Washington State Utility Launches Community Solar Project
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Community solar is now making headway in Washington State. At CleanTechnica we believe in the power of community solar, although most utilities are dragging their feet when it comes to offering this investment option to consumers. Community solar offers those interested in clean energy an opportunity to invest in a project—a compelling option since not everyone owns a home, has the money to invest in rooftop solar, or perhaps is in a house that does not score enough sun or is obscured by trees.
Minnesota, for example, launched a community solar program in 2013, but its implementation has been slow. New York City has a plan in the works, which would allow the city’s renters and apartment owners to invest in clean energy projects. The largest such project in the U.S., located in Colorado, sold all of its shares earlier this summer. While community solar is garnering more interest, the key for it to scale and succeed is to get the utilities on board. One community solar project in eastern Washington could serve as an example of how utilities can diversify their portfolios in an evolving energy market and engage their customers in a new way.
Inland Power and Light Co., based in Spokane, has launched a community solar plan for its customers. Its pilot project of 112 solar panels is at the company’s headquarters, which according to the local press generates enough electricity for about three or four homes. The panels are installed on land Inland Power already owns and are visible to the public so participants can see their investment. Inland Power claims it will install a second phase next year. The response shows how solar has barely scratched the surface with its potential to contribute more to America’s energy portfolio.
The company’s 34,000 residential and business customers were all eligible to participate in the program, and over 1,200 residents wanted to participate in the project. The project cost approximately $150,000 with about 500 shares were available for purchase. Inland power held a lottery and randomly selected 88 members who had the chance to buy shares. Shares were sold for $300 and a member could purchase a maximum of 10 shares. A $300 share is equivalent to purchasing 55 watts of solar power, which equals a $0.38 credit for each share purchased. Members will receive a monthly credit on their bills for the life of the project, which is expected to continue until 2034. They will also receive a portion of Washington state incentives, which are authorized by law until 2020.
Over the next five years before Washington’s tax credits expire in 2020, the result will be about an annual $88 rebate to investors; the company estimates annual payback to range between $77 and $70 at the beginning of the project. That is a payback of about 3.5 years, and yes, the annual benefit will decrease dramatically after five years. Inland Power estimates each $300 investment will return about $550 in electricity bill credits over its lifetime. Too put figure in perspective, that amount is about how much a $300 savings account would generate over time with 3% interest. So no, we are not talking about big bucks, but at a minimum it is a very safe, conservative investment. Another caveat is that if the investor moves out of Inland Power’s service territory during the life of the project, the benefit is gone, but he or she can designate another local customer to receive the benefits.
For local customers, community solar is a way to test to see whether solar is financially viable for eastern Washington, and it is a way to invest in clean energy project without huge up-front costs. Despite the Pacific Northwest’s reputation for having a drizzly and cloudy climate, the Spokane area actually receives about 174 days of full or partial sun annually—double that of much of Germany, the undisputed world leader in solar. For those who doubt the viability of the project, Inland Power allows visitors to its website to view the energy this project is generating in real time.
Watch for a growth in community solar to continue, especially as many tax incentive programs will expire at the end of this decade. The U.S. Department of Energy is encouraging this tactic to boost investment in solar: its National Renewable Energy Laboratory (NREL) has become a locus of information for communities seeking alternatives to conventional fossil fuels. Despite the surge in rooftop solar installations thanks to cheaper panels, only 22 to 27 of residential homes is suitable for photovoltaic systems; therefore community solar is a way to involve more citizens and democratize what is steadily becoming a cheaper, and cleaner, source of power.
Image Credit: Inland Power and Light
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