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Financial Analysis and Comparison
How does participating in a community solar project compare financially to investing in a project, individually, on a home or business? There is no simple answer to that question. The business model and availability of incentives will determine the unique answer for each community project.
In Ashland, Oregon, solar incentives for individual homeowners are so generous that the economies of scale achieved through a Community Solar model are insufficient to offer an equally advantageous return. On the other hand, in Washington State, where Community Solar projects can benefit from economies of scale and may receive more generous production payments than do typical residential or commercial projects, the former may be a better investment. Consider the following (hypothetical) financial analyses from the perspective of an individual system owner versus that of a member in a Community Solar system:
Click on figure to enlarge.
In many cases, grants and other sources of funds not available to individual system owners may be available to lower the upfront cost of a community solar project. These donations can leverage member contributions, improving the return to individuals. The rate at which Community Solar members are reimbursed for the electricity generated can also have great impact on the return. Projects that benefit from net metering will see their financial outlook improve as the price of traditional electricity rises.
When evaluating the available financial incentives, it is important to understand the differing impacts of up¬front savings and long-term revenue, and to realize that there may be tradeoffs. For instance, some programs that provide initial rebates on the installed cost (such as a program offered by the Energy Trust of Oregon) can stipulate REC ownership, eliminating a potentially long-term revenue option.
While a strong understanding of the financial picture is vital, Community Solar organizers and members should remember that there are many other ways to measure a project’s merit. Community projects can make contributing to renewable energy development much easier for most citizens. Similarly, a Community Solar project offers a public education and awareness opportunity orders of magnitude greater than that afforded by individual projects.
