Community Solar PolicyDecision MatrixGuidance for DesigningCommunity Solar ProgramsMarch 2019

ABOUT USThe Coalition for Community Solar Access (CCSA) is a national Coalition ofbusinesses and non-profits working to expand customer choice and accessto solar to all American households and businesses through communitysolar. Community solar refers to local solar facilities shared by multiplecommunity subscribers who receive credits on their electricity bills fortheir share of the power produced. Community solar provideshomeowners, renters, and businesses equal access to theeconomic and environmental benefits of solar energy generationregardless of the physical attributes or ownership of theirhome or business. Community solar expands access tosolar for all, including low-to-moderate income customers,all while building a stronger, distributed, and moreresilient electric grid. For more information, visit ourwebsite at, followus on Twitter at @solaraccess and on Facebookat

CCSA Core PrinciplesWe promote policies, programs, andpractices that:AcknowledgementsProvide equal access fordevelopers to build andoperate community solarprojects and interconnectthose projects to theserving utility’s grid.Support the participationof diverse customer typesin community solarprograms, and encouragecustomer choice withproviders, productfeatures, and attributes tocatalyze innovation andbest serve customers.Ensure that communitysolar projects are operatedand maintained well toprotect customers anddevelopers’ investment.Ensure full and accuratedisclosure of customerbenefits and risks in astandard, comparablemanner that presentscustomers withperformance and costtransparency.Comply with applicablesecurities, tax, andconsumer protection lawsto reduce customer riskand protect the customer.Encourage transparent,non-discriminatory utilityrules on siting, andinterconnecting projects,and collaboration withutilities to facilitateefficient siting andinterconnection.Maintain a 360-degreeview of the communitysolar market and ensurea beneficial role for allparties in the partnerships forged betweensubscriber, developer,and utility.CCSA wishes to thank all of the individuals from our memberorganizations and partners who contributed to the development of thispolicy decision matrix. CCSA’s members include solar project developers,service providers, attorneys, financial institutions and non-profitadvocates. For a full list of our membership, please refer toCCSA’s website.112Incorporate a fair billcredit mechanism thatprovides subscribers withan economic benefitcommensurate with thevalue of the long-term,clean, locally-sited energyproduced by communitysolar projects.Allow all consumers theopportunity to participate inand directly economicallybenefit from the construction and operation of newclean energy assets.Available at lition for Community Solar Access Community Solar Policy Decision Matrix

Why States areAdopting CommunitySolarSolar energy continues to grow in popularity across the nation,with individuals, businesses, governments, schools, and otherorganizations demanding more choice, cleaner energy options, andgreater control over their energy bills. Although nearly two million solarenergy systems have been installed in the U.S.,2 many customers remainwithout access to the many benefits of solar energy or the ability to installtheir own system onsite. For example, a property owner may haveunsuitable roof space, an old roof needing replacement in the nearfuture, or too much shading. Similarly, millions of tenants or renters lackthe permission to install a solar system at their home or business.Community solar provides equitable access to clean and affordable solarenergy to anyone and everyone who wants it. By participating incommunity solar, someone unable to install solar onsite can still takeadvantage of its benefits. Community solar works by allowing multipleindividuals, groups, or businesses to own a portion or subscribe to theoutput of a single solar facility located offsite. Community solar projectscan improve the resiliency of the electric grid and provide a predictable,safe and clean source of energy.Nineteen states and Washington, D.C.3 have enacted policies that enablecommunity solar arrangements between subscribing organizationsand participating subscribers. Community solar has grown exponentiallyin the last six years, going from just a handful of projects installed before2010 to a gigawatt (GW) by the end of 2018, enough to power around150,000 homes. Community solar installations are on track to growexponentially in the coming years – the Smart Electric Power Association(SEPA) estimates there will be 2GW of community solar installednationwide by 2021. Massachusetts, Minnesota and Colorado areleading the nation in community solar adoption, with New York,New Jersey, Maryland, and Illinois all poised for significant growth overthe next several years. States that enable community solar are seeingsignificant growth in jobs, economic investment, tax revenues to localcommunities, and upgrades to grid infrastructure as a result of theconstruction of community solar projects in their communities.2Solar Energy Industries Association, see: States include California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Oregon,Rhode Island, Vermont and Washington. See: y-projects/4Maryland PSC Website. See: olar-pilot-program/Coalition for Community Solar Access Community Solar Policy Decision Matrix3

