The U.S. market for community solar power will add 4.5 gigawatts (GW) over the next five years, a 9% increase over previous projections, according to a new report from Wood Mackenzie.
The report, US community solar market outlook: H2 2021, done in collaboration with the Coalition for Community Solar Access (CCSA), attributed the growth to expanded programs and new initiatives.
“Forecasts for New Jersey, New York, Illinois, and Colorado have all been increased thanks to updated and expanded programs and significant climate and clean energy commitments from state governments,” Rachel Goldstein, an analyst with Wood Mackenzie’s solar research team, said in a statement.
“Community solar needs state-level polices in order to thrive,” Goldstein said, noting that several states have passed or proposed legislation for community solar programs.
New Mexico and Delaware both passed legislation in 2021 for new or improved community solar programs, and Pennsylvania, Wisconsin, Michigan, and Ohio have all proposed bills for community solar programs that are working their way through the state legislatures, according to the report.
Those initiatives prompted Wood Mackenzie to increase its projections for community solar by 9 percent above the estimates in its first report on community solar programs, published in July 2021.
“We’re just scratching the surface of how much community solar is needed to meet customer demand and state and federal energy goals,” Jeff Cramer, president and chief executive officer of CCSA, said in a statement.
Nevertheless, the growth of community solar installations faces challenges, particularly with respect to connecting solar projects to the grid. “Today, Maine and Massachusetts are experiencing the complexities that come with interconnection studies and upgrade cost allocation decisions,” Goldstein said. “Those processes lead to delays and cause project attrition due to cost uncertainties.” She noted that Minnesota and Maryland’s forecasts decreased due to continued siting challenges in both states.
“As community solar penetrates more markets, it will have to contend with interconnection challenges due to grid congestion and outdated infrastructure,” Goldstein said. “These grid challenges could be replicated in other states, with some developers believing that the situations in Maine and Massachusetts are harbingers of the interconnection challenges they may see in other markets,” she added.
The report collected data on customer acquisition costs and found they vary widely, anywhere from $500 to $20,000 per customer. In general, the report found that residential customers with more standardized contracts have more consistent acquisition costs, while unique contracts for larger commercial customers result in a range of acquisition costs.
And while residential subscribers still make up the vast majority of community solar subscriptions and are simpler to acquire thanks to standard contracts, the report’s authors also noted that anchor tenants, such as large commercial entities and municipalities, account for a significant amount of installed community solar capacity.