Community solar: Everything you need to know

What if there was a way to support local clean energy and save on your electric bill without installing a single solar panel? Community solar offers just that. Whether you're a renter, don't have a solar-compatible roof, or you prefer not to install equipment on your property, you can sign up for a community solar project. 

When you subscribe to a local community solar farm, you reap the benefits of solar energy without purchasing any equipment. It encourages more clean energy in your community while reducing your yearly electric bill. We'll explain how to decide if community solar is right for you and why it's different from other alternatives to utility electricity, like green power plans and community choice aggregation.

Have you ever seen a large array of solar panels while driving down the highway? In many cases, these are community solar projects. Also referred to as solar farms, shared solar, solar gardens, or roofless solar, a community solar project is a large, central power plant that generates electricity for the grid. Unlike utility-scale solar, private developers or, in some cases, subscribers themselves own community solar farms. 

Community solar can be tricky to wrap your head around. When you subscribe to a farm, your solar panels don’t directly connect to your home or business. How can you save on electricity costs without directly feeding solar energy into your electric meter? It's all thanks to a policy, only available in certain states, called virtual net metering (VNM), which lets you purchase electricity generated offsite of your property in the form of credits on your electric bill. Here's how it works:

1. You subscribe to a solar farm in your utility company's territory, and the farm's subscription organization assigns you a share of the farm based on your electricity usage.

2. Your share of the solar farm generates emission-free solar power and exports it to the electric grid.

3. Your utility company distributes this electricity throughout the grid.

4. You pay your community solar provider for credit towards your electric bill based on the amount of electricity your share of the farm generates.

5. Your utility company applies the bill credits to your monthly bill, reducing your charges.

One of the most important things to understand about community solar is that you don't receive electricity directly from the farm. Your current utility company will still deliver your electricity and in many cases you will still receive a monthly electric bill. You actually end up needing to pay both your community solar provider for bill credits and your regular utility bill, but the total amount between the two of them will almost always be lower than what you'd pay without subscribing to community solar. 

At EnergySage, we want as many people to go solar as possible, and community solar enables a much wider group to benefit from solar energy. Here are some of the main reasons we launched our Community Solar Marketplace:

You don't need to own your home

Most landlords won't let you renovate your kitchen, and unfortunately, most won't let you install a solar system on the roof. One of the things we love most about community solar is that all you need is an electric bill and a utility company with open projects to be eligible. It's that simple. 

Whether you're a renter, are part of a homeowner's association that doesn't support rooftop solar, or have a roof with too much shading, you can sign up for a community solar farm

You'll save 5-20% on annual electricity costs

Are you paying more and more for electricity every year? If so, you're not alone: Between 2018 and 2022, the average residential electricity cost increased by over 17%. Community solar can help you recoup some of these costs.

When you purchase bill credits from your community solar provider, you get them at a 5-20% discount, depending on your initial contract. If your community solar subscription includes a 10% discount on bill credits, you'll receive $1 towards your utility bill charges for every 90 cents you pay your community solar provider – meaning you pocket 10 cents of savings. 

While 10 cents doesn't seem like much, over the hundreds or thousands you spend on electric bills each year, 90 cents for every dollar leads to decent savings.

It's easy to join and easy to cancel

We've already mentioned that joining a community solar program requires no change in utility service, but that doesn't scratch the surface of how easy it is. Most community solar options charge nothing upfront. You'll only pay once you receive bill credits on your monthly utility bill. 

Also, many programs require no long-term commitment. If you end up moving or decide you don't want to participate any longer, you can typically cancel without a penalty. You may need to give your provider the cancellation notice a few months (typically 90 or 180 days) in advance so they have time to cancel your subscription with your utility company. 

It supports clean energy development (and jobs) near you.

Investing in community solar supports the development of renewable energy and encourages job growth in that sector of the economy. The community solar farm you subscribe to will probably be nearby and employ people from your community to develop and maintain it!

The United States will install an estimated 6 gigawatts (GW) of community solar in the next five years. To put this into perspective, that amount of solar can generate enough electricity to power over 1 million homes! In 2021, the Department of Energy (DOE) set a target to develop enough community solar in the U.S. to power 5 million homes and support $1 billion in electric bill savings by 2025.

If you live in a state with renewable portfolio standards (RPS), a certain percentage of your state's electricity consumption needs to be generated by renewable energy. Because community solar farms produce renewable energy, they can help your state meet its requirements and reduce its dependency on fossil fuels. 

It strengthens the utility grid

Some areas of the utility grid don't have enough generators to provide adequate power when high demand makes them subject to blackouts. Utilities and developers often strategically work together to site community solar farms in these areas, helping utilities save time and money on costly grid maintenance and repairs. 

