Advocates pushing ventures to let groups share energy from the sun in Pennsylvania
November 3, 2013 12:00 AM
By Anya Litvak / Pittsburgh Post-Gazette
For solar advocates who live in apartments or have shady roofs, or those who don't have the means to install their own array but want to be part of the solar movement, there's community solar.
But not so much in Pennsylvania.
Community solar can mean several things, and all of them are difficult to accomplish in the state. At its most basic, it's a group of people chipping in to finance the installation of a single solar project. They could be donors, who receive no returns from the project. Or they could form a cooperative or even a for-profit company and reap the tax benefits of investing in solar.
In some states, like Colorado, residents who buy shares in a solar projects get the credit for the power it produces applied to their electric bills. The utility simply splits the credit among all the owners of that one project in proportion to their shares. That's called virtual net metering, and it is seen by community solar advocates as the most consumer-friendly option, but Pennsylvania law prohibits more than one customer from sharing an electric meter.
When the Pennsylvania Public Utility Commission took up a related issue last year -- whether solar installations operated by third parties should still be net metered for utility customers who host them -- utilities weighed in fearing community energy aggregation in which more than one customer would be served by a single solar project. The PUC assured the companies that it's against the law.
So solar advocates in Pennsylvania are exploring other options.
Pittsburgh Green Innovators -- a consortium of universities, local nonprofits and labor unions -- is advancing something it calls "Growing Solar from the Hill." The organization is looking to enlist nonprofits in the Hill District to act as host sites for solar arrays and then sign power purchase agreements for the electricity produced by the panels.
Tom Bartnik, executive director of the group, said the plan is to issue a request for proposals for interested nonprofits in mid-January. The funding will come from foundations and government grants, at least for the initial three pilot projects whose capacity will be a combined 15-30 kilowatts.
But in the future, Mr. Bartnik hopes to turn this into a self-sustaining and expanding community of solar projects. That could involve starting a solar cooperative or even founding a limited liability corporation, which would be able to take advantage of the federal tax credit available to solar owners for 30 percent of the project cost, and the accelerated depreciation available to companies that invest in such projects.
"Part of the challenge, whether developing an LLC or co-op, you end up having legal and accounting costs that, on a small scale, are hard to justify," Mr. Bartnik said. "So we're trying to set it up as an expanding network ... with the idea that we set up this organizational and financial structure that can be replicated and grow over time."
Then there's the crowdsourcing model of solar investment. Think of websites such as Kickstarter.com and Crowdfunder.com through a solar lens and you get the California-based company Mosaic.
Since its inception in 2011, Mosaic has been pushing the boundaries of solar investing online. It presents a platform where investors can browse projects and buy a stake in them.
These investments come with returns driven by the sale of electricity from the projects. But investments are limited to residents of California and New York or accredited investors nationwide. For Pennsylvania residents whose net worth is below $1 million, Mosaic is not an option.
That may be changing soon. The Securities and Exchange Commission has just released its guidelines for Internet financing and investing by nonaccredited investors. The rules are in a comment period now.
That may be a turning point for community solar investment, said Ian Smith, a solar installer with Coraopolis-based Energy Independent Solutions LLC and vice president of the Solar Unified Network of Western Pennsylvania.
"Everybody I talk to about that is saying, 'Yeah, we're waiting to hear what SEC rules are,' " he said.
Mr. Smith is a strong proponent of community solar, and he's finding interest in the idea is on the rise in Pennsylvania.
"[Now] we're trying to figure out which of these models is appropriate, feasible in Pennsylvania."
Radnor, Pa.-based Community Energy has a different version of crowdsourcing for its solar projects, one that is already taking root in Pennsylvania. The company is an electric supplier that offers a 100 percent renewable energy product from Pennsylvania sources. It uses the profits from the energy marketing business to build renewable energy projects.
Earlier this year, the company hit the Philadelphia region with a campaign to get enough customers to switch their electricity provider to Community Energy so that the company can build a 63 kilowatt solar system at Temple University in the city's center. About 1,600 residents signed up and the Temple project is now under construction.
Joel Thomas, business development manager with Community Energy, said a similar campaign is under way in Pittsburgh. Already, a critical mass of local residents has switched to Community, but an agreement with the host site is still being worked out.
Mr. Thomas said getting people to crowdsource these projects is easier than motivating them to make a more traditional investment. The pitch is: "Hey, you're already paying your electric bill, why not be part of a local solar project?" he said.
And, it's a lot easier to get residents excited about local renewable projects than it is to convince them to support solar installations across the state, he said, especially when their support means switching from the utility's price to a higher rate, as is currently the option for renewable energy generation.
In Duquesne Light territory, for example, Community Energy's 100 percent renewable product is 35 percent more expensive than Duquesne's default rate, according to PAPowerSource.com, PUC's website that compares retail electricity prices.
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