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Community Solar Prospective Program Opportunities in 2024
A community solar project has several benefits over a utility scale solar project. Because community solar projects are connected at the distribution level, projects have a much faster development cycle than a transmission-level project. Community solar projects avoid issues with the Federal Energy Regulatory Commission (FERC) that plagues utility scale solar projects. Interconnection queues, access to transmission – are all avoided with community solar.
According to the Solar Energy Industries Association (SEIA), there is currently 6.2 GW of installed community solar capacity as of the fourth quarter of 2023. Community solar projects have been deployed in 41 states and Washington, D.C. and 19 states have active programs. Most of that capacity is in three states: New York, Minnesota, and Massachusetts. Regulators in Maryland and New Jersey recently approved rules for permanent community solar programs, expanding their pilot programs. Maryland, Minnesota, and New Jersey’s new programs all include capacity allocations and provisions for low-income customer participation.
Nine states have pending community solar legislation (Ohio, Virginia, Pennsylvania, Missouri, Washington, Alaska, West Virginia, Iowa). Several programs are likely to open up in the next 12-24 months most notably California, New Mexico, and Virginia.
Community solar installations declined in 2022 and 2023 as the market was plagued by supply chain uncertainties and interconnection delays. However, 2024 is poised to be a growth year, bolstered by successful programs and new program implementation. The Coalition for Community Solar Access expects an annual average eight percent growth from 2024-2028, for a cumulative total of 14 GW without accounting for any new programs. There are a handful of states, though, poised to modify or adopt new community solar programs. This article provides insight to that question and the possible programs that we may see this year either from new legislation or expansion/modification of existing programs.
Michigan: At the end of 2023, Governor Gretchen Whitmer signed energy legislation moving the state to 100 percent clean power by 2040. Called the “Clean Energy Future”, this package did not include a community solar provision, but advocates are pushing for the passage of bills (SB 152 and SB 153 and HB 4464 and HB 4465) introduced in the Spring of 2023. It is possible that action will be taken in 2024 to enable community solar in Michigan since it has bipartisan support. However, a couple of important issues still need resolution to make a community solar program workable—raising the solar cap and restoring net metering.
Ohio: In June of 2023, Ohio Republicans introduced HB 197, a bill that would begin a community solar pilot program with 1.5 GW of community solar. Though supported by Governor Mike DeWine, the legislation was not enacted. In December 2023, the Ohio House Public Utilities Committee adopted a substitute version of HB 197 that will become the basis for legislative debate in 2024.
Virginia: In 2020, SB 629 was enacted for a community solar program in Dominion Energy’s jurisdiction. Initially capped at 150 MW and later expanded to 200 MW, the program’s capacity has now been awarded to developers. Bills have been filed in the General Assembly to add 50 MW to Dominion’s program, reduce the monthly subscription rate, and establish community solar in Appalachian Power territory. As of the middle of February 2024, the Senate passed SB 255 with a proposed 450 MW cap for Dominion Energy and 75 MW for Appalachian Power. The House passed HB 106 with 150 MW for Dominion Energy and 50 MW for Appalachian Power. In the coming weeks, cross chamber negotiations will begin on these two bills. Recently-introduced legislation would require the Virginia Department of Energy to convene a stakeholder workgroup and determine incentives for projects located on rooftops, at brownfields or landfills, or dual-use agricultural projects. Community solar has broad support and is expected to be expanded in the Commonwealth based on the demand and the need to help meet the Virginia Clean Economy Act goals.
New Mexico: In April 2021, Governor Michelle Lujan signed the Community Solar Act. The law set aside 200 MW for the program, with 30 percent directed to low-income residents. The state established program rules in 2022, and an independent contractor chose developers to create 45 community solar projects in the spring of 2023. In November 2024, the New Mexico Public Regulation Commission will deliver a report to the General Assembly about the success of the community solar program. It is thought that the report may act to lift the 200 MW cap, furthering the community solar program’s impact.