Learn more about the benefits of community solar.

Community solar is highly accessible, but it's still not available to everyone. Here are five questions to answer to understand if you’re eligible:

Are there projects open near you?

To subscribe to a community solar project, you need to have open projects in your utility service territory. While more and more states are recognizing the benefits of community solar and supporting the development of projects.Today, 41 states and Washington, D.C. have at least one community solar project online. This still leaves nine states without any community solar projects, and some of the states with projects still don't have enough capacity to meet demand. 

Do you pay your own electric bill?

If you live in a building where your landlord or building manager pays your electric bill, you likely won't be able to sign up for community solar directly. Without a utility account, your community solar provider won't be able to credit your electric bills. You can always encourage the person in charge of your electric bills to sign up if they're eligible.

Is your credit score high enough?

Some community solar projects have minimum credit score requirements of 600-700, but more providers are dropping these requirements to encourage community solar adoption among low and middle-income communities. 

One of the best incentives for community solar developers is the investment tax credit (ITC), which allows them to apply 30% of the farm's cost as a credit to their tax bill. The Inflation Reduction Act, passed in August 2022, provides an additional 10% tax credit to farms that are less than 5 MW in capacity (which applies to most community solar projects) and located in a low-income community or tribal land, and another 20% tax credit to farms that are less than 5 MW in capacity and installed as part of a low-income residential building project or economic benefit system. 

These tax credits can save community solar developers and investors hundreds of thousands of dollars, which encourages them to develop projects in lower-income areas and drop credit score requirements. Even if your credit score is a concern, a community solar project that doesn't require a minimum score may still be available. Some projects only allow lower-income customers to join. 

Do you plan to move soon?

When you sign up for community solar, you won't immediately see credits on your bill. It often takes at least a few months for your provider and your utility company to set up your subscription. As we explained above, you may need to give a few months' notice before you can cancel your subscription. Unless you plan on moving to an area within the same utility territory, you should hold off on signing up for community solar if you move within a year. 

Do you already have rooftop solar?

If you have solar panels on your roof, ideally, your system is sized to meet 100% of your electricity demand—meaning your electric bills should be close to $0 (as long as you live in a state with net metering). As a community solar subscriber, your provider will size your share of the farm according to your electric bills. If they're about $0, you won't be able to benefit from community solar.

If your solar panel system doesn't meet your electricity demand or if you don't live in a state with net metering, it might still be worth signing up for community solar. Unsure if you should sign up for community solar with rooftop solar? Contact our Energy Advisors to find out if it makes sense for you!

Learn more about if you're a good fit for community solar.

You may not need to choose between community solar and home solar, but if you live in a state with net metering, you'll save the most long-term by getting a rooftop solar panel system sized to meet 100% of your electricity consumption.  

Let's say you live in a house and spend $1,800 annually on electricity. With a community solar subscription, you might save 10%, or $180, each year. With rooftop solar panels, you might cover the full $1,800 worth of energy each year on your own.

You'll save the most in almost every situation by installing solar panels at home. If that's not feasible, community solar is still a great alternative that will save you money and support clean energy development.

Community solar vs. rooftop solar

Learn more about rooftop solar vs. community solar.

Community solar isn't the only way to support clean energy without putting panels on your roof, but it’s the best way to save money. Retail green power plans and community choice aggregation (CCA) are other common alternative electricity options. Here's how they differ from community solar:

Retail green power plans

In deregulated electricity markets, you can choose the supply portion of your electric bill (where your electricity comes from), but the transmission and distribution (T&D) portion (how your electricity gets to you) still comes from your existing electric utility company. 

With a retail green power plan, you can choose what percentage of your electricity comes from renewable sources. The higher the percentage, the more you'll pay, which doesn't make much sense because renewable energy is cheaper than non-renewable energy sources. 

Signing up for a green power plan doesn't necessarily support clean energy development near you because the energy generation can be thousands of miles away from your home. With a green power plan, you buy renewable energy certificates, or RECs, so you can claim to run your home on renewable electricity even if that electricity isn't directly going to your home. 

Community choice aggregation

In certain areas around the U.S., the local government wants alternative electricity options for its residents, often to reach certain clean energy targets. Cities participating in a CCA arrangement can purchase electricity from specific sources and companies, sometimes for less than utility electricity.

Currently, CCAs are only authorized in 10 states. Even if your state allows for CCAs, your city still needs to create a CCA option for you to sign up. Similar to green power plans, CCAs don't always support local clean energy development: Your city could choose to get its electricity from across the country or opt for non-renewable sources entirely. If your CCA does use renewable energy, you'll receive RECs, just like with green power plans.

