(July 21, 2018) The concept was great. For those who found solar unattainable, community solar offered a way to buy into a larger community solar energy system. If a property is surrounded by trees making solar impractical, the home or business owner could purchase solar panels, as part of a community system, equal to the number of panels needed to offset their electrical usage. If that person’s solar panels represented 5% of the solar panels in the community system, they would receive 5% of the system’s electrical production to offset their electric bills.
They also received all the benefits of private-solar-energy-system ownership, including tax credits and state incentives without needing to maintain the system or provide space for the system. But, community solar has taken an unforeseen turn since the concept was introduced. Rather than marketing community solar for joint ownership, developers have pushed the systems to electrical consumers on a leased basis. Instead of selling panels, the developers are selling subscriptions to access the large energy systems.
By leasing, the developers retain ownership of the systems. They also receive all of the incentives, including federal tax credits and State Renewable Energy Credits (SREC). In return, all the lessee receives is the power equivalent of their needs at a discounted rate. That discounted rate usually works out to a reduction of 20% compared to what they normally paid.
The only advantage for the subscriber is that they avoid the initial investment to buy into the community solar system. That’s it.
Leasing solar energy may seem like a great deal but you may want to take a closer look before signing a customary 20-year contract. That’s two decades where the subscriber won’t have the advantage of federal tax credits, SRECs or writing the system off on their taxes.
When purchasing a solar energy system, once the cost of the system is recouped, the owner of the system is essentially reaping the benefits of free electricity delivered by an indiscriminate sun. The same is true when someone purchases panels in a community solar system. But, with a lease, the developer enjoys the post-installation-cost advantages.
The way to see community solar, as applied by developers today, is to Think Timeshare. There are commercials offering ways to defer a timeshare owner’s loss when they want out. In the future, the same commercials may run for those stuck in community solar leases that sounded a lot better when the subscriber first signed up.
Paul A. LaBarbera
President / CEO
Magitek Energy Solutions, Inc.