Community Solar Makes Renewable Energy Available to All—If Power Companies Allow It

The field was perfect for a solar array; unused farmland in Pine Bush, N.Y., with no nearby neighbors to complain. But when the developer, Sol Source Power, submitted an application to Orange & Rockland Utilities to get permission to connect the still-unbuilt community solar project to the grid, it got a surprising response.

Connection would cost $20 million, the utility said—roughly 40 times what Sol Source Power had anticipated. After a failed appeal, the company withdrew the application, as it has 14 of the 15 community solar projects it has asked to connect to Orange & Rockland, a subsidiary of Con Edison, one of the largest investor-owned utilities in the U.S.

“The hurdles are just getting higher and higher,” says Lindsey McEntire, chief development officer of Sol Source Power, which operates in New York and Illinois. Sol Source appealed the decision, but did not succeed in getting much more explanation or a reprieve on the cost; it dropped the project. “We also don’t want to rock the boat too much,” McEntire says. “We’re completely at the mercy of the utilities.”

For much of the last century, when you flipped a switch and turned on the electricity, your electrons came from a gigantic power plant located far away that burned coal or natural gas or used nuclear energy. As the world tries to wean itself off fossil fuels, renewable energy advocates see a better way: solar arrays distributed across rooftops and fields. One key way to deploy solar panels at a local level is through community solar projects: arrays that are bigger than what can fit on homes but smaller than utility-level projects that connect to high voltage transmission lines.

“Community solar is like Goldilocks, it’s just the right size and at a better cost than residential,” says Zaid Ashai, the chairman and CEO of Nexamp, the largest community solar provider in the U.S.

Community solar developers put up a small-ish—around one- to five-megawatt—solar array on a warehouse rooftop or on a field, feed the energy it generates into the grid, and then sign up subscriber households, who get a discount on their electricity bill for participating in community solar.

Though right now, such projects only make up 5% of total installed U.S. solar capacity, according to research firm Wood Mackenzie, community solar is expected to grow at an “exponential rate,” says Charles Hua, a policy analyst with Rewiring America, a nonprofit focused on electrifying homes and businesses. That’s partly because such projects are built close to where that energy is consumed, making them efficient, and cost less per watt than residential solar. Community solar is a key part of ensuring equity in the clean energy transition because it makes solar available to people who can’t afford to put panels on their homes or whose homes don’t get enough sun to make rooftop solar viable. “This is an unprecedented generational opportunity for the wealth transfer of energy producers to consumers,” Hua says.

But what sounds like a relatively quick and easy way to bring thousands of kilowatts of solar online has proven anything but. Community solar projects need to be hooked up to the grid to feed power to homes, and as federal and state incentives for renewable energy expand, utilities can’t—or don’t want to—handle the increased volume of interconnection requests.

Transitioning the grid from being powered by giant fuel-burning power plants to small, distributed renewable sources was always going to be difficult, but many community solar developers and advocates say that some utility companies are putting up unnecessary roadblocks, significantly slowing deployment. “Some utilities view community solar as a threat to their business model,” says Ashai.

He estimates that community solar projects take 40-50% longer to receive approval now than they did a decade ago. Nexamp recently received an estimate that interconnection of one of its projects would cost $60 million—though building the project itself would have only cost $8 million.

 

In a statement provided to TIME, Orange & Rockland Utilities, the business that told Sol Source Power that connection costs would be $20 million, said that it operates its solar programs under the rules and regulations of the New York State Public Service Commission. In some areas where it operates, “the company has reached the limits of its hosting capacity,” it says, and so those costs must be borne by the developer. “The cost estimates provided to developers are the result of careful study and are accurate,” the company says.

As a whole, the U.S. is largely failing to hook up projects at the pace needed to meet its renewable energy goals. There are two ways to connect renewable projects to the grid—at the transmission level and at the distribution level. Transmission lines can move electricity over long distances and at a high voltage level, but connecting projects is very complicated, one reason transmission level queues are completely backlogged. PJM, the largest electrical grid operator in the U.S., said in February 2022 that it would not accept new requests for interconnection because it was so behind, and the MISO, or Midcontinent Independent System Operator, is in similar straits.

Community solar is connected to the grid at the distribution, or local, level, which theoretically should require a lot less time and cost to connect than a transmission-level project. Rather than go through grid operators, developers hoping to hook community solar projects go through utilities.

But a few factors have slowed down the process. There’s been a lot of federal and state funding to support community solar projects, so there are a lot more projects proposed than in the past. Some developers are submitting interconnection requests without thoroughly vetting projects, creating long lines of paperwork for utilities to sort through, says Lars Norell, CEO of Altus Power, a company that provides community solar from the rooftops of warehouses and retail stores.