Pennsylvania: Pennsylvania has been debating community solar legislation for more than 10 years. Conceptually there is little opposition to it, but it gets stuck with discussion about upfront capital costs and subsidy of other ratepayers. It is possible that legislation could be passed in 2024. In 2023, the Pennsylvania legislature took up several community solar bills all of which are still in play for 2024. There are two that are key. SB 550 creates rules for a community solar program in Pennsylvania. The bill would allow community solar facilities with a capacity up to 5 MW, increasing to 20 MW if the project is located on a brownfield or on rooftops. Facilities may be owned by third-party community solar organizations or subscriber administrators. HB 1467 establishes a community solar program. The bill would allow third party community solar development, ownership, and operation under contract with a community solar subscriber organization/administrator. The bill would allow community solar facilities with capacity up to 5 MW.
Missouri: Missouri has three bills that are being debated to establish community solar: HB 2342 (its companion is SB 1347), and HB 2540. HB 2342 requires retail electric suppliers to operate three year pilot programs for third party community solar providers. Each community solar project must have 10 percent of all subscriptions go to low-income customers and at least 20 percent to residential customers. The system size is 5 MW.
California: Regulators in California are considering the design for a new community solar program. The 2022 community solar program (legislated through AB 2316) includes equity goals such as 51 percent low-income subscribers. Projects must be built by workers paid with prevailing wages. The new angle this year is the proposed payment structure for community solar through the Net Value Billing Tariff, much like New York’s “Value Stack.” The community solar project must be paired with a minimum of four hours of energy storage capacity. The deadline for the California Public Utilities Commission to rule on the tariff proposal is July 2024. This would be the first program in the country connecting community solar to energy storage.
Washington: Washington introduced a bill in January 2024, HB 2253, which addresses fair access to community solar. It establishes a community solar bill crediting program to ensure subscribers earn a proportionate credit. This program builds upon previous work, but it is not certain that it will pass into law.
Wisconsin: Wisconsin had significant legislative debate about third party owned community solar (SB226 and HB 258) but it ultimately failed at the end of 2023. Ironically, the legislation was supported by conservatives, the farm bureau, realtors, and sustainability interests, but failed due to utility interests and opposition from labor unions. Nevertheless, it gained more traction than in years past and is expected to come up again in the 2024 legislative discussions.
Alaska: Alaskan lawmakers will take up community solar again in 2024. SB 152 was introduced in May 2023 and requires utilities to create community solar programs. Only utilities that fall under the Alaska Corporation Commission’s jurisdiction would be required to create a program. Each program would be capped at 50 MW and projects could be owned by the utility or a third party.
West Virginia: West Virginia took up community solar back in the 2022 legislative session, but it did not pass. In 2023, HB 4834 was introduced to create a program (limiting projects to 5 MW and the utility’s aggregate capacity to 100 MW). The bill was defeated in 2023. This year HB 4834 was reintroduced by Rep. Evan Hansen and Rep. Kayla Young. In addition, SB 638 was introduced but it is proposed as a pilot rather than a permanent program. In both chambers, the legislation includes projects that offer at least 51 percent of the electricity for low-income customers.
Iowa: In February 2023, Iowa legislators took up SB 332, which establishes a shared net metering cooperative program. Under the bill, the Iowa Utilities Board must develop interconnection agreements for shared solar net metering interconnection. The cooperative may consist of subscribers that are located at most 30 miles from the cooperative location (not including out-of-state subscribers). The number of subscribers is limited to 10 per cooperative and must be a customer of the same utility. It is expected that the legislature will take up this bill again in 2024.
So, which state may see community solar traction this year? It is hard to predict, but some look more promising than others. Pennsylvania has had interest in community solar for years, but it remains to be seen whether it will come to fruition. Other possibilities include Ohio and Michigan, and expansion of Virginia's program. Finally, California should be able to finalize its tariff schedule, opening up a major market there.
2024 may indeed be a banner year for community solar legislation and regulatory action. Leyline Renewable Capital looks forward to actively supporting developers in mature and new community solar markets.