Community Solar Overview and Market

ProjectionsJennifer Szaro, Senior Director

SEPA

About SEPA

SEPA’s mission is to facilitate the utility industry’s smart transition to a clean energy future through education,

research, and collaboration.

www.sepapower.org

Growth of Community Solar Programs

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pre2011 2011 2012 2013 2014 2015 2016 2017 (May)

Cumulative CS Capacity Cumulative Number of CS Programs

Source: SEPA Annual Member Survey

There are 67 Planned CS Programs that will account for an additional 313 MWs

Status of Community Solar Programs

Utility-Managed Community Solar Programs

Third-party Managed Community Solar Programs

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Currently implemented

No interest

Planning/researching/considering

Currently implemented

No interest

Planning/researching/considering

Source: SEPA Member Survey

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Untapped Market Today

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Source: SEPA Analysis

Rooftop

Solar

Community Solar

Utility-Scale

Solar

Cumulative

Installed US

Capacity (2014 MW)

• Median program is 102.5 kW

• 75% of programs leverage systems less than 800 kW

• Largest programs are around 20 MW (TEP, SRP, Xcel, RMP)

Understanding Customer Perspectives on Community Solar

Jennifer Szaro

Senior Director, SEPA

www.sepapower.org

Methodology

Sample of 2,001 regionally

diverse U.S. residential utility customers from a national online consumer panel

A mix of multiple choice, fixed

response, Likert scale and

discrete choice (conjoint) analysis

questions

Stratified random sample

included a mix of genders, ages,

home ownership,

ethnicities/races, education,

incomes and geography

Margin of error +/-2.2% at a 95% confidence level

Source: 2016 SEPA-Shelton Group Survey

The Current Residential Solar Landscape

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Consideration by Type

ConsiderationInterest

59% are interested in getting solar power for their

home

34% are seriously considering

renewable energy options

16% are currently considering rooftop

solar

14% are currently considering

community solar

But DO customers UNDERSTAND community

solar?

14% 47%Current

consideration

Interest after education

Residential Community Solar

Landscape

19% 52%Current

consideration

Interest after education

Commercial Community Solar Landscape

How Do Customers Respond to Different Program Designs?

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Residential Customer Research

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Panel lease

• Pay up front fee to lease a certain number of panels

• Receive bill credit per panel per year based on production of the panel

• Time-certain contract

Solar lease target • Younger, affluent couples (25-54)

• Suburban

• White collar

• More likely to live in the NE

Care about:

• Saving money

• The environment

• Being good role models for their kids

• Time management

Why a Community Solar lease?

• Like having an ownership stake

• In-community location is more important to them

• Worried about inconsistent production of a rooftop system

Low-end market potential for panel lease model, or roughly 2.5% of households

2,800,000

Messaging

Community solar is good for the planet!

• Promote environmental benefits, including curbing climate change.

Take your kids to see your solar array!

• Talk about future generations/being a good role model.

Solar without the hassle!

• Note key community solar strengths: lower risk of inconsistent output or maintenance headaches.

An Effective Lease Design

20+ year term

$595+ per panel

No on-bill financing

Less ownership – customer doesn’t “own” the panels or power the panels produce

Location based on efficiency/lowest cost to utility (often distant)

Most capacity currently generated by non-utility-owned arrays.

Often no real-time access to production information

5-10 year term

$395/panel

On bill financing

Customer “owns” the power the panels produce (and even better) “owns” the panels

Location in the community or within 15 minutes driving

Utility sponsor or solar co./utility partnership

Real-time panel production info via web portal or smartphone app.

High Probability of SuccessLow Probability of Success

Block Subscription Offering

• Subscribe to blocks of power produced by a solar array at a slight price premium per kWh ($.01-.03)

• That rate is locked in for the duration of the contract, even if the utility’s rates go up

Low-end market potential for block subscription rate model, or roughly 3% of

households

3,700,000

Block Subscription Target • Females, 45+

• Suburban

• Well educated and middle class

• No kids at home

• More likely to live in the South

Care about:

• The environment

• Locking in lower energy costs

• Being responsible

Why a Community Solar Subscription?• Haven’t really thought much about solar

before• Utility sponsorship is more important to

them• Adverse to ongoing maintenance required

for a rooftop system

Messaging

Community solar is good for the planet!

• Though they haven’t considered solar viable for themselves, they’re concerned re climate change

Community solar is affordable!

• Point to the economic benefit of locking in what will likely be a lower-than-average rate over a long term.

You can be part of the solution!

• Help them feel empowered

An Effective Subscription Design

2 year term w/option to renew

$100 non-refundable deposit or “sign-up fee”

$.03-$.05 premium kWh rate

Most capacity currently generated by non-utility-owned arrays.

