Association for Public Policy Analysis & Management

Community shared solar (CSS) is an emerging approach to increase solar energy deployment and broaden access to its benefits. CSS allows customers to own, finance, or lease a share of an offsite, centralized solar facility without the requirements of appropriate rooftop space or access to capital or credit. Consequently, CSS is often linked with efforts to more equitably distribute the benefits of solar energy to low and moderate income (LMI) ratepayers excluded from the benefits of rooftop solar. Proponents of CSS as a means to expand the beneficiaries of renewable energy policies highlight the finding that the direct effects of many existing clean energy policies tend to be more regressive than other forms of economic policy. For example, only 10% of federal clean energy tax credits are claimed by households in the bottom 60% of the income distribution.

Increasing access to solar energy for LMI populations through CSS programs has also been supported for its effect on democratizing the energy system, allowing communities historically disenfranchised in the energy system to exert agency in making energy decisions. Yet significant barriers to LMI access remain: liquidity and credit constraints imposed on institutional investors, low compatibility of planning horizons, customer acquisition and transaction costs, and lack of organizational and political motivation.

CSS programs are being developed in states and utilities across the country, and some are taking innovative approaches to increasing LMI access. This project will provide the first systemic review of the demographics of CSS subscribers through a detailed analysis of subscription data of at least one CSS project developer in the country’s largest CSS program to date, Minnesota’s Solar*Rewards Community program. While approximately 90% of CSS subscriptions (by capacity) are held by non-residential energy customers in this program, little is known about the demographic makeup of the over 5,000 residential subscribers. We apply spatial regression techniques to estimate the income distribution of CSS subscribers in this CSS program to assess whether it is delivering on its promise to expand access to solar energy. A key challenge is that subscriber demographic information collected by utilities and project developers does not contain income information (for some developers, income verification and credit checks are intentionally not performed so as to lower transaction costs and not deter LMI participation). Therefore, our empirical approach is focused on using multiple matched datasets (such as property values and area summary statistics) to estimate income demographics of individual subscribers.

Findings on the income-based demographics of CSS subscribers will be complemented with a detailed financial analysis of business models being developed to attract LMI participation. We have collected over 100 subscription contracts being offered in over 30 CSS programs in utilities across Minnesota. We analyze these contracts for their lifetime value and their risk profiles, highlighting how contract design of CSS subscriptions can be made compatible with the competing priorities of electric utilities. Policy implications for CSS program design will be highlighted, drawing lessons from six original case studies of mechanisms to increase LMI participation in states across the country.