Community Solar – As a community solar subscriber, what should I be looking for?
By David Comis, Senior Energy Program Manager
This is part four of a 7 part series on community solar.
Please note, the comments in this blog are the personal opinions of the author and do not represent the views of the Maryland Energy Administration or the State of Maryland.
First, read the subscriber agreement from top to bottom. The agreement may be for 20+ years and involve many thousands of dollars. If they will not let you read the entire agreement in advance, it’s not worth doing business with them. Also, the agreement summary sheet is NOT the agreement. If they say that they will send you the agreement after you sign up, ask for the agreement again. If supplying the agreement becomes an issue, you may want to consider other vendors.
Key items in the agreement include:
- The term of the agreement (in months or years),
- Methods, conditions and costs to get out of the agreement early (if needed),
- Deposits and fees associated with the agreement,
- Methods for settling disputes,
- The method of determining cost.
In some cases the agreement will provide a cost for the first year (say $0.10/kWh) and an amount that it will increase each year (called an annual escalator). It is not unusual for the escalator to be in the vicinity of 2.9% each year, meaning that the rate is 2.9% higher than it was the previous year. For those that are mathematically inclined, it means the rate in year N is:
where R1 is the rate in the initial (first year) rate and N is the year number.
Often, the rate will be a discount from a utility set rate, for example the rate will always be 10% below the electricity rate paid for standard offer service (i.e., the rate you pay the utility company if you do not select a specific energy supplier).
Will you benefit from signing up for community solar? Well, it depends. If your agreement indicates that you will save a fixed percentage from standard offer service, then you should save money each and every month (assuming you would have used the default standard offer service from the utility company). However, you will now need to pay both the utility company and the community solar company separately each month as currently consolidated billing has not been authorized.
If your agreement is designed to have an initial year discount with an annual escalator, then the amount of cost benefit is based on the ratio of your annual escalator and the increase in the cost of electricity from the utility company which will vary with time. If the annual escalator is larger than the rate at which the utility power cost goes up, then your annual benefit from using community solar will get smaller each year, and at some point you may actually pay a bit more than the utility rate. If, on the other hand, the escalator rate is lower than the rate of increase of the utility rate, then you should benefit every year by increasing amounts. It’s up to you to consider the benefit of each agreement and sign up with a company that offers terms that are acceptable to you.