Coming up with a climate agreement in Paris last month, getting nearly 200 countries to commit to lowering their greenhouse gases, well, that was the easy part. Now nations have to actually achieve their targets to transition to a lower-carbon future, which includes investments in more renewable energy.
Here in the US, the solar industry got a big holiday gift at the end of 2015 — Congress extended an investment tax credit (ITC) to build new solar panels. For every dollar solar manufacturers spend, the government will give them 30 cents back through the end of 2019. After that, the credit tapers down. You and I can get the same deal for slapping panels on our roofs.
I looked into putting solar panels on my roof just outside of Boston. A company pulled up an aerial shot of my home on Google Earth, and minutes later said, no dice — a large tree is blocking the sunlight. Many of us living in dense urban areas are finding it challenging to go solar.
“Just go out one day and walk around Boston and take a look at how many roofs have a large amount of space facing south. Not many,” says Henry Lee with Harvard’s Kennedy School of Government.
That doesn’t mean we can’t own solar panels though. They just can’t be on our roofs. The panels can, however, be in places like a muddy field in the Massachusetts town of Fairhaven, near Cape Cod. There, workers are busy installing thousands of solar panels.
I walked around the field with Mark Slyvia — a managing director at BlueWave Capital, a Boston-based company that invests in so-called “community solar” projects.
“You see the sun is very much directed right down on these panels,” says Sylvia, admiring the field on a bright, sunny December day.
BlueWave works with many people who want to put up solar panels, but can’t. This field will service about 100 customers.
“So the individual actually will be able to drive by this site and say, ‘I’m getting my power locally from this facility.’”
Here’s how this all works, the basics. You now own a few solar panels in this field and they pump electrons into the electricity grid. Due to federal tax rebates and incentives from the state of Massachusetts, your solar electrons are cheap. So, your utility says thanks for the electrons, here’s a discount.
“If you enter into an agreement for community solar, that will enable you to reduce your energy cost by 10 percent,” explains Sylvia.
So, if your bill is $100 now, you’d pay $90 with community solar.
Besides Massachusetts, community solar is gaining traction in a handful of states providing extra incentives: New York, California, Minnesota and Colorado.
Here’s another nice thing about community solar: there’s no upfront capital cost. You don’t have to plunk down $10,000 or $20,000 to install panels on your roof. Your long-term savings, over many years, may be lower, but you don’t have to come up with that big chunk of money right now.
In order to make the community solar business model work though, you have to commit to it.
“It’s a 20-year contract,” says Sylvia. That seems to be the standard in the nascent industry.
As a commitment-phobic person, I told Sylvia: that scares me. I asked him why I shouldn’t be scared.
“Because it’s a 20-year contract that commits you to reducing your electricity bill on an annual basis,” he says.
Other companies lock in a guaranteed rate for 20 years. The rate I was quoted, by NRG Home Solar, a competitor of BlueWave, looked like a sweet deal — today. But costs of solar panels have fallen substantially in the past few years, and I don’t want to be the sucker who locks in too early.
It’s fair to harbor some reservations, says Lee.
“I think that solar costs are going to continue to go down, maybe not as dramatically as they have in the last few years, but they’re going to continue to come down. And as a result, I would be somewhat hesitant to enter into such a deal right now,” says Lee.
On the other hand, every month I wait, I’m paying more on my electricity bill. And I’m not helping the environment. These are questions I have the luxury to grapple with here in Boston. But they’re not the kind of calculations that most people are making in the developing world — they just want reliable energy.
With community solar, it’s cheaper to build a bunch of panels at once in a field, as opposed to going roof to roof. So, I asked Cory Honeyman, an analyst with GTM Research in Boston, a firm that covers the solar industry, if the community solar model could bring benefits to poorer countries.
“I think that community solar can, in theory, touch upon the broader best practices in economic development,” says Honeyman. “When you have a community solar project in an emerging economy, you get buy-in from the broader community to make sure that project is a success not just from the installation phase, but through the project's entire life cycle.”
Honeyman adds that the business model for community solar remains “a work in progress.” And the US tax credit extension won’t help much in the developing world. He estimates that the tax credit will help add 25 extra gigawatts of solar power in the US by the end of the decade — enough to power about 4 million homes. But the credit focuses on installation of solar in the US, not overseas.