Grid parity is upon us, but not all rooftops were created equal. For those who can't install an array at home, community solar gardens are an increasingly popular means of harnessing the sun.
Despite a long and soggy spring, Colorado is still among the states that gets the most solar energy in the nation and its leadership has responded. The state has one of the strongest renewable portfolio standards in the country and Denver has taken extra steps to make it easier for residents and businesses to go solar, and not just via a rooftop installation.
The most popular option for homeowners and smaller businesses was to install rooftop solar. At first this was limited to those who could afford to buy a solar system outright. Then companies like SolarCity, SunRun and Clean Power Finance (which operates as a financing facilitator) began offering third-party ownership options.
With these newer offerings, a homeowner or business didn't have to pay the up-front cost of a solar array and all of the other equipment. Instead they paid a set monthly fee under a lease agreement or they paid for the power produced by the array under a power-purchase agreement (PPA). Such options were still limited to those lucky Denverites whose buildings had great access to sunlight, people who could afford a solar array and those who either owned their building or had long-term leases that allowed for improvements to the building.
Enter solar gardensFor those who can't install a rooftop array, community solar is a popular way to harness the sun.
Then came the newest offering: community solar gardens. They allow homeowners with roofs that don't access to great sunlight or businesses that couldn't install solar on their roofs -- heck, even renters -- to get access to solar power in Colorado. Thanks to state legislation passed in 2010, utilities in the state had to purchase renewable energy credits (RECs) produced by community solar gardens.
Community solar gardens are basically solar arrays built on plots of land much bigger than the average rooftop. "Typically our solar farms average thousands of panels," says Clean Energy Collective CEO Paul Spencer. Such farms cover acres and produce thousands of kilowatt hours and therefore RECs on a daily basis.
To give a sense of scale the average residential solar array in the U.S. is about five kilowatts, according to the Solar Energy Industries Association (SEIA). In Colorado, such a system can produce -- very roughly -- 6,000 kilowatt-hours of electricity annually. Clean Energy Collective's 499-kilowatt array at 5050 N. Telluride St. in Denver produced 2,420 kilowatt-hours of electricity on June 24 alone.
That's just one of three community solar farms Clean Energy Collective has in Denver County that can serve members of the community. Another Denver-based company, SunShares, also has community solar gardens in the Denver area.
Clean Energy Collective also has a 400-kilowatt project at Lowry on a former Air Force hangar and a 487-kilowatt array in Denver County. "One of those is sold out," Spencer claims. "The other two, they're probably half sold out. There are probably 400 to 500 kilowatts available."
Under Colorado law, people can purchase enough panels in a community solar garden to offset their electric use at a business or residence. "The minimum buy-in in Xcel territory is one kilowatt or about four panels," Spencer says. The maximum purchase is enough to offset up to 120 percent of the customer's electric use.
Depending on the panel size and project, Spencer says panels in a project can cost as low as $750 each. However, different projects have different costs. As of June 2015, the average cost is roughly $3.70 per watt of solar power, he says.
Spencer explains that people can purchase the solar panels in the array outright. They can also get a low-interest rate lease (2.5 percent interest) through a local credit union that partnered with Clean Energy Collective to provide up-front financing for the panels.
Clean Energy Collective has a 400-kilowatt project at Lowry on a former Air Force hangar.Reimbursed on the power bill
"Individuals participating in a solar garden receive bill credits for the power produced by their portion of the array," explains Lyndsay McDonald, program manager for Xcel Energy's Solar*Rewards program. The Solar*Rewards program is Xcel's incentive program for solar power. The bill credits offset the amount the customer has to pay on his or her electric bill.
Solar gardens are currently competitive in terms of pricing and benefits for Xcel customers, Spencer contends. That's partly because the Solar*Rewards program has evolved over the years, paying less for solar rooftop systems as they have become more popular and costs for solar panels have come down. When Xcel first introduced the program, it offered a higher rate for power generated by customers' solar panels as well as a rebate for solar power equipment. Those earlier rebates are gone and McDonald doesn't expect them to come back.
As of 2015 and throughout 2016, Xcel Energy will accept up to two megawatts of applications for new, small solar arrays. Solar arrays up to 25 kilowatts in size, McDonald explains. For those systems, Xcel makes a REC monthly payment of two cents per kilowatt-hour produced by a rooftop system for 20 years. That's if the homeowner owns the system. If they get the system through a third-party like SolarCity, the rate is one cent per kilowatt-hour produced.
Still the Solar*Rewards program is a viable choice to help customers use clean energy and reduce their electric bill. "Really it's a preference and is based on what you're working with from the business or home standpoint," McDonald explains. "If the customer has too much shading, they'd probably want to go with community solar. But if they can afford leasing or purchasing a system and their roof is ideal, then they probably want to go with Solar*Rewards," she says.
Not surprisingly, Spencer contends that community solar is a better option for homeowners and small businesses right now. "Community solar with our existing facilities in Xcel territory actually get more benefit than what you could get off the roof from a credit perspective. Even though the price of panels might be similar it's a better value to go with community solar."
When Xcel opened up bidding for community solar gardens it was offering them a higher rate of REC payment than what it offers customers directly through the Solar*Rewards program. That may change for upcoming community solar gardens. Xcel will soon issue a new request for proposals (RFP) to build more community solar gardens to serve its customers.
Spencer cautions: "It will be at far different economics than the first request. That's because the existing systems were rewarded in years past when Xcel had a really attractive REC value price. We're expecting that this new RFP will have a REC value price of zero." He elaborates, "The cost will probably be fairly similar. But the return -- what you're getting for that cost in the form of bill credits -- will be far less." As such it will likely take solar garden members longer to see a return on their investment in the solar garden than they do now.
However, Xcel hasn't said how much it's requesting. Spencer says it will be in the range of six megawatts to 30 megawatts. "We're planning on bidding every ounce of that," he says.
This story was produced in partnership with Clean Energy Collective.