Unlocking Urban Solar Potential: Community Solar Case Study Reveals Economic and Environmental Benefits
America is experiencing a remarkable surge in solar energy adoption as the nation shifts towards renewable resources. Over the past decade, solar installations have grown by 22% annually, with a staggering 51% increase in 2023 alone. This growth is attributed to several factors, including reduced costs for solar photovoltaic (PV) installations, a rising demand for sustainable electricity from both public and private sectors, and supportive federal policies such as the Solar Investment Tax Credit (ITC) and the Inflation Reduction Act (IRA).
By the end of 2023, the country boasted over 179 gigawatts (GW) of installed solar capacity, capable of powering approximately 33 million households. Projections from the U.S. Energy Information Administration indicate that a record-breaking 36.4 GW of solar capacity will be added to the energy grid in 2024.
While rooftop solar remains a significant contributor to the solar revolution, it's not always feasible for everyone, especially renters and low- to moderate-income households. Community solar, which emerged in 2010, offers an alternative solution by allowing customers to access solar energy without installing PV panels on their properties. Over the past decade, community solar has seen an astounding average annual growth rate of 80%, reaching around 6.49 GW by the end of 2023. Forecasts suggest that community solar capacity will double by 2028, reaching 14 GW.
The concept of community solar presents numerous benefits and opportunities, particularly for commercial property owners in urban areas with high demand for renewable energy but limited space for on-site solar installations. Altus Power, a full-service solar company, defines community solar as a system that provides local businesses and residents with shared access to renewable energy and its benefits through remote access to existing solar installations.
Subscribing to a community solar project allows property owners to reduce carbon emissions and electricity costs without altering their rooftops or homes. This innovative model promotes clean energy adoption within communities and offers renewable energy access to those unable to install solar panels due to various constraints like limited space, shading, outdated electrical systems, high costs, or lack of property ownership.
In essence, participants in community solar programs are members of a shared solar project located off-site, such as a large utility-scale solar facility, a solar farm, or a nearby industrial or retail property. Each participant contributes to the energy generated by the community solar array and receives a credit on their electricity bill in return. This not only reduces carbon emissions but also often lowers operational costs for property owners.
The integration of community solar into commercial real estate strategies can serve both environmental and business objectives. This intersection occurs when property owners opt to host community solar projects, typically by leasing rooftop or land space for solar installations. Such partnerships allow solar developers and real estate owners to maximize the size of the solar system, thus enhancing economic opportunities for the property owner. By leveraging underutilized spaces, property owners can generate renewable energy and create additional income streams. Community solar not only strengthens the resilience and reliability of the electrical grid but also stabilizes energy expenses and showcases a commitment to sustainability.
For commercial real estate owners with suitable rooftops, two income options arise: "behind the meter" solar serving the tenant and community solar. The former provides clean power directly to the tenant and on-site operations, reducing utility expenses and aiding in meeting sustainability targets. With community solar, generated clean power is fed into the grid, allowing multiple community members to purchase energy, often at a discounted rate, without requiring site control. These projects advance sustainability goals by increasing renewable energy adoption, reducing greenhouse gas emissions, and lessening reliance on fossil fuels, a key contributor to climate change.
Significant community solar projects have proliferated since the inception of the first project in Ellensburg, WA, in 2006, largely propelled by state programs. By 2022, there were 2,550 community solar projects nationwide, with 93% concentrated in 10 states. Leading states for installations include Florida, New York, Minnesota, and Massachusetts. However, many projects were part of utility-specific programs not available to commercial real estate property owners. Notably, Illinois, New Jersey, New York, and Maryland stand out for active community solar adoption on large commercial buildings, driven by favorable state legislation and ample real estate supply.
The concentration of community solar in specific states underscores the significant role of state policies and regulations in driving adoption. Federal policies like the Investment Tax Credit (ITC), extended through the Inflation Reduction Act (IRA), and state-level policies such as Renewable Portfolio Standards (RPS) and net metering have spurred participation and investment. As solar costs decline and favorable state policies persist, community solar projects are becoming increasingly accessible to low- and moderate-income (LMI) households, facilitating broader participation in a low-carbon future.
Case Study: Learning from Neighboring States' Solar Success
In numerous urban areas, the scarcity of suitable land for ground-mounted solar installations has led to a shift towards utilizing expansive rooftops of large industrial and retail commercial properties. This strategy enables local communities to extend the reach of renewable energy to a wider demographic, including those with lower incomes. Leveraging these roof spaces not only addresses land constraints but also fosters collaboration between residential and commercial sectors. This collaborative environment promotes sustainability while optimizing existing infrastructure, ensuring that renewable energy integration becomes integral, especially in underserved communities most affected by fossil fuel pollution.
In the following case study, CBRE Econometric Advisors employs proprietary commercial property data to assess the community solar potential in four cities. Two markets with existing community solar initiatives, namely New York City and Chicago, are compared with cities in the same regions—Philadelphia and Detroit—that are planning to implement similar programs. The study illustrates the potential financial and environmental advantages that community solar initiatives could offer as regulations and programs evolve. While the extent of savings varies based on location, project specifics, and energy consumption patterns, community solar subscribers can potentially save up to 20% annually. For instance, in the case study examples, subscribers in New York and Chicago could save approximately 9-10% annually off their electricity bills.