How to Use thisPolicy MatrixThe members of CCSA have experience working in different states underdifferent community solar policy models. This experience has providedthe organization with a deep understanding of how different policyoptions spur the community solar market in different ways and howcertain policy provisions may have unintended consequences.Based on CCSA member experiences, we have created this policydecision matrix to aid policymakers in designing community solarprograms. This matrix is intended to lead policymakers through importantquestions, grouped into five categories, which should be addressed whendesigning programs. To answer these questions, we provide a menu ofoptions, focusing on those that will spur market development whileproviding choices to customize programs to meet a state’s needs andgoals. The decision matrix provides CCSA’s recommendation for whatworks best, based on our members’ experiences working in differentstates. It also provides our rationale for that recommendation, examplelanguage to aid in drafting policies and other important issues toconsider. The five areas addressed in this matrix are:Community Solar Policy Considerations1. Program Structure2. Compensation3. Consumer Participation4. Project Sizing and Siting5. Low-to-Moderate Income ConsiderationsIn addition to considering how to design a community solar program,there are a number of changes to utility practice that are important toenable community solar. Outdated billing processes can lead tofrustrations for customers. Poor interconnection standards andprocesses can unnecessarily drive up project development costs andlead to months- and sometimes years- long delays in projects coming online. We provide recommendations for policymakers to direct utilities tomake changes to their processes in order to make sure that a communitysolar program’s implementation goes smoothly in these two key areas:Efficient Utility Processes1. Interconnecting Community Solar Systems to the Grid2. Billing Community Solar Customers and Data Exchange with CommunitySolar ProvidersOur recommendations in this document are driven by our Core Principles, whichemphasize the creation of sustainable markets that will benefitconsumers for years to come.4Coalition for Community Solar Access Community Solar Policy Decision Matrix

Program StructureCommunity solar can serve the most customers at the least cost when markets are designed for scale. That means avoidingartificial caps on program capacity, and ensuring efficient program administration.Key Questions to Ask: What types of entities should be permitted to own and/or manage projects?Options to ConsiderCommunity Solar ProvidersUtilityOther (e.g. Customer)CCSARecommendationsOpen, competitive markets open to non-utility entities, with utility participation prohibited unless clear protocols for competitive neutrality are established.RationaleCompetition and innovation are necessary to drive the market forward, ultimately resulting in lower costs and more options for consumers.Example LanguageA Subscriber Organization shall be any for-profit or not-for-profit entity permitted by [State] law that (A) owns or operates one or more community solarfacility(ies) for the benefit of subscribers, or (B) contracts with a third-party entity to build, own or operate one or more community solar facilities.NotesIn a program where utilities are allowed to participate as project owners/managers, protocols should be put in place to ensure a level playing field andsafeguard competitive markets. Considerations include equal access to data, financing, interconnection opportunities and other issues. To date thereare not examples of utilities effectively being incorporated into a competitive market in a neutral manner.Key Questions to Ask: Who should fill the role of program administrator? (i.e. who should determine project / subscriber organizationeligibility and, if a program is capped, determine which projects are allocated space in the program)Options to ConsiderState agency (such as the public utilities commission or energy agency)UtilityThird-Party administratorCCSARecommendationsAn independent, third-party administrator that has staff dedicated to the Community Solar program and is overseen by a state agency is typicallythe most efficient and effective type of program administrator.RationaleProgram administration should be designed to run transparently and efficiently 4Example Language[State agency] shall seek qualifications from, select, and provide oversight and direction to a third-party entity to administer thecommunity solar program.NotesIf a utility oversees program administration and that utility is also participating as a subscriber organization in the program, additional oversight will benecessary to ensure conflicts of interest are avoided.Key Questions to Ask: What entity should administer bill credits?Options to ConsiderUtilityOther (e.g. retail supplier)CCSARecommendationsUtility, though it may be appropriate to contract with a third-party to provide administrative support. There should be clear guidance in program rules toensure that subscriber credits are applied to utility bills within 30 days, there is monthly reporting from the utility to the subscriber organization andthat subscriber organizations are allowed to update subscriber lists on at least a monthly basis. Billing is best facilitated through an automated billingprocess. The utility should administer bill credits to customers to simplify and enhance the customer experience and overall program administration.In competitive electricity markets where many customers purchase electricity from competitive suppliers, having the distribution utility apply the billcredits is important in order to simplify the calculation, administration, and cost recovery of the credits.RationaleThe utility should administer bill credits to customers to simplify and enhance the customer experience and overall program administration. Incompetitive electricity markets where many customers purchase electricity from competitive suppliers, having the distribution utility apply the billcredits is important in order to simplify the calculation, administration, and cost recovery of the credits.4Massachusetts’ MassACA is an example of a third-party administered application system that is streamlined and transparent. It provides significant value to market participants in the state. The application system is not community solar-specific, butmanages applications for projects seeking to reserve net metering capacity more broadly. Then in 2017, the Massachusetts Renewables Target (SMART) program conducted a solicitation for a program administrator and selected ClearResult tomanage the program with oversight from the Department of Energy Resources.Coalition for Community Solar Access Community Solar Policy Decision Matrix5

