A new concept in renewable energy is catching fire across the country, allowing customers who might find solar panels too expensive or impractical to buy green energy anyway.
Community solar gardens first took off in Colorado a few years ago, and the model — also known as community or shared solar — has spread to Minnesota, California, Massachusetts and several other states. Capacity is expected to grow sharply this year, and interest is up among both residential customers who just like the idea and large companies that want to cut their carbon footprints.
The gardens feed electricity to the local power grid. Customers subscribe to that power and get credit on their utility bills, with contracts that typically lock in for 25 years and shelter against rate increases. Some developers say customer bills will drop below regular retail rates within a few years; others say the savings begin immediately.
"This is really the year that community solar becomes mainstream," said David Amster-Olszewski, CEO of Denver-based solar garden developer SunShare LLC, which runs two operations in Colorado and is developing more with Xcel Energy Inc. (NYSE: XEL), including in Minnesota.
Rooftop solar panels are becoming more popular among homeowners as the cost comes down, but that market is limited to only about one-fourth of U.S. residences, according to the National Renewable Energy Laboratory, an arm of the U.S. Department of Energy. Community solar opens the door to many more, including renters, customers with shaded roofs and those who can't afford solar panels.
It's friendly to big customers, too. Ecolab Inc. is the first major corporate customer to commit to Minnesota's program. The Fortune 500 sanitation technology company will get enough electricity from a project in the suburbs to provide most of the power for its St. Paul headquarters.
At least 10 states promote ways for multiple customers to share renewable energy systems, according to the advocacy group Vote Solar, and a dozen states are actively promoting community solar.