Community solar – also known as shared solar – is gaining traction as a vehicle to “bring solar to the masses” in significant, visible and diverse ways. It is a model for solar growth that is proving attractive to a variety of organizations, none more so than electric utilities.
Utilities have an obligation to offer reliable electric service to all customers in their service areas. Community solar programs are conceived in the same spirit of customer service.
Community solar offers a solar option to those who may not have the means, interest or space to install their own solar system.
- It contributes to the utility’s reputation as THE leading provider of energy. Utilities want to maintain a strong tie to their customers, especially those early adopters interested in solar. A utility-managed community solar program accelerates the utility learning curve across the internal utility structure.
- Solar adds to customer satisfaction and engagement. Solar is popular with the public and surveys show that most customers want their utility to add solar to the mix. Customers want meaningful choices in energy, and for a segment of the customer base, local solar fills the bill.
- Solar is a new source of local economic development. This is especially compelling to electric cooperatives and municipal utilities, which as locally owned utilities, share a strong connection to the community.
- The opportunity to locate solar where it may have the optimal strategic benefit to the operation of the distribution system. And to quantify those benefits in real-time.
But as solar costs continue to fall, the solar business attracts greater entrepreneurial diversity, and customers become more sophisticated in their expectations, simple good intentions will not guarantee success.
This is one of the key lessons learned in a new member report released by SEPA, Utility Community Solar Handbook, a guide to designing solar programs based on the experience of more than a dozen SEPA member utilities.
The nature of the offer to the customer matters a great deal. This relates closely to the mixed experience of utility green pricing programs of the last decade. Poll after poll of customers showed huge support for the idea of buying renewable energy from the utility, but the actual buyers of green pricing options were substantially lower, on the order of 1-2%.
Did this mean that people didn’t really want renewable energy? Or did the product not meet customers’ value expectations as simply a charitable donation? Was the product - blocks of kilowatt-hours from a distant wind farm - too abstract?
Perhaps customers were not convinced that their contribution “caused” more renewable energy to be installed.
- Simplify the Value Proposition: Utilize local, visible generation resources, combined with an easy-to-understand product offer that can provide economic value to customers. Customers will readily perceive offers that expand the use of solar in meaningful ways from offers that are “green-washing”.
- Understand the Market: Solar leasing firms are turning the solar value proposition on its head. Solar had been viewed as an expensive purchase motivated by environmental concern or early adopter interest. It is now being sold as a way to save money on utility bills with “no money down.” In a few markets, utility community solar programs have lost customers and momentum to solar leasing.
- Serve the Underserved: Utilities may want to focus on serving the market the private sector won’t. In some areas with low solar activity, that’s the entire customer base, but in more advanced markets already serving homeowners, focus on those with lower credit scores or savings, renters, shaded homes, etc. Specifically design programs for these underrepresented parts of the market.
- Learn from Others: The complexity of a viable program surprised some utilities interviewed by SEPA. “There are complicated legal and financial issues,” said one community solar program manager. “This is not just a ‘feel good’ program.” There is no one-size-fits-all model - adapt and improve upon what other utilities have started, or seek outside partnerships that will avoid replicating the wheel to save time and money.
So competition – even if it is indirect – is compelling community solar program designers to better understand the market, sharpen their pencils and improve their offers.
It is important to take a page from the solar leasing companies and explore all of the financial vehicles available to a utility in crafting the most attractive option.