A financial benefit-cost analysis of different community solar approaches in the Northeastern US.

Citation metadata

Date: Jan. 1, 2021
From: Solar Energy(Vol. 213)
Publisher: Elsevier Science Publishers
Document Type: Report
Length: 662 words

Document controls

Main content

Abstract :

Keywords Community shared solar farms; Photovoltaic; Net present value; Benefit-cost analysis; Panel leasing; Lease-to-own Highlights * State policy greatly influences community solar farm approaches. * Smaller projects in Illinois are a better deal for subscribers than larger ones. * Full net metering in ME is better for subscribers than higher REC prices in IL. * Lease-to-own provides value to all stakeholders in Maine and a path to ownership. * Panel purchase yields higher net present value for subscriber and host than leasing. Abstract Community solar farms (CSF) have the potential to expand solar access and improve financial viability compared to traditional residential and commercial solar options. The Cook County Community Solar Project created and made publicly available 26 benefit-cost analysis spreadsheets and associated white papers for 15 case study CSF locations in Illinois with proposed panel leasing financial models. We update these spreadsheets to reflect current federal incentives, fix some key errors, and compare the net present value, annual cash flow, return on investment, and simple payback period for all 26 panel leasing financial models; apply the panel leasing model to a Maine-based location; develop and apply to Maine three additional financial models: lease-to-own, panel purchase with developer, and grassroots "true ownership"; and provide a comparative analysis of the effects of federal and state incentives on CSF panel leasing in Maine and Illinois. Illinois panel lease results for subscribers, owners, and hosts, respectively, include net present values ($2019 thousands) of -$127 to $27, $6 to $450, -$490 to $473; return on investment of -53% to 295%, 8% to 117%, -44% to 474%; and simple payback period (years) of 0 to 20, 3.6 to 20, 0 to 20, (with system owner internal rate of return set at 10%). Respective Maine results include: $5 to $9, $4 to $201, $193 to $209; 84% to 262%, 26% to 207%, 116% to 309%; 0 to 8, 1 to 14, 0 to 3. Holding all else equal, higher electricity prices, a lower labor rate, and a 1:1 net metering bill credit policy yield greater subscriber and host (anchor subscriber) benefits for Maine than Illinois. Although the panel purchase model yields the greatest net present value (NPV) for subscriber and host in the Maine analysis, it yields the lowest developer NPV and requires a large upfront cost to subscribers that may limit participation to those with higher income. Therefore, we recommend the lease-to-own model for the Maine case study site, as it provides positive substantial NPV for all three stakeholder types without large upfront costs for subscribers and with a path to ownership. Abbreviations ABP, Adjustable Block Program; ACTT, A Climate To Thrive; CCCSP, Cook County Community Solar Project; COM, commercial; CSBCT, Community Solar Business Case Tool; CSF, community solar farm; DG, distributed generation; DOE, Department of Energy; ILSFA, Illinois Solar for All; IRR, internal rate of return; ITC, investment tax credit; LD, legislative document; LLC, limited liability company; LMI, low-to-moderate income; LTO, lease-to-own; LTRRPP, Long-Term Renewable Resources Procurement Plan; MACRS, Modified Accelerated Cost Recovery System; MDI, Mount Desert Island; MPUC, Maine Public Utilities Commission; NPV, net present value; NREL, National Renewable Energy Laboratory; O&M, operation & maintenance; PBP, payback period; PL, panel lease; PLP, panel lease price; PP, panel purchase; PPA, power purchase agreement; PPP, panel purchase price; PV, photovoltaic; REC, renewable energy credit; RES, residential; RGGI, Regional Greenhouse Gas Initiative (RGGI); ROI, return on investment; RPS, renewable portfolio standard; SLP, site lease price; SS, small subscriber; TO, true ownership; VNM, virtual net metering (Tables 1-5 include additional abbreviations unique to them, including 30 abbreviations for the 30 financial models considered in this paper Author Affiliation: School of Economics, 5782 Winslow Hall, Room 206, University of Maine, Orono, ME 04469-5782, USA * Corresponding author. Article History: Received 23 May 2020; Revised 9 October 2020; Accepted 9 November 2020 (footnote)1 Present Address: Department of Economics, Maxwell School, Syracuse University, 110 Eggers Hall, Syracuse, NY 13244-1020, USA. Byline: Sharon J.W. Klein [sharon.klein@maine.edu] (*), Abigayle Hargreaves, Stephanie Coffey [sgcoffey@syr.edu] (1)

Source Citation

Source Citation   

Gale Document Number: GALE|A648932523