Shared renewable energy installations allow multiple “subscribers” to purchase or lease a part of the output of a renewable energy system. Subscribers receive a portion of the financial returns as a bill credit or direct payment. Shared renewable facilities can be owned by utilities, third parties, or by the customers themselves (Cleveland, 2016). While most shared renewable energy systems are solar projects, referred to as community solar, there are a small number of shared wind projects.
The National Renewable Energy Laboratory (NREL) estimates that around half of households and businesses cannot host a rooftop solar system due to shading, roof suitability, size, or housing ownership (Feldman, 2015). Local ordinances and homeowner association rules can also prohibit installation and increase rooftop solar installation costs (NCSL, 2018).
Low- and moderate- income (LMI) households earn less than 80% of the median income in an area. LMI customers often have low credit scores, preventing them from accessing traditional borrowing mechanisms (Heeter, 2021a). LMI communities are typically not targeted for solar investment, and may be unfamiliar with solar products and their benefits.
Renting creates barriers to solar panel access. Landlords may not allow solar panel installation, and the high upfront cost may not be worth it to those who rent. Renters are also ineligible for the most widely used tax credits because of resident ownership requirements, such as in the Residential Energy Efficiency Property Credit and the Federal Investment Tax Credit.
In 2016, 58% of Black households and 54% of Hispanic households rented, compared to 28% of White households (Cilluffo, 2017).
Total community solar capacity in the U.S. more than doubled every year from 2010–2020 (Figure 1) (Heeter, 2021b). By the end of 2021 there were approximately 5,219 megawatts (MW) of community solar capacity distributed across ∼2,000 projects in 40 states and Washington, D.C. (Chan, 2022) A small town uses about 1 MW of electricity, while the largest cities use tens of gigawatts (Gates 2022).
By measuring the difference between subscriber costs and the credits that they receive, NREL assessed if community solar subscribers see a net positive economic benefit.
Community solar projects may improve subscription to solar energy by LMI and minority households by increasing accessibility and mitigating the need for individuals to secure their own financing for rooftop solar systems (Heeter, 2021a). Some barriers may still exist for these households including:
NREL identified four general approaches for equitable solar development (NREL, 2021):
For more information, view their fact sheet.
**This Note has been updated since its original publication. Previous versions are not up-to-date, but can be accessed here: Version 1 (March 2022)