Program StructureExample LanguageAn Electric Company shall apply bill credits to the accounts of participating subscribers on a monthly basis, based on their proportional subscriptions tothe community solar facility, and provide reporting back to the Subscriber Organization on a monthly basis. An Electric Company shall accept subscriberlist updates from Subscriber Organizations on at least a monthly basis. An electric company shall, at the request of a Subscriber Organization, offerconsolidated billing for community solar subscription fees.NotesA positive customer experience is best facilitated when the subscriber organization has accurate information and can update subscriber lists asneeded. Communication between community solar providers and utilities for the purposes of calculating, assigning, and applying bill credits must behandled via efficient electronic systems that result in timely, accurate bill crediting, with the capability to update subscriber lists at least on a monthlybasis. Consistent monthly reporting from utility to subscriber organization is also necessary to ensure accuracy in bill crediting. Consolidated billing forcommunity solar subscriptions can simplify the transaction for the consumer. See billing section under Efficient Utility Processes for more info.Key Questions to Ask: Should there be a preset size for the program?6Options to ConsiderCalibrate initial capacity available under program to meet state policy goalsNo predetermined size limitsCCSARecommendationsStates should establish permanent and uncapped community solar programs, in recognition that distributed solar generation is an essential part ofany resilient, safe, and clean energy portfolio, and that customers should have choice in their energy solutions. If a given state is in the early stages ofdistributed generation planning, it may be appropriate to initially establish a program size threshold of approximately 5-10% of peak load. This willensure that the program can be adjusted once better data on distributed generation integration into the electricity system is made available throughplanning efforts overseen by the public utilities commission. However, in order to attract serious long-term private sector investment, states shouldmake their intent to establish a permanent program clear from the outset.RationaleGiven that the majority of customers cannot host onsite solar, community solar programs should be sized appropriately to create equitable access tolocal solar generation for all customers. At a minimum, if policy makers set a threshold for initial program capacity, it should be large enough to allowcommunity solar to grow to at least the size of the on-site solar market within the first two years.Example LanguageOnce [insert threshold level of MW] have been placed in service, the [state regulatory agency] may consider whether adjustments to the credit ratemethodology are appropriate for new projects beginning development. Any adjustments to the credit rate shall be informed by a comprehensivereview of the long term costs and benefits of distributed generation and shall ensure equitable access for all electric customers to directly participatein and benefit from distributed generation.NotesAn effective interconnection queue management process and strict project maturity requirements must be implemented in parallel to ensure smoothprogram rollout. It is essential to assess interconnection standards well in advance of implementing a new program, to ensure there are sufficient thnicalstandards, process transparency, queue management practices and other important factors. Please see the interconnection section on page 18 formore detailed recommendations on interconnection best practices.Coalition for Community Solar Access Community Solar Policy Decision Matrix

