Clearing Up the Confusion Around Community Solar

A Focus on New York Community Solar Programs 

Community solar is booming and that fact is reflected in search data. According to Google Trends, community solar is breakout topic, and interest is rising and has been for years. Yet, as a new program, or relatively new, to many states, we’ve observed a great deal of confusion and several misconceptions around community solar. One concern particularly is that this confusion may impact the participation rate and the number of those benefiting from it.  

First, the Basics of Community Solar 

Community solar or “solar gardens” is the most popular form of shared renewables and 22 states have  legislation enacted to support adoption and development. New York particularly has seen the number of community solar projects explode in the past few years under support from NYSERDA.  

Whether it’s a mature community solar program in New York or the upstart one in Maryland, there are several commonalities. In every case, community solar is a shared renewable that enables multiple participants to benefit from a single solar array. Instead of installing solar panels on your property, participants subscribe to a local solar project and receive credits on their electricity bills for the power generated by your share of the solar panels. It’s an ideal solution for those who cannot install solar panels on their rooftops due to space constraints, shading issues, or renting their homes.  

A note about legislation: community solar arrays can be owned and operated by the utility, a solar developer such as OYA Renewables, a charity or non-profit, as well as a group of investors or individuals.  A community solar project can be developed or built essentially anywhere but the legislation makes it easier to develop with a clear pathway to operation. It’s one of the reasons, community solar is growing in New York to the extent that it is. 

How Does Community Solar Work in New York?  

In New York, community solar is regulated by the state’s Community Distributed Generation (CDG) program. Under this program, solar developers build community solar projects in suitable locations, and residents, businesses, and organizations can subscribe to these projects. Once subscribed, participants receive virtual net metering credits on their electricity bills, reducing their reliance on traditional fossil fuel-based power sources.  

Confusion with the CDG Program  

A lot of misconceptions and confusions come directly from the complexity of the CDG program, as individuals who sign up for a CDG contract assume they are purchasing renewable electricity, rather than subscribing to a community solar program. Many community solar states, including New York, exclude renewable energy credits (RECs) from being sold to community solar participants. Instead, those RECs may go to the utilities. We further explain RECs in the section on double counting. 

1. Complex Regulations and Policies 

The CDG program involves various regulations and policies set forth by the New York State Public Service Commission (PSC) and the New York State Energy Research and Development Authority (NYSERDA). These rules are both intricate and challenging to grasp fully. The complexity of the regulations can make it difficult for potential participants to navigate through the process of subscribing to a community solar project. 

2. Varying Program Structures

Community solar projects can differ significantly in their structures, pricing models, and subscription terms. The amount of savings and credits received by participants can vary depending on the specific community solar program they choose. These variations sometimes lead to confusion and misconceptions about the financial benefits of joining a community solar project.  

3. Billing and Crediting Mechanisms 

The billing and crediting mechanisms in community solar isn’t the most straight-forward, often creating unnecessary confusion for participants. In New York, when you sign a CDG contract you will receive solar credits on your utility bills, which offsets a portion of your electricity costs.  In other states, and previously in New York, you may receive two bills: one from your utility, with the credits offsetting your bill, and one from the solar developer with the credits minus a discount. 

4. Subscription Limitations 

Community solar programs have a limited number of subscribers they can accommodate, depending on the amount of electricity generated At OYA Renewables, we try to cover 100% of each customer’s electricity bill and there is only so much electricity a solar array can generate.  

For the time being, the number of community solar arrays is growing so space is still available, but that may not be the case in future. Or the savings being offered to customers will decrease from around 10% currently being offered.   OYA has developed numerous community solar programs in upstate New York that are available to sign up to. Learn more about our active projects here. 

5. Unfamiliarity with Virtual Net Metering 

Virtual Net Metering is a key component of community solar, allowing the allocation of solar credits to multiple subscribers connected to a shared solar array. For those unfamiliar with the concept, it can be difficult to grasp how the net metering process works and how it benefits participants. A quick definition: virtual net metering is a billing arrangement that allows multiple energy consumers to share the benefits of a single renewable energy system, such as solar panels, by allocating the surplus energy to their respective utility bills. 

How CDG Credits Work 

CDG credits for community solar projects are primarily bill credits provided to CDG members, which offer participants financial benefits but not environmental benefits. These credits represent the savings or benefits that subscriber receive on their utility bills for signing up to a shared solar project: the amount of credits that you receive is proportional to the share of the project’s energy generation you use. 

It may be confusing to understand how these financial incentives are calculated.  

The Value of Distributed Energy Resources metric calculates the credits’ value that CDG members receive and includes a payment (“E”) for the environmental attributes of the energy generated. CDG members receive the “E” payment as part of their bill credits, while the utility retains the environmental attributes of the electricity. This allows the utility to claim the use of solar or other renewable power equivalent to the project’s generated energy, incorporating it into the energy mix for all the utility’s energy supply customers. 