Electricity plan comparison

Learn more about how community solar compares to other alternative electricity options.

As of 2023, at least 19 states and D.C. have policies or programs that support community solar, but only a handful of states have projects designed to provide electric bill savings with open capacity. According to data through Q1 of 2023 from the Institute for Local Self-Reliance (ILSR), three states have the best community solar markets based on operating capacity and the number of completed projects:

1. New York: 1,378 MW of operating capacity across 826 projects

2. Minnesota: 869 MW of operating capacity across 467 projects

3. Massachusetts: 816 MW of operating capacity across 478 projects

While New York currently has the highest community solar operating capacity, it doesn't necessarily have the most availability for new subscribers. We looked at the states with open projects in our Community Solar Marketplace to determine which have the highest available capacity on EnergySage as of June 2023:

1. Maine

2. New Jersey

3. Colorado

4. Maryland

5. New York

6. Illinois

7. Minnesota

8. Massachusetts

9. Rhode Island

We also recently opened marketplaces in California, Oregon, and D.C., but these areas are still limited in available capacity.

Even if we have projects open in your state, we may not have ones in your utility territory, or the projects could be explicitly reserved for lower-income customers. Learn more about the best states for community solar and check if you’re eligible for any open projects near you.

You might be lucky enough to have multiple projects in some areas. How do you choose one? Here are some of the top factors to consider when picking a project:

Community solar model

Community solar projects and programs are typically offered in two formats: You get access to electricity from a certain number of panels in the array or purchase a specific amount of electricity. 

Subscription 

This model is what we describe above and what we offer through EnergySage. It's similar to leasing a solar panel system, allowing you to pay a lower price on your annual electricity bill without buying solar panels directly. Instead of owning panels or a share of the project, you purchase electricity at a lower rate than you would from your utility.

To ensure you save, many community solar companies limit how much electricity you can receive from the project (i.e., no more than 100% of your average monthly usage).

Ownership

Ownership-based community solar models are similar to purchasing a rooftop panel system, but instead of installing panels on your roof, you own a set number of panels in the community solar array or a certain number of kilowatts from the solar project's total capacity.

You can only purchase enough shares for these projects to meet your annual electricity usage, and the project's output will be credited to your electric bill as with other community solar plans.

Estimated savings

Most community solar projects offer a fixed discount on the credits you purchase from your provider. This discount can vary depending on the provider, project, and location, but generally, it ranges from about 5-20%.

If you're choosing between multiple projects, you'll save the most if you choose the one with the highest discount rate. On EnergySage, we estimate how much you'll save over the year: Keep in mind that with community solar, you save annually, not monthly (more on that below). 

If you're a lower-income customer, some providers are considering creating budget plans that provide a fixed monthly discount so you consistently save. If these become available, remember that because your annual solar production still determines your savings, you would likely need to make a yearly commitment or pay a cancellation fee. 

Availability and timing

Some investors require the project to obtain a certain number of subscribers before they fund its development. If you select a project like this, you'll likely wait a year before seeing savings. Other projects are currently active and accepting new subscribers. Through our Marketplace, it's easy to see if a project's active, if it's filling up, and how many subscriber spots remain.

Billing structure

We get into the details below, but when choosing a community solar project, you should understand its billing structure. Some projects offer consolidated billing, meaning you'll receive one bill from your provider or utility company, with your community solar credits reflected. With other projects, you'll receive two bills: one from your provider, and one from your utility company, which can sometimes make it more challenging to track your savings.

Cancellation policy

If you move or want to cancel your subscription for any reason, it's free and easy with most community solar projects. You likely need to give a few months' notice, so it's usually best to choose a project with a shorter cancellation notice period if you're a renter. As we just mentioned, if you're on a budget plan, you'll usually be locked into your subscription for a year before you can cancel without penalty.

Available sign-up bonuses

Some projects offer bonuses such as a bill discount or a gift card just for signing up! In most cases, you must wait until you start receiving bills from your provider to claim the bonus. If you choose a provider offering a sign-up bonus, you can start saving immediately with your subscription.

Sustainability

Some community solar farms are built on undeveloped land, while others are located on brownfields sites, landfills, or farmland (especially when combined with agriculture in agrivoltaic farms). These projects are typically more sustainable because they use the land for multiple purposes and don't contribute to deforestation. You can learn more about a project's sustainability in the "Project Story" section of our Marketplace.

Provider reputation

The best indicators of a good community solar provider are positive reviews from actual customers. When you click on open projects in our Community Solar Marketplace, you can see reviews from verified subscribers to help you decide.

