many communities will benefit from using community solar.

Related article: Solar for Schools