States have also not been very forward-thinking about passing laws that would quicken the adoption of community solar, says Gilbert Michaud, a professor of environmental policy at Loyola University in Chicago. About 20 states have passed laws facilitating community solar, but some have also implemented policies that discourage people from signing up. In Virginia, for instance, customers who participate in community solar have to pay a minimum monthly bill of $55.10, which could discourage low-income customers from signing up. Some states have caps on the amount of power a community solar farm can produce, which disincentivizes developers.

Many community solar developers say that the biggest obstacle to getting projects up and running is the utilities. “Some of the reasons you don’t see this proceeding more smoothly is that utilities just don’t have the staff to process the applications,” says Sean Gallagher, vice president of policy at the Solar Energy Industries Assn. “Some of it is, frankly, anticompetitive behavior by the utility.”

After all, utilities make money by spending money on capital improvements, and then asking regulators if they can raise their rates because of those upgrades. They are largely incentivized to spend on big capital-intensive projects and then raising rates, rather than rethinking how to structure the grid in a way that might be more efficient—encouraging homeowners to get batteries to be able to store power so they consume less power at peak periods, for example.

Some utilities don’t want developers to build community solar projects at all—they’d prefer that the utility owns and builds the project. That’s because distributed community solar projects can be much more difficult to troubleshoot and maintain than, say, a central power plant; if a community solar project is developed and then has problems, it’s the utility, not the community solar operator, who will deal with the flack, says Tim Sparks, vice president of electric supply at Consumers Energy, a Michigan utility. “Customers don’t understand when they call and complain that it has nothing to do with us; it has to do with that third-party provider,” Sparks says.

Still, community solar developers say that some of the excuses put forward by utilities seem deliberately obstructive. In the Northeast, for instance, due to weather, a community solar project can typically only hit its maximum capacity for a few hours a day, in the summer. But the utility often requires that the wires connecting that project will be able to handle the maximum amount of power all of the time, rather than finding solutions like allowing the community solar farm to store some of its excess power on batteries, or turning down the amount of power the farm is generating so as to not overload the pipes. Instead, “we’re building a lot of fat pipes that are being severely underutilized,” says Ashai, of Nexamp.

It’s difficult to challenge a utility that throws up a roadblock, because there’s so little transparency about what is actually happening, Ashai says; and if you file a complaint with the Public Utility Commission about the utility, you’ve antagonized the entity that can approve your project.

Read more: This Vermont Utility Is Revolutionizing Its Power Grid to Fight Climate Change

There are some types of community solar projects that do appear to have a slightly easier time getting approved, such as those on warehouses and commercial rooftops in areas where there’s already a lot of power lines. Then, it’s not as much of a heavy lift for utilities to connect large solar arrays to the grid. In some states, approval for community solar that are on commercial rooftops can take as little as six weeks, says Norell, with Altus Power—although in places like Massachusetts, that has begun to stretch out to six to nine months, he says.

Some states, like New Mexico, are starting to push utilities to be more transparent; that state is the only one that receives an “A” from Freeing the Grid, an initiative that grades states on policies that will increase grid access. New Mexico scores high in part because it requires utilities to provide additional data to developers and allows a third-party mediator to handle disputes, according to the report card.

But it’s possible that broader changes will be needed, and that may require customers to take action themselves. In Minnesota, for instance, after community solar projects were facing significant delays getting approved for interconnection by Xcel, a local utility, advocacy groups encouraged customers waiting for the projects to happen to file complaints with the Public Utility Commission. After receiving hundreds of complaints, the regulator fined Xcel $1 million.

The state legislature is now in the process of changing how interconnection requests are approved, says Kyle Samejima, executive director of Minneapolis Climate Action, which is working on two community solar projects. Now, the majority of community solar implementation falls under the state Department of Commerce, rather than Xcel. The state “heard a lot of complaints,” she says. “What really had an effect was low-income community members reaching out.”

The most forward-thinking utilities realize that as the country—and the world—electrifies, they’re going to be selling even more power in the future. They’re helping redistribute where energy is generated so that it’s more local, so they’ll be better prepared for the electric future. Green Mountain Power, for instance, in Vermont, is giving consumers batteries to store energy, pioneering the idea of residential batteries as virtual power plants, rather than building power lines.

“Utilities can absolutely be a critical part of the clean energy future,” says Hua, with Rewiring America. “The question is what are they doing to position themselves.”

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