Program StructureKey Questions to Ask: How should projects be selected for participation in the program?Options to ConsiderOpen tariff enrollmentCompetitive solicitation processCCSARecommendationsOpen tariff enrollmentRationaleWhen projects show they have met the required maturity requirements, they should be approved for participation in the program on a first-come,first-served basis. Such a tariff-based or “open” program is easiest to administer, creates a more level playing field for a diversity of projects, and ismore efficient from the project development perspective.CCSA has not seen a large-scale RFP process successfully implemented for community solar and does not believe such a process is compatible withefficient, cost-effective project development. Moreover, an RFP process may lead to a situation in which some initial projects get delayed, complicatingthe rollout of later projects. The uncertainty associated with RFP processes can also significantly increase project costs and risks.Proponents of an RFP process see it as a form of competition. However, such a conclusion disregards how community solar programs work. Becausecommunity solar projects have the same credit values to customers, compensation to projects is the same. The competition among community solarprojects is not competing to be accepted in the program but rather to have low cost, well built projects in order to give customers the best possiblesavings.Example LanguageA community solar facility may reserve capacity under the community solar program upon demonstrating appropriate project maturity requirementsas determined by the [insert appropriate state agency].Key Questions to Ask: What project maturity milestones should be required to reserve capacity in the program?Options to ConsiderSite control milestoneInterconnection process milestonePermitting process milestoneCCSARecommendationsBased on experience in existing community solar markets, the following minimum requirements will help ensure that projects receiving capacityallocations can be built and financed:1.2.3.NotesProof of site control (e.g. a signed lease or lease option)A signed Interconnection Agreement with the utility, or equivalent milestone in the interconnection process (typically the point in the processwhere the project has completed interconnection studies and has an estimate of total interconnection cost)All non-ministerial permits (i.e. those which require some discretion such as a board vote)To promote an efficient process, community solar programs should ensure that developers have demonstrated significant progress in meeting certainproject development milestones before they are eligible to reserve program capacity. The project selection process should allow projects to compete inthe marketplace with other community solar providers and ensure that projects receiving approval into the program have demonstrated they are readyto build those projects.It is important to ensure that project maturity requirements are commensurate with the level of risk involved in the project selection criteria. Thesethree criteria are appropriate for programs that award participation in the program on a first-come, first-served basis, which is CCSA’s recommendation.However, if a program uses a project selection process that is inherently more risky for the developer, such as an RFP or lottery process, the projectmaturity requirements will likely need to be adjusted accordingly.There is considerable risk to a program’s success if appropriate project maturity requirements are not provided from the outset. Not setting the bar highenough can lead to a program being overwhelmed by early-stage projects, creating inefficiencies for interconnection and the project selection process.Coalition for Community Solar Access Community Solar Policy Decision Matrix7

CompensationCommunity solar generation must be fairly compensated at a rate that reflects prudent long term grid planning, and offersan equitable value proposition for customers as compared to onsite solar energy options.Key Questions to Ask: How should bill credit value be set?Options to ConsiderRetail-rate based approachResource valuation approachCCSARecommendationsAs long as credits are transparent and predictable over the project life cycle, and provide subscribers with an economic benefit that is equitable, theresource valuation and retail-rate based approaches can both be effective.Policymakers should choose a compensation approach that can be implemented quickly, in order to give consumers access to solar in the near term.That said, credit rate approaches can evolve within a state over time as distributed generation markets evolve. Particularly in states where solar is onlya small portion of the state’s generation, a retail rate credit is likely to be the appropriate credit rate. This retail rate credit rate provides customerswith a comparable bill credit to that available to rooftop solar customers and is a fair proxy for the value of that solar.Establishment of a value-based credit is best done as part of an evolution of utility distribution and resource planning, because it should be informedby analysis of the long term avoided transmission, distribution, environmental, and other costs associated with the local clean energy generation overthe full tariff term. Short term avoided costs that may be used for traditional utility investments are not an appropriate benchmark for communitysolar planning. The characteristics of local solar generation, such as its ability to produce power where and when the grid needs it the most, make itparticularly valuable, and that value can be captured through a well-designed tariff that balances predictability in revenue streams for projectinvestors with sending market signals to incent the most valuable community solar configurations.RationaleBill credits should provide subscribers with an economic benefit that is equitable based on the long-term, clean, locally-sited energy produced bycommunity solar facilities.Example LanguageAn electric company shall credit a subscriber’s electric bill for the amount of electricity generated by a community solar project for the subscriber in amanner that reflects the resource value of solar energy, as determined by the [state regulatory agency].An electric company shall credit a subscriber’s electric bill for the amount of electricity generated by a community solar project for the subscriberbased on the applicable retail rate.NotesIf the resource valuation approach is chosen, a transparent, data-driven process with broad stakeholder participation must be used to determine thevaluation. 6This likely necessitates setting an interim credit rate that can enable the program to launch while the valuation analysis and tariff development isdone, in which case, a clear, predictable, timetable for changes in credit evaluation should be set and adhered to. While credit rates can evolve overtime for new projects, once a credit rate approach is set for a particular project it should remain fixed for the life of the system in order to enableproject financing and stability for consumers.If the retail-rate approach is chosen, special attention should be paid to determining which retail rate to use, as this is a state-specific issue. Forexample, in restructured states, the credit rate should be based on standard offer service rates as opposed to competitive supplier rates. It is alsoadvised that the credit rate be based on a non-demand rate schedule, as different utility rate schedules can result in very low /kWh charges as aresult of customers paying high demand charges.6See: Rocky Mountain Institute, A Review of Solar PV Benefit and Cost Studies, September 2013, for a review of 15 distributed PV (DPV) benefit/cost studies that assessed what is known and unknown about the categorization, methodological bestpractices, and gaps around the benefits and costs of DPV. The review also began to establish a clear foundation from which additional work on benefit/cost assessments and pricing structure design could be built. /8Coalition for Community Solar Access Community Solar Policy Decision Matrix

