Community solar has historically been limited by geography, given that most programs require subscribers to live within the same utility territory or state as the solar farm providing the community power.
If community solar management company Ampion Renewable Energy has anything to say about it, those limitations could be on their way out.
The company launched its Synthetic Community Solar program, which lets developers match solar generation in one state or utility territory with low-income (LI) subscribers in another; enrolled households will benefit from bill credits and the initiative will help developers qualify for federal tax incentives.
Andrew Kvaal, Ampion’s President and COO, told pv magazine USA that the traditional geography-based model has made access to community solar limited, particularly in smaller or saturated markets where finding sufficient low-income subscribers is challenging.
The synthetic community solar program effectively removes that restriction, he explained, by making it possible for projects in one state to have direct financial benefits to households located hundreds of miles away.
“It’s the first of its kind, and we think it’s fairly innovative,” Kvaal said. The program is built around the IRA’s Category 4 investment tax credit bonus, which grants additional tax credits to solar and wind facilities that direct at least half of the benefits to low-income subscribers.
So, how does it work in practice?
After developers have qualified for Category 4 incentives and spoken with tax professionals about the best way to implement the initiative, Ampion works with utilities to transfer a portion of a project’s financial output (which is held in escrow and calculated monthly) to households in another region. These subscribers see credits appear on their utility bills, even if the generation comes from out of state.
“In the promise of community solar, it’s quite literally free money for the subscriber,” Kvaal said, “so that’s pretty great.”
But, while there are millions of LI households across the country, likely only thousands will benefit from the program, he noted.
Instead, the main benefit lies on the developer side, as the program gives them more opportunities and flexibility to qualify for the Category 4 adder and ultimately build more projects.
A recent 2.5 MWdc project in Maine demonstrates the model in action. Ampion transfers funds from the project developer to income-qualified households in Illinois, who receive up to a 20 percent discount on solar credits. According to the company, the program has opened a pathway for developers to secure the Category 4 bonus in markets where low-income acquisition would otherwise be prohibitively expensive.
“Some of our clients were having success getting low-income adders through the IRA and were looking for ways to qualify in markets where it’s hard to find subscribers,” said Kvaal, adding that synthetic community solar helps open up availability without requiring localized acquisition.
So far, Illinois has been the primary target for subscribers because of its sizable population, lower cost of acquisition and cooperative utilities. Ampion expects to expand to other geographies as the model matures.
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“In the promise of community solar, it’s quite literally free money for the subscriber,”
Nothing could be further from the truth. The “free money” is paid for by taxpayers in the form of massive subsidies. With all the transmission line challenges, community solar needs to be in or near the community geographically. If a solar installation is 20 miles away it does not matter if there is a state line or not. A solar site in northern California is not in community to San Diego.