Community solar billing: Four things to know

Put simply, community solar can save you hundreds of dollars on your annual electricity costs. Alas, community solar isn’t simple. It requires cooperation from at least three independent parties – you, the community solar company you want to enroll with, and your utility.

With community solar, renewable energy is produced at a large-scale solar panel project and sent to the local utility grid. Utility customers are eligible to subscribe to the community solar project in exchange for credits on their electricity bill. A community solar subscription can save you 5-20% on your electricity bills annually, but the billing process can be a head-scratcher. As a subscriber, you won’t have to do anything other than account for one additional bill every month, but it can be confusing to understand how your utility company and community solar provider interact to deliver savings. To make it a bit easier, we've broken down the most important things to know about community solar billing.

Consolidated billing is the end goal for the community solar industry, but most community solar programs today require two separate bills: your usual bill from the utility company and a separate bill from your community solar provider. 

For the most part, your utility bill will look pretty standard. On the other hand, your community solar bill depends on how much your share of the solar farm generates over the billing period and your subscription structure. When you subscribe to a community solar farm, you’re essentially buying credits to use towards your utility bill. The more electricity your share generates, the more credits you’ll receive. This can be confusing to conceptualize, so let’s take a look at the example below to better understand how you’ll end up saving money between these two bills:

Fixed discount on bill credits

Under a fixed discount model, you receive the same discount on your solar production every month. Let’s say you sign up for a community solar project that offers a fixed 10% discount on your share. If your solar panels generate 769 kilowatt-hours (kWh), you’ll earn a $100 credit toward your utility bill. After your community solar company applies the 10% discount, you’ll only pay $90 for that credit, saving a total of $10 on your monthly electricity costs. 

Fixed electricity rate from the solar project

When you sign up for a fixed electricity rate community solar project, you lock in to a certain cost per kilowatt-hour (kWh). For example, if you sign up for a community solar program that sells electricity for 11.7 cents per kWh (compared to the 13 cents per kWh your utility company currently charges for electricity), and your share generates 769 kWh, you’ll pay your community solar company $90 for your credits and reduce your bill charges by $100 (i.e., save $10). 

Why subscription structure matters

In the two scenarios above, you end up saving the same amount of money. However, it's important to understand which one more resembles your offering because it doesn't always work that way. 

With a fixed discount on bill credits, you receive the same percentage discount regardless of the price of electricity in your area. With a fixed electricity rate option, your savings will largely depend on how much your community solar company charges per kWh and how that compares to your utility company's current electricity price. If utility rates continue to rise in your area and outpace any annual community solar electricity rate increases (also known as an ‘escalator’), you could save more than you would under a 10% fixed discount offer. Alternatively, while unlikely, if your utility rates drop below what you agreed to pay your community solar company, you could end up paying more for community solar than you’d pay for standard utility service.

Your utility company and community solar company will work together to ensure that the energy credits you buy from your local solar farm end up on your bill – no hard work necessary on your part.

The first time you receive a bill from your utility company with community solar credits, you may not immediately notice any difference: supply and demand charges will be located in the same place, as will your usage history. If you drill down to the nitty gritty charges of your bill, you should see a new line item with a negative value – that represents your community solar credits.

Community solar bills look different for every utility company and state. For example, if you live in New York, your credit will likely come through as a "CDG Value Stack Credit" or "CDG generation credit," while in Massachusetts, it may be under a "net metering" or "NEM" line item. Either way, the easiest way to find your credit will be to scan your bill for a new negative charge.

There will be months when your portion of the solar farm generates more energy than you need. It would be impossible to match your monthly energy usage to monthly solar production from the farm since energy consumption habits and solar panel production vary season by season.

If you're shocked by the growing credit value on your utility bill, remember that community solar provides savings on an annual basis, not monthly. Your community solar company will size your share of the solar farm to meet most of your annual energy needs, and any extra solar bill credits you buy now will apply in future months. For many subscribers, this means banking additional bill credits in the summer to use in the winter when electricity production at the solar farm is lower. 

Paying for community solar bill credits you'll never use is pointless. This shouldn't happen if your community solar company sets up your solar farm allocation appropriately and your electricity usage remains consistent from year-to-year. If you decide to upgrade your home energy efficiency and cut your annual electricity consumption, it's a good idea to get back in touch with your community solar company to downsize your allocation of the solar farm.

A lot goes into the community solar billing process – much of which you won't even see. 

Here's the process, simplified:

1. The community solar company and utility company determine how much electricity the solar project generates for the grid and how much electricity your share generated

2. The community solar company calculates your credit value based on production and sends you a bill

3. You receive credits to your utility account

4. The utility company sends you a bill with solar bill credits included

Ideally, the timing of your solar bill credit delivery will closely align with the delivery of your utility bill, but schedules vary by community solar project and utility company, and the steps outlined above don't always occur in that order. 

If your utility sends out your monthly electricity bill before your community solar company can calculate and deliver your credits, you may experience a monthly delay between when you earned/paid for the solar bill credits and when you see them on your utility bill. Just remember that community solar provides savings on an annual basis, so a delay won't impact your yearly savings.

Want to compare community solar options in your area? Check out the EnergySage Community Solar Marketplace for a list of open community projects near you and get a quick estimate of potential savings. If community solar hasn’t come to your region yet, you can sign up at the link above to receive updates as new projects go live.