CompensationKey Questions to Ask: What should be the term of the tariff providing for bill credits?Options to ConsiderLife of the projectFixed term, e.g. 35 yearsCCSARecommendationsLife of the project or 35 yearsRationaleCommunity solar projects are long-lived, stable assets that will easily function for 35 years. Customers should receive bill credits for the full life ofthe project, in order to maximize the benefits of their subscription. However, if it is viewed as administratively simpler to set a fixed number ofyears the tariff will remain in effect, a term of 35 years is reasonable.Example LanguageIf life of project is selected, typically does not require direct reference in statute. If a fixed tariff term is selected:After 35 years from the date of commercial operation, a community solar facility shall cease to generate bill credits pursuant to [insert relevantsection of community solar statute/rule that outlines bill credit methodology] and shall be compensated via an appropriate tariff for distributedgeneration as determined by the [insert state Commission]NotesStates that have chosen shorter tariff terms, such as 20 or 25 years, have done so only in combination with parallel incentive programs that helpmake up for the economic shortfall to project developers that results from a shorter tariff term.Key Questions to Ask: By what mechanism should credits be applied?Options to ConsiderMonetary CreditkWh CreditCCSARecommendationsCCSA recommends the use of a monetary credit, which is used in most markets. Regardless of whether a volumetric or monetary credit is used, it isvital that the credit is transparent to subscribers (for example, as a separate and clearly labeled line item on the customer’s utility bill). Withvolumetric credits it is particularly important that utilities be required to provide transparent and timely reporting to subscriber organizations on thevalue of credits allocated to customers.RationaleTypically, there are higher transaction costs and more complexity associated with applying the value as a volumetric, kilowatt-hour, rather a monetarycredit on the customer’s bill. A volumetric credit can also make it more difficult for customers who are using a competitive supplier for their energyservice to participate.Example LanguageA Utility shall provide a Bill Credit to a Subscriber’s subsequent monthly electricity bill for the proportional output of a Community Solar Facilityattributable to that Subscriber. The value of the Bill Credits for the Subscriber shall be calculated by multiplying the Subscriber’s share of the kWhelectricity production from the Community Solar Facility by the Applicable Bill Credit Rate for the Subscriber. Bill Credits that exceed a Subscriber’smonthly bill shall be carried over and applied to the next month’s bill.NotesIf volumetric crediting is used, it is important to ensure that the application of credits to subscribers’ bills does not change the underlying calculationof kWh delivered to the subscriber’s location (for example, in areas with competitive retail supply). It is important to consider which portions of the billthe credit can offset and whether or not that results in a different value proposition across customer classes.Coalition for Community Solar Access Community Solar Policy Decision Matrix9

CompensationKey Questions to Ask: How should unsubscribed energy or unallocated bill credits be handled?Options to ConsiderUtility must purchaseSubscriber organization can distribute unallocated bill creditsCCSARecommendationsCCSA recommends that both options be used together. Subscriber organizations should be allowed to sell unsubscribed energy to the utility at theutility’s avoided cost. In addition, subscriber organizations should have the ability to accumulate unallocated credits as long as they are then allocatedto subscribers within a set time period (e.g. one year).RationaleA backstop of purchase at avoided cost is helpful for community solar providers in securing lower cost project financing. Because the avoided cost rateis significantly lower than the credit rate for subscribed energy, there is a natural disincentive for community solar providers to have unsubscribedenergy, but it is important to have the option to sell that energy to the utility at avoided cost if needed. The ability to reallocate credits may be able toprovide more value and flexibility to subscribers and subscriber organizations, which can bring down overall project costs. This ability to bank credits isparticularly valuable to allow customers to leave and other customers join the project during the course of a year.Example LanguageUtilities must purchase unsubscribed energy as directed by the Subscriber Organization at a rate equivalent to the electric company’s avoided costas determined by the [state regulatory agency].Credits that are not allocated during a billing period are banked on the generator’s account. These credits are then available, along with new credits,in the next distribution period. New subscribers, who are not part of the ongoing subscription list, may be allocated these banked credits that wereaccrued prior to

Community solar provides equitable access to clean and affordable solar energy to anyone and everyone who wants it. By participating in community solar, someone unable to install solar onsite can still take advantage of its benefits. Community solar works by allowing multiple individuals, g