Published on December 3rd, 2012 | by John Farrell2
Community Solar Shouldn’t Be This Hard
December 3rd, 2012 by John Farrell
Sunlight falls almost anywhere, in every community. So it would make sense for any number of people in that community to team up to harness the sun and make clean, local power.
Sadly, it isn’t as easy as it should be, as illustrated by the Vashon Community Solar Project in Washington State.
The Vashon project is being organized by a local nonprofit called the Backbone Campaign, which has a history of tackling tough issues. But the unfortunate barriers to community-based solar are even challenging this dynamic nonprofit.
The proposed project is a small commercial-scale (50-66 kW) solar array located at a recycling transfer station, with electricity generation reducing bills for King County, and the state’s production incentive accruing to local investors. The project wouldn’t happen without Washington’s community solar production incentive, worth $1.08 per kWh (for community-owned projects with Washington-made solar modules, located on public property).
Prospective investors are forecast to make about $135 per year off their $1000 invested, enough to come out ahead by about $75 by the time the state’s incentive expires in 2020. At that point, the project may be sold to King County, or to a third party (that may lease the system to the county), or donated to the county or a nonprofit organization. Any of these options would result in some recompense for investors.
Some interesting twists for the project:
- The nonprofit status of the project makes it ineligible for federal incentives, like the 30% tax credit. On the flip side, it also means the project does not need a tax equity partner, a middleman that would take a big cut of the tax credit.
- The use of Washington-made solar modules doubles the effective incentive to $1.08 from $0.54, but at the expense of a very high installed cost (over $8 per Watt). This is likely due to the cost of the locally made modules, as a typical installed cost for a commercial solar array of this size is closer to $4 per Watt.
- Prospective investors have to have a previous relationship to the Backbone campaign. This probably means it is considered a “private solicitation” and not subject to securities regulation (indeed, the Q&A declares [pdf] “The CSP is not registered as a security with the Washington State Department of Financial Institutions”).
- The state incentive is paid through June 2020, so every extra day it takes to complete the project is a lost opportunity.
Despite the challenges, community solar can solve a lot of problems if it succeeds. It lets individuals without a suitable roofspace for solar (75% of Americans) participate in clean, local power. It lowers the cost by achieving economies of scale. And it can support the local economy, by stopping up “equity leaks” as energy dollars flow out.
But the Vashon community solar project shows – like the other projects featured in our 2010 report – that too often community solar only succeeds against the odds.
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