Location based on efficiency/lowest cost to utility (often distant)

No real-time access to production information

20+ year term

No sign-up fee or $50 refundable deposit (after 2-5 year participation)

$.01-$.02 premium kWh rate

Utility sponsor or solar co./utility partnership

Location within community

Real-time panel production info via web portal or smartphone app

High Probability of SuccessLow Probability of Success

Overall, the best package from a customer perspective:• “Community Shared Solar” = best description

• If leasing:• Shorter (5-10 year) terms; < $495/panel

• If subscribing :• Longer (up to 20 year) subscription rate term is OK; premium kWh

subscription rate won’t fly above $.01/kWh

• No sign-up fee

• Non-refundable deposits don’t fly

• Utility involvement in community solar projects preferred

• Siting in their community or within a 15 minute driving distance preferred

• Need access to panel power production info.

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Community Solar Program Participant Feedback Survey

Education is Critical Program Demographics

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Subscribers who felt program was clearly explained

Subscribers who felt program was

not clearly explained

Own , 98%

Rent, 2%

18-34, 4%

35-54, 21%

55-64, 27%

65+, 48%

< $25k, 2% $25k–$49k, 15%

$50k–$99k, 45%

$100k+, 37%

Single w/ kids, 7%

Single w/o kids, 26%

Partnered w/o kids, 32%

Partnered w/ kids, 36%

Inner Circle is Community Solar Subscribers

Outer Circle is NationalPopulation

Key takeaways

Build your CS arrays within a 15 minute drive of most likely subscribers

Offer a robust portfolio of options – different customer segments need different solutions

Rethink price points and terms, using the guidance noted here to craft the offers with the highest likelihood of success.

Education is key to community solar recruitment

Consider the customer journey when designing a program – are you making it easy or difficult?

Commercial Customer Research

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Low-end market potential for panel lease model, or roughly 4% of American

businesses

308,000

• Younger executives (CEO/CFO/COO; 18-44 years old)

• Small to mid-size companies (revenue less than $10 million – majority have fewer than 10 employees)

• Own their building and operate in a single location

• More likely than average to be located in the Midwest

• More likely than average to be in business services.

Cares about:

• Being a good corporate citizen

• Reducing energy costs

Why a Community Solar lease?• Less risk and better monthly cost benefits

• Likes the idea of sponsorship by a reputable solar company, working in partnership with the utility

Panel Lease Target

Messaging

Be a good corporate citizen!

• They feel a strong sense of responsibility and report already undertaking at least 5 sustainability initiatives

Community solar is good for the bottom line!

• If they can’t make the economic case for it they won’t do it. They’re also not willing to pay extra for visibility of the panels

Low-end market potential for subscription rate model, or roughly 2% of American

businesses

132,000

• Older owners/partners(at least 45 years old)

• Small companies (1-9 employees; revenue less than $5 million)

• Lease their buildings

• Located in the Midwest or Northeast

• More likely than average to be in business services, manufacturing or technology.

Cares about:

• Reducing energy costs

• Control and independence from their electric utility

Why a Community Solar lease?

• No maintenance costs

• Sponsorship by local utility

Block Subscription Target

Messaging

Get control over your energy costs!

• The bottom line is their top driver…and they are control-oriented

All the advantages of solar without messing with your rooftop!

• They’re wary of the impact of rooftop solar on their property values and resale value. And many don’t own their buildings

Be recognized for your contribution

• This target does want the array to be local and visible…and they want credit for their participation

Businesses are participating in/considering a wide variety of renewable options

• 8% say they’re buying RECS and 23% are currently considering them.

• 7% have some other renewable generation solution (e.g., geothermal) and 20% are considering them.

• 6% are participating in a green power plan and 20% are considering one.

• And many (18%) participate in more than one option and 42% are currently considering more than one option.

RECOMMENDATION:

Offer a diverse portfolio of renewable energy options.

The market for business community solar is significant, but smaller than rooftop/onsite.

• 27% are currently considering rooftop/onsite.

• After exposure to rooftop cost and lease/financing examples and community solar models, interest in rooftop increased.

• Given a final choice, most (50%) will be more likely to consider rooftop (either leased, purchase, or financed), compared to 39% who will be more likely to chose a community solar option.

RECOMMENDATION

Unlike consumers, community solar isn’t seen as an acceptable alternative to those who are interested in their own system, but CS does offer a viable option to a different market – particularly smaller companies and those who lease, rather than own, their facilities. So offer both alternatives.

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Is Your Program Contagious?

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More Community Solar Resources

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1. Select a community solar program design from your table.

2. Take 7 minutes to map out the customer’s journey to participate in the program.

3. Each table will report out what they learned about the customer’s experience.

1. How long was the process?

2. Were there any potential hurdles? If so, what could be done to address them?

Table Exercise

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