Community-scale solar (CSS) is emerging as a new, multi-gigawatt opportunity for distribution utilities, businesses, local governments, and the more than 50% of U.S. households believed to have roofs that are unsuited to installing their own solar panels, the Rocky Mountain Institute asserts in a new report.
All told, this segment of the industry could help meet the US$16 billion RMI foresees in U.S. demand for solar investment through 2020.
“Although certain risks and technical challenges remain, CSS can enable new and more attractive value propositions for these customers through its unique attributes and a number of effective financing options,” write Senior Associate Kieran Coleman and Sustainable Finance Principal Jeff Waller in a summary of the report. “In the process, it can create value for multiple industry stakeholders and address slowing rates of growth in the utility-scale and rooftop solar markets.”
The two authors trace a series of potential threats to U.S. solar growth, including a plateau in utility-scale installations, uncertain long-term financing beyond 10-year power purchase agreements, and intense competition in the residential solar market. “Efficiently financing and developing CSS projects can help pick up the slack and accelerate solar market growth,” they write. “But the huge market opportunity created by CSS won’t be realized without listening to the ‘community’—in whatever form it takes.”
The report cites customer retention, diversification of credit risk, local good will, professional project management, and a significant size advantage as key benefits attached to CSS. But while innovative CSS financing structures exist, RMI says it’ll be important to mitigate some significant risks, including local permitting and property taxes, data transfer and management issues, and differences between CSS rates and local grid tariffs that “can waste millions of dollars in CSS development efforts and put project investments at risk.”