As a result, the solar energy generated by community solar projects is shared across the utility’s customer base, and its use is reflected in the utility’s environmental disclosure. Moreover, these credits help the utility in fulfilling its Clean Energy Standard requirements. 

In short, CDG credits represent bill credits for CDG members, while the environmental attributes of the energy go to the utility, enabling them to meet Clean Energy Standard mandates and contribute to a greener energy supply. 

The Issue of Double Counting or Overestimating the Impact of Renewable Energy

The main problem with double counting is related to the way renewable energy attributes are accounted for and claimed. Double-counting occurs when the same renewable energy attributes, such as environmental benefits or carbon credits, are claimed and counted by multiple parties, leading to an overestimation of the environmental impact of the renewable energy project. 

In CDG programs, when customers subscribe to a community solar project, they receive bill credits or financial benefits for their share of the electricity generated by the project but not the renewable energy credits (RECs). Instead, the utility or the entity that owns the solar project claims the environmental attributes or RECs of the energy produced. 

We see issues start to arise when both community solar participants and the utility company claim that they are using renewable energy, which results in double-counting of the environmental benefits associated with the solar project. For instance, if a community solar project generates 1000 megawatt-hours (MWh) of solar energy, both the customers and the utility might claim to have used that 1000 MWh of renewable energy, leading to an inflated representation of the total renewable energy. 

Double counting is problematic for several reasons:

1. Overstated Environmental Impact: Double counting can lead to an overestimation of the environmental benefits of the CDG program. It may create a perception that more renewable energy is being used than what is truly generated, potentially misleading stakeholders and the public about the project’s actual sustainability impact.  
2. Misleading Renewable Energy Claims: When multiple parties claim the same renewable energy attributes, it becomes challenging to accurately attribute the environmental benefits to the rightful parties. This can lead to conflicting claims and confusion among customers and regulators. 
3. Compliance and Reporting Issues: Double counting can create challenges in meeting regulatory requirements and renewable energy reporting standards. Accurate reporting is essential for tracking progress toward renewable energy goals and targets. 
4. Market Distortion: If double-counting is prevalent in the CDG program, it can distort the renewable energy market by artificially inflating the demand for renewable energy certificates (RECs) and other environmental attributes.

To address the problem of double counting, it is crucial for CDG programs to have clear and transparent accounting mechanisms. Proper tracking and verification of renewable energy attributes are necessary to ensure that the environmental benefits are attributed accurately to the right parties. This may involve the use of renewable energy tracking systems and ensuring that only one party claims the environmental attributes of the solar energy generated by the community solar project. 

A Loophole to Claiming Renewable Energy: Pre-2015 Hydropower 

Community solar participants in New York may be unable to say that they are powering their homes and businesses with clean, renewable energy, but there is a loophole around this. 

The loophole in New York’s Clean Energy Standard pertains to hydropower facilities that were put into service before 2015. In most cases, these facilities do not meet the eligibility requirements of the Clean Energy Standard to receive the “E” value of the Value of Distributed Energy Resources (VDER). However, there are exceptions, and some hydropower facilities smaller than 5 MW are taking advantage of the CDG mechanism and the VDER payment regime to compensate for the lack of “E” value. 

Under this arrangement, facilities that do not meet the eligibility requirements for the “E” value in VDER retain their Renewable Energy Credits (RECs), which are tracked by the New York Generation Attribute Tracking System (NYGATS). Although these RECs cannot be sold, they can be transferred to CDG members. 

Basically, this loophole allows certain pre-2015 hydropower facilities to participate in the CDG mechanism and the VDER payment regime to compensate for their ineligibility to receive the “E” value in VDER. This enables CDG members to potentially benefit from the transfer of RECs and environmental attributes, although some companies may choose not to provide these attributes to their customers. 

So, Can Community Solar Members Claim to be Using Renewable Energy?  

This question is at the forefront of confusion for industry professionals and participants of such programs, alike.  

Members who subscribe to a community solar project can claim that they are using renewable energy, they are paying for their share of a solar project. While fine, there is a distinction between claiming to use renewable energy and the specific environmental benefits or RECs associated with that usage. 

Despite double counting and not actually retaining the RECs, community solar members are still benefiting from renewable energy. They are contributing to the reduction of carbon emissions and supporting the growth of clean energy in the state. By subscribing to community solar, customers are directly supporting the development of renewable energy projects and helping to fulfill New York’s clean energy goals. So, long answer short, yes members can say they are using renewable energy, but they cannot claim the environmental attributes or RECs that are tied to the community solar project. 

Ensuring the Future of Community Solar

Despite community solar programs being a massive step forward in prioritizing the use of clean energy, education continues to be a pressing need and priority across the board to support the U.S. energy transition to a sustainable future.  

If you have any questions about what we’ve covered in this article, please reach out to the community solar team by dropping us a note at subscribe@oyarenewables.com.  

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