Conclusion
Community solar emerges as a cost-effective avenue for communities to engage in sustainable energy solutions. The benefits encompass increased access to clean energy for local communities and, for property owners, additional revenue streams, reduced reliance on fossil fuels, and compliance with government Building Performance Standards (BPS) or other climate mitigation measures.
By the end of 2023, the country boasted over 179 gigawatts (GW) of installed solar capacity, capable of powering approximately 33 million households. Projections from the U.S. Energy Information Administration indicate that a record-breaking 36.4 GW of solar capacity will be added to the energy grid in 2024.
While rooftop solar remains a significant contributor to the solar revolution, it's not always feasible for everyone, especially renters and low- to moderate-income households. Community solar, which emerged in 2010, offers an alternative solution by allowing customers to access solar energy without installing PV panels on their properties. Over the past decade, community solar has seen an astounding average annual growth rate of 80%, reaching around 6.49 GW by the end of 2023. Forecasts suggest that community solar capacity will double by 2028, reaching 14 GW.
The concept of community solar presents numerous benefits and opportunities, particularly for commercial property owners in urban areas with high demand for renewable energy but limited space for on-site solar installations. Altus Power, a full-service solar company, defines community solar as a system that provides local businesses and residents with shared access to renewable energy and its benefits through remote access to existing solar installations.
Subscribing to a community solar project allows property owners to reduce carbon emissions and electricity costs without altering their rooftops or homes. This innovative model promotes clean energy adoption within communities and offers renewable energy access to those unable to install solar panels due to various constraints like limited space, shading, outdated electrical systems, high costs, or lack of property ownership.
In essence, participants in community solar programs are members of a shared solar project located off-site, such as a large utility-scale solar facility, a solar farm, or a nearby industrial or retail property. Each participant contributes to the energy generated by the community solar array and receives a credit on their electricity bill in return. This not only reduces carbon emissions but also often lowers operational costs for property owners.
The integration of community solar into commercial real estate strategies can serve both environmental and business objectives. This intersection occurs when property owners opt to host community solar projects, typically by leasing rooftop or land space for solar installations. Such partnerships allow solar developers and real estate owners to maximize the size of the solar system, thus enhancing economic opportunities for the property owner. By leveraging underutilized spaces, property owners can generate renewable energy and create additional income streams. Community solar not only strengthens the resilience and reliability of the electrical grid but also stabilizes energy expenses and showcases a commitment to sustainability.
For commercial real estate owners with suitable rooftops, two income options arise: "behind the meter" solar serving the tenant and community solar. The former provides clean power directly to the tenant and on-site operations, reducing utility expenses and aiding in meeting sustainability targets. With community solar, generated clean power is fed into the grid, allowing multiple community members to purchase energy, often at a discounted rate, without requiring site control. These projects advance sustainability goals by increasing renewable energy adoption, reducing greenhouse gas emissions, and lessening reliance on fossil fuels, a key contributor to climate change.
Significant community solar projects have proliferated since the inception of the first project in Ellensburg, WA, in 2006, largely propelled by state programs. By 2022, there were 2,550 community solar projects nationwide, with 93% concentrated in 10 states. Leading states for installations include Florida, New York, Minnesota, and Massachusetts. However, many projects were part of utility-specific programs not available to commercial real estate property owners. Notably, Illinois, New Jersey, New York, and Maryland stand out for active community solar adoption on large commercial buildings, driven by favorable state legislation and ample real estate supply.
The concentration of community solar in specific states underscores the significant role of state policies and regulations in driving adoption. Federal policies like the Investment Tax Credit (ITC), extended through the Inflation Reduction Act (IRA), and state-level policies such as Renewable Portfolio Standards (RPS) and net metering have spurred participation and investment. As solar costs decline and favorable state policies persist, community solar projects are becoming increasingly accessible to low- and moderate-income (LMI) households, facilitating broader participation in a low-carbon future.
Case Study: Learning from Neighboring States' Solar Success
In numerous urban areas, the scarcity of suitable land for ground-mounted solar installations has led to a shift towards utilizing expansive rooftops of large industrial and retail commercial properties. This strategy enables local communities to extend the reach of renewable energy to a wider demographic, including those with lower incomes. Leveraging these roof spaces not only addresses land constraints but also fosters collaboration between residential and commercial sectors. This collaborative environment promotes sustainability while optimizing existing infrastructure, ensuring that renewable energy integration becomes integral, especially in underserved communities most affected by fossil fuel pollution.
In the following case study, CBRE Econometric Advisors employs proprietary commercial property data to assess the community solar potential in four cities. Two markets with existing community solar initiatives, namely New York City and Chicago, are compared with cities in the same regions—Philadelphia and Detroit—that are planning to implement similar programs. The study illustrates the potential financial and environmental advantages that community solar initiatives could offer as regulations and programs evolve. While the extent of savings varies based on location, project specifics, and energy consumption patterns, community solar subscribers can potentially save up to 20% annually. For instance, in the case study examples, subscribers in New York and Chicago could save approximately 9-10% annually off their electricity bills.
Conclusion
Community solar emerges as a cost-effective avenue for communities to engage in sustainable energy solutions. The benefits encompass increased access to clean energy for local communities and, for property owners, additional revenue streams, reduced reliance on fossil fuels, and compliance with government Building Performance Standards (BPS) or other climate mitigation measures.
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