By Rachel Gass – 3/6/2025

Community Solar: A Critical Yet Underutilized Clean Energy Resource

Community solar represents a critical yet underutilized resource in the clean energy transition. Despite its potential to deliver substantial energy savings to consumers and generate millions in annual economic benefits, community solar remains unviable in Pennsylvania. Lawmakers must take action to enact policies supporting the development of community solar to reduce energy costs for consumers, foster local economic growth, and advance a sustainable energy future.  

What is Community Solar?  

The US Department of Energy (DOE) defines community solar as “any solar project or purchasing program, within a geographic area, in which the benefits flow to multiple customers such as individuals, businesses, nonprofits, and other groups.” Community solar democratizes the energy grid by enabling individuals to collectively invest in solar energy, making it accessible for renters and those unable to afford the high upfront costs of installing a solar array.  

Community solar arrays typically operate at a nameplate capacity of 5MW and below and can serve up to 1,000 households. Because of their relatively small size, arrays can be built where utility-scale solar cannot. Accordingly, common sites for community solar arrays include brownfields, public or donated land, rooftops, or low- and moderate-income (LMI) neighborhoods, where residents can economically benefit the most. 

Community solar is a critical resource for nearly half of Philadelphians and 50% of households and businesses nationwide who cannot host their own solar arrays because they rent or have unideal rooftop conditions. For these households, community solar is the only way to directly participate in solar generation and access the environmental and economic benefits of local, clean energy.  

How Does Community Solar Work?  

Community solar implementation varies widely by state based on state policies, but programs typically follow the same general structure: Community solar projects generate electricity from sunlight which feeds into the grid. Customers either subscribe to or own a portion of the electricity generated by the solar array and receive credits for electricity generated by their share of the community system. These credits usually get applied towards a subscriber’s monthly electric bill, reducing electric costs.  

Community solar project ownership ranges from utility-led models to community ownership, for instance by a church, group of neighbors, or other nonprofit. Each model comes with its own benefits and drawbacks, with community-owned initiatives emerging as a particularly equitable and lucrative option.  

Source: Environmental Law and Policy Center  

What are the Benefits of Community Solar? 

Economic 

Community solar offers substantial economic benefits for both individual consumers and local and state governments. One key metric for evaluating the financial value of these programs is Net Present Value (NPV). NPV calculates the difference between received credits and subscription payments over time, with a positive NPV indicating that subscribers save money compared to not participating. As of mid-2024, the median NPV of community solar subscriptions is approximately +0.27 per watt (W-AC), indicating a positive economic return for households, on average. At the individual level, a community solar subscription can reduce utility costs by 10% over a customer’s lifetime, making it a highly cost-effective option for long-term savings. 

State-level research supports these conclusions. A recent study by Penn State University emphasizes the tremendous impact that community solar programs would have in Pennsylvania. The construction of the 235 planned community solar facilities as of 2020 would create over 11,000 jobs and generate $1.8 billion in economic activity. In the years following construction, these facilities would generate approximately $83.3 million in economic output and support 520 jobs annually. Indeed, the long-term value of community solar in driving both job creation and economic growth, while lowering emissions and ushering in a sustainable energy future, is indisputable.    

Electrical Grid 

A significant portion of the cost savings for ratepayers outlined above will come from efficiency improvements to the electrical grid. Smaller in-state projects built closer to their respective points of consumption more efficiently use existing infrastructure and allow utilities to avoid pole, wire, and transformer costs that they would otherwise pass onto consumers.  

Community solar can also address the nationwide challenge of the backlog of utility-scale projects in the interconnection queue because community solar-battery projects can connect directly to lower-voltage distribution grids. One study by grid modeling expert Vibrant Clean Energy found that if over 10% of the grid were composed of distributed projects, ratepayers would save nearly half a trillion dollars compared to if those projects did not exist. These savings come from costs diverted from money sinks like expensive transmission projects and peaker plants, or fossil-gas powered stations states rely on to generate power in times of grid stress. These plants are predominantly located in lower-income areas and communities of color, contributing to poor environmental health outcomes and structurally racist practices.  

Low-Income Community Solar 

The average cost to install a rooftop solar array in 2022 was $20,498, making individual solar energy inaccessible for many households. Community solar offers a crucial alternative, particularly for low-income households who sometimes spend up to 30% of their paychecks on energy bills. For these families, community solar savings could have a significant material impact. However, low-income families and communities of color historically targeted by dirty energy projects have largely been excluded from the community solar transition. Low-income households account for 43% of all U.S. households but make up only a small fraction of program participants. 

One reason for this gap is that traditional deployment models have failed to enable sufficient access to community solar for critical income groups. For instance, 46% of projects require upfront payment subscriptions and monthly payments, leaving them inaccessible to LMI customers who may lack the resources for an upfront financial investment, regardless of promised long-term savings. Contract termination penalties or fees present another barrier to LMI customers who rent and may need to relocate during their subscription term, putting these projects further out of reach of these income groups.  

