Wright-Hennepin Electric's community solar garden. Photo courtesy of Wright-Hennepin Electric
Many companies plan to host community solar gardens — and customers and neighbors are subscribing to the idea
Scott Cramer, owner of Northern Sun Merchandise, situated on Lake Street in the Longfellow neighborhood of south Minneapolis, has been using solar energy in his business for the past decade. His company, founded in 1979, specializes in merchandise such as T-shirts, buttons, and bumper stickers bearing socially and environmentally conscious messages.
“We’re vendors of social messages,” Scott Cramer says, “so the decision to install solar energy at our warehouse was an attempt to practice what we preach, so to say.”
This year, Northern Sun’s involvement in solar energy will get even bigger. It’s planning to host a “community solar garden” atop its warehouse roof. Neighboring residents and businesses can, for a one-time subscription fee that helps pay for the system, receive discounts on their energy bills for years to come based on the energy it produces.
Community solar gardens were provided for by the passage of the state’s 2013 Solar Energy Jobs Act, which changed Minnesota’s solar energy landscape in several key ways. In addition to the gardens, the law set up a stronger incentive program for Xcel Energy customers who install solar-electric systems. Instead of up-front rebates to offset installation costs — the earlier model — now incentives (in the form of credit to the producers’ energy bills) are offered based on how much energy is actually produced. The law also dramatically raised the production cap on solar arrays connected with investor-owned utilities, from 40 kilowatts to 1 megawatt.
Community solar gardens comprise a significant part of the legislation. The gardens will allow customers of major utilities to buy into arrays in their communities without necessarily installing one themselves. Xcel Energy launched its community solar gardens program, Solar Rewards Community, in December 2014. Though no gardens are yet operating in its territory, several are in the planning stage, including for Northern Sun Merchandise.
Only about a third of the state’s population has property suitable for hosting solar energy systems. Community solar gardens will significantly expand the number of people able to take advantage of solar energy, including those who lack open space or own a property that doesn’t get enough sun. “One major advantage of these projects is that they offer access to clean, sustainable energy to those who may not be able to install solar panels on their own homes,” Cramer says, noting that that accounts for as much as 70 percent of Minnesota residents.
Businesses looking to set up a community solar garden can go through a developer that acts as a liaison between hosts, subscribers, the utility, and the installation company. Examples include Minneapolis-based MN Community Solar and Colorado-based SunShare, which set up shop in Minneapolis last year. Both companies foresee opportunities in the state thanks to the Solar Energy Jobs Act.
“MN Community Solar is made up of a group of people with deep roots in renewable energy policy, solar development, and socially responsible business,” says David Wakely, director of communications at MN Community Solar. “After the Solar Energy Jobs Act passed, we realized it was necessary to establish an entity to develop community solar gardens.”
His company compensates hosts for their space. “They choose community solar hosting over installing their own solar arrays because community solar hosting involves no capital cost to the host … whereas installing their own solar arrays can cost tens or hundreds of thousands of dollars.”
For their part, subscribers pay a one-time, up-front payment to the host to buy into the solar garden for a period of 25 years. This contribution ends up saving them between about 5 and 30 percent on their energy bills over the lifetime of the subscription. According to Wakely, subscriber payments begin at around $1,000.
Community solar garden subscriptions aren’t investments in the way that financial instruments such as stocks and bonds are, Wakely emphasizes. “They are akin to service contracts, and the service in question is monthly bill credits for solar electricity. Subscribers don’t own or lease solar panels — which means they don’t have to worry about installation, maintenance, or insurance.”
For hosts, a community solar garden program does more than offer a way to use otherwise unprofitable space to generate extra income. It also allows them to make an environmentally conscious energy choice at almost no cost. “Our host sites choose to host solar gardens because they want to receive the extra income, because they want to help their community and their customers get access to solar electricity, and because they want to demonstrate their commitment to the environment to their customers,” says Wakely. “They can highlight a commitment to environmental preservation and sustainability, which is something a lot of customers are looking for in companies they want to have a relationship with.”
On example is south Minneapolis resident Unny Nambudiripad, co-founder of the nonprofit Compassionate Action for Animals and a subscriber to the upcoming community solar garden at Northern Sun Merchandise. He’d previously considered investing in a company that produces solar energy, but the community solar garden model made more sense to him in terms of seeing the effect his dollars were having. “Investing in a company would be much more abstract,” he explains. “By subscribing to a solar garden, I can see the impact I’m making in terms of money saved on my energy bill, and in a way that relates directly to the community I’m living in.”
