If you live in Illinois you have probably received a mailer recently offering “community solar”. Or, perhaps someone knocked on your door selling subscriptions to a community solar farm. You might be wondering about the benefits of community solar vs. rooftop solar and which makes more sense for you.
What is rooftop solar?
You’re probably generally familiar with the idea of rooftop solar. With residential rooftop solar panels, you produce energy that directly powers your home. Thanks to net metering, even if your system sometimes produces more energy than you are consuming, you get the benefit from that energy because your utility gives you credits for that energy that you can use anytime in the subsequent year.
With rooftop solar, you can either choose to buy your system outright, in which case you are making an investment that will pay for itself (and more) over time, or you can lease your system, in which case you will have zero up-front costs and immediately lower total monthly electricity costs. (Read about financing options.)
What is community solar?
With community solar, instead of putting panels on your home you “subscribe” to a solar farm located elsewhere. You don’t actually receive electricity from the farm, but you can think about it as if you do. The farm will tell your utility that you, as a subscriber, are eligible for credits for each kWh of electricity the farm injects into the grid on your behalf. This will reduce the number of kWh of energy supply your utility bills you for.
Note that the community solar farm does not have to be in your actual local community or municipality. In Illinois, it only has to be connected to the same utility. If you are served by ComEd in Chicago or Plainfield, the location or your community solar system might well be in DeKalb.
When community solar is better
Community solar is a better choice when any of the following are true:
1. You live in multifamily housing, such as in a condominium, townhouse, or apartment. Simply put, if you don’t own your roof, no one can install panels there for you. With community solar you don’t need “roof rights”.
2. The roof of your home is heavily shaded or otherwise not suitable for solar. If your roof is heavily shaded or the only available space faces north, solar panels placed there will not be efficient. Or, your roof might be of an usual shape or construction. When your roof is not suitable for rooftop solar, community solar is a great solution. See our article about how to evaluate your roof.
3. You don’t like the idea of solar panels on your roof. Some people just don’t like how solar panels look. Community solar is perfect in these situations. However, before you decide, make sure you check out our beautiful installations, which look much better than you might imagine.
4. Your electricity bill is less than $75 / month. Congratulations! You’ve done a great job of keeping your electricity consumption low. If you installed solar panels you would not need many of them to offset the your electricity usage. Unfortunately, installing panels involves a number of fixed costs that don’t shrink with the size of your installation. This can make a small system uneconomic. Another great time for community solar!
When rooftop solar is better
If none of the situations above describe you or your home, you are probably a good fit for rooftop solar. You will also likely save more money with a rooftop solar installation than with a community solar subscription.
I used the word “credits” above when describing both community solar and rooftop solar. However, the value of the credits is different in each case. First, some background: In Illinois, your utility bill has three parts. The first part, “supply” is for the generation of electricity. The second part, “delivery” is for the transport of that electricity to your house. Alas, both supply and delivery are subject to the third part: “taxes & fees”.
The credits you receive for a community solar subscription apply only to supply. By contrast, the net metering credits you receive for a rooftop system apply to both the supply and delivery part of your bill (and, by extension to the taxes & fees as well). Thus, you can potentially save much more with a rooftop system than a community solar subscription.
Consider the components of a typical ComEd bill in the table below. A community solar subscription might save you 10-20% of the supply charges, or 0.71 to 1.42 cents per kWh. By contrast, a rooftop system could save you anywhere from 1.27 cents to 12.70 cents per kWh, depending on whether you choose to lease or buy. As we will see later, these seemingly small differences can really add up.
Monthly Bill Savings with Community Solar Vs. Rooftop Solar
To understand what the above figures mean in terms of your monthly energy costs, let’s look at an example of homeowner, “Sunny”, consuming 1000 kWh in a month (a fairly typical value). Sunny is considering three options: community solar, a rooftop solar lease, and a rooftop solar purchase. How will this impact his monthly bill?
The community solar company Sunny is dealing with is offering to sell him bill credits for 20% less than ComEd’s supply commodity charge, so he would save 1000 kWh * $0.07094 / kWh * 20%, or $14.19, each month if he goes that route.
The rooftop solar company is offering Sunny two options: lease or buy. For the lease, Sunny’s monthly charge is 20% less than the usage-based charges he would otherwise pay to his utility for the 1000 kWh. He would save an average of 1000 kWh * $0.12703 * 20%, or $25.41. With both the community solar and rooftop lease options, Sunny has zero up-front costs.
Finally, the rooftop solar company offers to sell Sunny his system outright. In this case, Sunny’s average monthly utility bill will decrease by 1000 kWh * $0.12703 * 100%, or $127.03. To be fair, in this case we have to take into account the money Sunny spends on the system, so it’s not a direct comparison. (Read our post on solar as an investment.)
The figures above actually understate the rooftop advantage, and it’s due to inflation. Sunny’s community solar option only offered him 20% savings relative to ComEd’s supply charges. If ComEd raises prices in the future, so will the price of his community solar credits. On the other hand, whether you lease or purchase a rooftop system you are locking in your prices at known values for the term of the lease (often 20 years) or life of the system (25 years or more). Also, notice that when you are contracting for community solar, you are only locking in savings on the supply part of the charges from ComEd. Next year, the year after, or the year after that ComEd is free to charge more for delivery, and the government is free to increase taxes and fees. With a rooftop system, you also protect yourself from increases in those charges over the life of the system (or term of the lease).
Other Reasons to Consider Rooftop Solar
Another reason you may prefer a rooftop system is that you will likely increase the value of your home. Research from Zillow shows that homes with solar sell for, on average, 4.1% more than similar homes without solar. Whether this is because home buyers like the “green” aspect of homes with solar or it is because they know homes with solar have lower electricity bills is hard to say, but the result is the same.
Finally, a rooftop system can be a daily reminder to your neighbors that they too, have the option of going green and saving money at the same time.
If you think you might be a good fit for rooftop solar (or if you still have questions about community solar vs. rooftop solar), fill out the form below to schedule a consultation. We’ll happily evaluate your home’s solar potential in detail, answer any questions you have, and give you a completely free, no-obligation quote.