Up until recently, LMI customers who resided in Section 9 housing faced compounded barriers to accessing community solar benefits. Solar credits can impact monthly rent payments utility allowances that these households receive to cover monthly energy costs, making them financially infeasible. In July 2022, the U.S. Department of Housing and Urban Development (HUD) issued guidance enabling residents of HUD-assisted housing to access community solar without rent increases or utility allowance adjustments. Now, in some cases, community solar credits can be excluded from household income and utility allowance calculations, meaning housing costs will not increase due to the added savings from a community solar subscription. This is an important step in ensuring that the 4.5 million families who live in affordable housing can benefit from low-cost renewable energy. 

This shift in guidance, combined with an expansion of accessible payment options, will be critical steps towards making community solar more accessible for LMI customers. Ensuring access for these income groups is essential to unlocking the full potential of community solar, as a significant portion of the U.S. solar potential exists in LMI communities, and, as illustrated below, many LMI areas have the capacity to offset up to 100% of their electrical consumption through rooftop solar generation.  

Source: National Renewable Energy Laboratory 

Community-Owned Solar 

Community-owned solar presents an incredible opportunity for communities to maximize the benefit they receive from the community solar transition. Local clean energy ownership, as opposed to local siting on its own, maximizes electric bill savings, energy revenues, and NPV. Subscribers to community-owned arrays can see up to $12,000 to $14,000 more earnings over the life of these projects, compared to outside ownership by a utility or other third party. On a large scale, this looks like $7.5 billion in extra value for host communities if all the small solar installed in 2021 were locally owned. Community ownership can also increase home values by as much as $4,000 per kilowatt and increase public support for renewable energy projects, making them both more viable and beneficial in the long run.  

Source: Institute for Local Self Reliance  

What Does the Community Solar Landscape Look Like Today?  

National  

As of June 2024, approximately 7.87 GW of community solar was operational in the U.S. across 44 states and localities, including DC. Four states–Florida, New York, Massachusetts, and Minnesota–represent over three-quarters of the total market. Pennsylvania is home to no community solar projects.  

Twenty-four states and localities have passed “enabling legislation” encouraging or mandating community solar, and of those, 20 have additional provisions addressing LMI participation through either incentives providing additional funding for projects subscribing LMI customers or carve-outs requiring a certain percentage of projects be subscribed by LMI customers. 

Significantly, community solar enjoys broad legislative and public support from both Republicans and Democrats: according to a poll conducted by the Conservative Energy Network, approximately 78% of Democrats and 66% of Republicans support community solar projects being developed in their communities, and diverse coalitions of farmers, businesses, and environmental justice advocates have rallied behind the cause. Additional support has come from the previous federal administration, which awarded $7 billion in funding to 60 recipients to improve low-income households’ access to solar energy through their Solar for All program, including for community solar projects in New Hampshire, Maine, and Oregon. 

Source: U.S. Department of Energy  

Pennsylvania 

Without legislation regulating community solar projects, including by defining how projects can sell excess energy back to the grid and providing a structure for financial subsidies, community solar remains unviable in Pennsylvania. State lawmakers across the aisle have unsuccessfully tried to enable community solar, with bills introduced both in the House and Senate getting stuck in committee. Disputes included whether utilities would be required to buy excess power and renewable energy credits from projects and whether subscribers would need to pay distribution costs. Utilities like PECO have opposed past community solar bills on these grounds, arguing that projects would shift costs onto all utility customers, regardless of their participation.  

Most recently, two community solar bills sat in the Senate for consideration before expiring at the end of the 2024 legislative session. HB 1842, which passed the General Assembly with bipartisan support, aimed to establish a third-party owned community solar program in the Commonwealth and imposed duties on relevant government and subscriber organizations. Key provisions included a ban on upfront sign-on fees or credit checks for subscribers and a prevailing wage requirement for construction workers. The Senate version of the bill also passed with bipartisan support but never made its way to the House. Any legislation calling for community solar would now need to be reintroduced, and key groups, including Our Solar PA and Solar United Neighbors are lobbying for such policies. 

The lack of community solar projects in Pennsylvania represents a significant missed opportunity. Two of Pennsylvania’s neighbors are quickly establishing themselves as leaders in community solar programs. New York leads all states in community solar capacity with over 800 active projects and an aggressive goal of producing 6 GW of distributed solar electricity by the end of 2025. In 2024, New Jersey established rules making remotely sourced solar energy available to residents served by all four of NJ’s electric distribution companies (EDCs). Hopefully, Pennsylvania can follow suit to establish a framework in which robust community solar projects can operate. 

What are Some Next Steps? 

If implemented thoughtfully, community solar can power an equitable clean energy transition that brings significant economic and environmental benefits to households across the country. States like Pennsylvania should pass legislation enabling robust community solar programs, including provisions for condensed billing, maximized benefits for low-income communities, and carveouts for community-owned projects. Federal support through increased funding of community-owned programs will also be crucial.  

Those interested in supporting community solar in Pennsylvania can visit Our Solar PA , a coalition lobbying to pass comprehensive legislation enabling community solar statewide. More information about community-owned projects can be found at The People’s Solar Energy Fund, a woman-led nonprofit financing community-owned projects across the country. Community solar represents just a small segment of clean energy today, but it has the potential to make some of the greatest impacts, and lawmakers and community leaders must act to ensure that happens.