Project location

As long as a project is located in your utility territory and has available capacity, you can sign up for it. Some subscribers look for the project to be as close to their homes as possible so they can feel closer to the impact they're making.

Select the closest project to your house if you fall into this camp and have multiple projects to choose from. On the EnergySage Community Solar Marketplace, you can see the town or city where each project is located.

Learn more about selecting a community solar project.

Now that you understand how to choose a project, it's time to sign up for one! 

1. Enter your zip code: When you enter your zip code through our Marketplace, you'll see a tailored list of open farms nearby.

2. Compare projects: At a glance, you can see information about project location, annual savings, project status, credit score requirements, and cancellation terms. Click on the project's details to learn more about the project and provider, including its size, remaining spots, billing structure, and any available sign-up bonuses. 

3. Choose an offer and fill out an enrollment form: This step should only take a few minutes. You need to fill out an enrollment form with basic information (like your name and address), your utility account number, and about a year of your electricity usage information (if you have it). Occasionally, a credit check may also be required at this step.

4. Finalize your subscription with your provider: Your community solar provider will assess your electricity consumption and allocate a portion of the community solar farm to you accordingly. Typically, the size of your share will generate enough energy to meet 85-90% of your annual consumption—this is important because you don't want to purchase bill credits that you'll never use.

5. Wait: It will typically take 1-3 months to see the credits reflected on your electric bills and receive an invoice from your provider. Your utility company needs to work with your provider to set up the billing process (more on this below). As mentioned above, in some cases, the project's investor may require a certain number of subscribers to build it. If you sign up for a farm like this, it could take over a year to start saving with community solar. 

If you have any questions along the way, we have a team of dedicated Energy Advisors who are happy to help, either over the phone or via email.

When you've officially subscribed to a community solar farm, it needs to generate electricity for a month before your utility company will read the meter at the farm to determine how much electricity it's produced. Your utility will divide that production across all the shares and allocate electric bill credits accordingly. This can take a few weeks.

Once your provider receives this information from your utility, they'll send you a bill for the credits your share generated. This usually takes about 1-3 months, so in some cases, you may use your bill credits before you pay for them (which is why you typically need to give a few months' notice before canceling). You may even see a negative balance on your utility bill if your share's generation exceeds your consumption. 

Billing structure

Depending on where you live and the project you select, you could receive either one bill (from your provider or your utility company) or two bills (one from your provider and one from your utility company). When you receive one bill, it's called consolidated billing; this can make it easier to track your bill credits and utility consumption. 

If you don't have consolidated billing, don't worry. While it's more complicated, it's not that much different from having multiple monthly utility bills like electricity, gas, and water. On your electric bill, you'll see the value of your electricity consumption for that month and the value of your solar bill credits, which will be applied to that consumption charge. On your community solar bill, you'll see the value of the solar bill credits and the discount you're receiving on them.  

Learn more about community solar billing. 

Seasonality

When you sign up for community solar, one of the most important things to understand is that it's an annual savings product, not monthly. This means there may be some months you pay more for electricity than you do currently, and some you pay a lot less. We all know the sun shines more in the summer than in the winter, which means your farm will generate a lot of bill credits. If you're not consuming enough electricity by the time those credits are reflected on your bill, don't worry: With community solar, you can roll over credits onto future electric bills.

Because there's a lag between when the credits are reflected on your bill and when you pay for the credits, with community solar, you should expect to pay the most in the early fall. Learn more about community solar seasonality.

Can your business sign up for community solar?

Absolutely! If your business pays its electric bill and is located in an area with open projects, it can sign up for community solar. If you're interested in signing your business up for community solar, please get in touch with us directly for more information.

How big are community solar farms?

Community solar farms are typically less than 5 MW in capacity. Projects over 5 MW won't qualify for the lower-income tax credits described above.

Why should I use EnergySage to sign up for community solar?

With EnergySage, you can compare multiple community solar projects head-to-head to pick the one that's best for you. As you shop, you'll also have access to a free Energy Advisor who can answer any questions you may have throughout the process. 

Can I change the size of my project share?

Typically, yes. If you decide to make some home energy efficiency upgrades and cut your annual electricity consumption dramatically, it's a good idea to get back in touch with your community solar provider to downsize your allocation of the solar farm. Similarly, if you add an electric vehicle (EV) charger or switch to heat pumps, you may need to increase your share of the farm. It may take a few months for changes to take effect, so we recommend providing as much advance notice as possible.

Want to compare community solar options in your area? Check out our Community Solar Marketplace, where you can see a list of open community projects near you and get a quick estimate of potential savings. If there aren't community solar projects in your region yet, sign up to receive updates as new projects go live in our Marketplace.