Community-scale solar is a fast-growing segment and, in fact, is growing much faster than utility-scale and rooftop solar in the past few years, according to executives from the Rocky Mountain Institute (RMI). They believe community-scale solar has the possibility to eventually account for 10% of all power generated in the US.
Thomas Koch Blank (principal) and Titiaan Palazzi (senior associate) with RMI describe community-scale solar as “an overlooked market segment in between large-scale utility solar and rooftop solar.” These smaller solar projects can be owned by owned by corporates, universities, or small-scale utilities. Or, they could be community owned or with a shared-ownership partnership.
Blank and Palazzi are involved in RMI’s Shine, a program that develops community-scale solar projects to make solar energy more affordable and accessible to greater numbers of customers. The program aims to reach underserved market segments like commercial and industrial properties, multifamily dwellings and universities across the country.
Community-scale solar is on the fast-track to grid parity: projects are cost-effective compared with normal power, and cost-competitive with large-scale solar, natural gas and traditional sources, Blank and Palazzi said during a Facebook Live event they hosted earlier this week.
Other benefits, the hosts said, include the fact that it allows the industry to look at new ways of going to market. If you want to develop a gigawatt of solar, you would need ten 100 MW installations. Community-scale solar allows you to be highly customized - if you develop the same amount of power with 1,000 smaller installations, you can have a streamlined offering with repetition in the whole system, Blank and Palazzi said. Additionally, by developing community-scale projects with a program like Shine, multiple stakeholders can be involved, so smaller entities that would not normally have access to such technologies are able to access solar.
What motivates those involved in developing community-scale solar? According to Blank and Palazzi:
While growing the Shine program, RMI has found that end-users have concerns or confusion with community-scale solar. Cost is perceived as too high, and most don’t know how to engage in projects like these. Awareness around the market was just not that well known, Palazzi and Blank explained.
However, cost was never really a barrier to begin with, they said. “It was always a really big gap in the perception between the buyers and the market.” For example, utilities in New Mexico thought they would be paying for solar at $80/MWh. “We asked if they’d be interested in $60/MWh. When final bids came in, they were below $45. We had a bold hypothesis that we could reduce costs at 40% and we outperformed that.”
While it’s difficult to predict how fast the market will grow, RMI says it has the potential to reach 20 to 30 gigawatts in the next few years. If expanded to markets beyond the utilities, “it’s easily a 200 to 300 gigawatt market, with hundreds of billions of dollars of market investment,” the hosts said.
While forecasting for small markets can be a challenge, RMI believes it’s possible for community-scale solar to eventually account for 10% of all the power generated in the US.
Prices will likely continue to drop. Panels and batteries are coming down in cost and, as more “anchor” buyers like corporations become involved, installations can be easier than when there are thousands of different entities in the community investing in the project.
As corporate leadership becomes more knowledgeable about the market, they are not only committing to their own solar footprint but are also in discussions with Fortune 30 companies who are interested in extending that service to their customers. By sourcing their own power consumption through renewables, they are becoming excited for their customers to source renewables, as well.
University implementations may be expected to grow, as well. Universities have a significant footprint of electricity and real estate already established, making solar installation easier. They have the opportunity to put systems on land they already own and control, Blank and Palazzi said.
