What is the best solar for me?
Direct ownership, shared ownership, subscription or renewable energy credits?
By Darren Fishell
WITH THE RIGHT MIX OF PROPERTY, sunlight, and funding, installing a home solar system is a no-brainer, adding valuable infrastructure to a property. But if any one of those ingredients is missing, residential electricity customers in Maine have an array of options for buying solar energy, each with pros and cons to consider.
Shared ownership and subscription plans for large-scale “community solar” projects became available after passage of a 2019 law, with some of the first such arrays coming online this year. The change broadens the potential market for solar customers who may not have access to one of the three main ingredients for a successful home solar array.
The change has also resulted in a barrage of marketing that has elicited some confusion. Thomas Tutor, a clean energy consultant with ReVision Energy’s South Portland office, says the new options have analogies in housing, with shared community solar offering a “condo” option, where customers pay up front for long-term access to a shared solar resource, and subscription-based plans enabling customers to “rent” solar.
It’s an apt analogy, as condo owners and renters face some of the most obvious hurdles to installing a solar array at home. Industry experts still make the case that home installations offer the most value in the long run, but community solar can help to accelerate the decarbonization of our electrical grid.
Here is an overview of the options.
Home solar
For homeowners, the long-term value of rooftop solar installations is hard to beat for several reasons. Whether you pay cash up front for a solar electrical system or choose from one of the many available financing options, direct installation at your home will provide you with free power for the life of the panels (and most solar panels today are warrantied for 25 years or more). Even if you finance your investment over a number of years, owning your own solar offers the added benefit of insulating you from increases in electricity rates. Maine’s system for compensating residential solar customers, called net metering, gives bill credits in kilowatt (KW) hours—which means that as electricity rates rise, so do your savings.
At the right size and with the right light, a home solar array can provide all of a home’s electricity, displacing power from the grid that—in Maine—produces around 430 lbs. of carbon dioxide emissions per month for the average home. And those systems are more efficient, reducing “line loss” for power that needs to travel longer distances before reaching end users.
The direct environmental impact and power bill savings also stand to increase property values. A 2015 study by the Lawrence Berkeley National Lab and a 2019 study by Zillow Research suggested homes with solar arrays sell for more, with Zillow finding an average premium of 4.1%, or more than $9,000 for the median home.
When compared with new ownership models, home systems also offer more flexibility for homeowners, who then have an option to pair their systems with battery backup systems that continue to come down in price. Those backup systems carry a particular value in Maine. In 2019, for outages lasting longer than 5 minutes, Maine had the country’s highest average power outage duration at 15 hours, according to the U.S. Energy Information Administration.
Shared ownership
If you’re without the right land or access to sunlight, shared ownership models enable you to buy into a larger community solar installation and own a portion of it. As a part owner, you receive credits on your electricity bill equal to your portion of the solar generated by the community solar installation, just like a net-metered home installation. These credits apply directly to your Central Maine Power or Versant electricity bill, reducing the amount you owe. Shared ownership models have been allowed in Maine for years. Before the 2019 law, however, they were capped at nine owners.
Under the prior cap, installer ReVision Energy built 14 arrays in Maine. Under the new regulations, they built a 100-member array in Vassalboro, and two other large farms are slated for completion later this year.
ReVision’s community solar development focuses primarily on that shared ownership model, which has so far been in high demand. Both projects coming online later this year have waitlists, Tutor says.
To get in line, investors make a $1,000 deposit and make payments toward their share in the solar farm based on project milestones, with payments supporting all the upfront costs of the development, which as of August totaled about $19,000 for an ownership size projected to offset 100% of the electricity needs for a home with an average monthly electric bill of $100. A 26% federal tax credit available to each owner has the potential to reduce the net cost to around $14,000.
Members do not own the panels but own a share of the output from the arrays for 25 years, with two five-year options to extend the contract. Tutor said ReVision is the only company he has heard of in Maine offering a shared ownership option right now.
If you move, the ownership goes with you as long as you stay within the same grid operator. If a user moved from CMP turf to Versant’s, the share would not transfer. It could, however, be sold separately or bundled with a home sale. And that can be a boon for a home, as Tutor says power rates from the grid have risen 3% annually, on average.
“Everybody who hasn’t invested in their own solar yet are going to continue renting electricity from your utility,” Tutor said.
New customers can expect to wait about a year from initial signup to the time their solar array begins generating power, given normal project development timelines and the current backlog of demand, Tutor says.
Subscription solar
Sarah Lozanova, a solar marketing specialist with Searsport-based Sundog Solar, is also involved in the community solar market as a customer. Lozanova, who lives in Belfast Cohousing and Ecovillage, recently entered the queue to join a solar farm run by Nexamp. “There’s no money upfront, and that’s an advantage to [subscription] solar,” Lozanova says. If she later installs a household array, Lozanova says, the arrangement with Nexamp requires only 90 days notice to cancel.
Nexamp acquired a 50-megawatt (MW) solar portfolio last fall from Dimension Energy and has led marketing efforts for subscription community solar in Maine. Terms of the commitment can vary, as with a rental agreement. Suppliers could charge customers month to month or for a fixed term of up to 20 years. In exchange, customers pay less for the electricity they receive each month: Nexamp offers a 15% discount from the going grid rate. While customers’ electricity rates are still subject to increases, they will continue to see 15% savings on their bills.
“We encourage folks to read the fine print carefully, as they are entering into a contract,” says Susan Faloon, spokesperson for the Maine Public Utilities Commission.
There’s yet another batch of retail electricity suppliers that may seem to offer services similar to subscription solar arrangements. Companies called competitive electricity providers, such as Clearview Energy, can also offer electricity that differs from the standard offer at a fixed term or monthly rates.
Regulators encourage customers to make sure they fully understand a few key points about these kinds of arrangements before signing up:
Request a disclosure form from the supplier, to understand the exact makeup of the electricity supply offered, and do not sign a blank disclosure form.
Ask when the project is coming online and when you begin to receive credits (and a bill).
Ask whether credits are in dollars or KW hours and whether they are for a fixed amount or will match usage.
Confirm the term (time period) of the contract.
Renewable energy credits
If the above options are too much of a commitment or too costly, there’s another option to support renewable power supply: buying renewable energy credits from companies such as those certified by Green-e or through the state-sanctioned Maine Green Power program. The state program includes renewable energy credits (RECs) from a variety of renewable generators, including biomass and fuel cells using landfill gas or biogas. Other REC programs may target specific energy sources and are purchased separately from your power bill. Maine Green Power can be incorporated into a customer’s bill at different cost tiers. For $8.95 a month, you can purchase credits that would offset the CO2 emissions produced monthly by the average home. This enables customers to support new renewable power generation with no upfront cost or commitment.
Renewable power generators receive RECs for each unit of power they put into the grid. Carbon-emitting power generators in New England are required to purchase some amount of these credits to offset their emissions. And they are tracked closely. A credit purchased by one entity cannot then be sold to another.
RECs are also sold by community solar projects. And that illustrates the shift that new community solar offerings provide: more residential customers can reap the benefits of being a small power generator.
What’s the best solar for you? That depends on a variety of factors. But not owning a home or having substantial initial investment funds at the ready is no longer a dealbreaker.
This article appeared in the Fall/Winter 2021 edition of Green & Healthy Maine HOMES. Subscribe today!