There were also practical reasons. “I live in a town home complex, so it would be quite challenging for me to install my own solar energy project,” he says. “I would have to get it approved by the complex’s association, not to mention it would be quite expensive for me to do on my own.”
Nambudiripad paid a $200 deposit when he signed on as a subscriber last year and will pay the other $800 once construction begins on the project.
For MN Community Solar, its process begins with a search for hosts such as Northern Sun Merchandise — businesses or individuals with large, open spaces with high sun exposure and proximity to an electrical grid interconnection who are willing and able to support a solar array on their property. The company works with what it calls “community partners” to recruit subscribers. “These are institutions, and some individuals, who help us get in touch with parties interested in subscribing to solar gardens,” Wakely explains.
MN Community Solar currently partners with several local nonprofits, including some religious communities. “These faith communities often already have an [environmental] stewardship mission, and so encourage their own members to become subscribers to these solar projects,” says Wakely. One such institution, Bethel Evangelical Lutheran Church in the Bancroft neighborhood of south Minneapolis, is planning to host its own community solar garden, due for installation later this year.
Aside from monetary savings on their electric bills and the environmental benefits, subscribers and hosts can be confident that they are supporting the local economy rather than relying on more geographically distant sources of energy. “We’re rooted here in Minnesota,” Wakely says. “We care about doing business here in a way that’s sustainable and that’s going to work for as many people in the local community as possible.”
Although the company is a for-profit entity, its goal, Wakely says, is to use as often as possible Minnesota-made modules, find local investors, and employ local labor for project installations. “And of course to use Minnesota sunshine,” he adds. The company is associated with local solar developer and installer Applied Energy Innovations, another Minneapolis-based company dedicated to local renewable energy solutions.
For its part, competitor SunShare announced a strategic agreement early this year to build community solar gardens in Minnesota with construction company Mortenson.
While MN Community Solar has been working mostly with Xcel Energy and its customers, other utilities in the state have already had success in establishing community solar gardens. One example is the Wright-Hennepin Electric Association, which installed a solar garden in Rockford in September 2013 and is currently planning two more.
Development is also underway in Gaylord, where MN Community Solar has been working with Xcel and renewable energy firm Front Row Energy on a 1-megawatt community solar garden in the Gaylord Industrial Park.
In its latest round of applicants (in January), Xcel received applications for the equivalent of over 400 megawatts worth of community solar garden projects statewide, according to Wakely. “To put that in perspective, all of the solar energy systems currently installed in Minnesota total about 17 megawatts,” he says. “That’s pretty incredible.”
As such numbers suggest, solar energy has gained significant traction in the state in recent years. Minnesota is particularly well poised for solar success for several reasons, according to John Farrell, director of the Democratic Energy Initiative at the Minneapolis-based Institute for Local Self-Reliance.
Minnesotans, he notes, have a longstanding history of self-reliance and good resource-management skills. “As far back as the 1920s, communities were making efforts to be self-reliant, as evidenced by the number of rural electrical co-ops and businesses such as municipally owned liquor stores that were established around that time.” Today there are more than 40 such co-ops.
The state’s past success with renewable-energy legislation has also helped pave the way for future sustainability-related policy. Add to that the fact that many Minnesotans are active and passionate about preserving the natural beauty of their home state and you end up with a situation in which community solar gardens can potentially thrive.
The state’s solar sector appears poised for growth. The Solar Energy Jobs Act places no limit on the number of solar gardens. To Farrell, one of the law’s most exciting parts is the significantly higher production cap of projects. This, he says, will encourage development on all scales, ultimately creating a robust solar industry in which all can participate.
“There are benefits to having solar energy projects of all sizes, from individual residential installations to large community solar gardens,” he says. “Having a range of projects all over the grid, rather than a few large ones concentrated in spacious rural areas, will definitely prove to be an asset.”
For Cramer, the owner of Northern Sun Merchandise — and soon to be the proud host of a community solar garden — there’s a certain thrill in being part the sector’s momentum. “Solar energy is on a fast growth track,” he says. “I’m excited to be a part of it.”