Since Maine passed solar-friendly legislation in 2019, there has been a boom of mostly out-of-state corporations setting up massive solar arrays and signing up subscribers into community solar programs.

Raising limits on the scale of solar development has increased the amount of solar energy in Maine’s renewables portfolio – more than 300 megawatts of solar generation have been brought on line since then. In addition, the subscription model made solar energy accessible to more people because it does not require any upfront investment to participate, while buying into a community solar farm can cost tens of thousands of dollars.

But advocates for cooperatives say that investor-owned solar is not necessarily the best way forward, and they are developing strategies to make sharing ownership in a community solar farm more affordable for working Maine families.

At a Cooperative Maine Business Alliance conference in Belfast this month, community leaders spoke about the need to keep the community-owned solar model alive, saying it keeps more money in the community while giving energy consumers more local control.

“People think community solar involves the community, but a lot of the way it’s being done, it doesn’t,” said Marianne Connor, manager at Co-op Power, a regional network of community energy cooperatives in New England and New York. “It just basically means distributed solar generation. … State policies are focused on increasing megawatts: ‘How much solar, how fast?’ instead of thinking about who owns it and how do we build community wealth.”

Solar developers point out that subscription-based, investor-owned solar farms benefit communities in several ways, not least of which is bringing more clean energy to the grid quickly, offsetting the use of fossil fuels that are contributing to the climate crisis.

Keith Havenor, spokesman for Boston-based solar energy company Nexamp Inc., said such farms also provide lease revenue to the landowner, savings to subscribers on their electric bills and employment opportunities to locals during construction, all of which can provide more revenue to area businesses.

And Maine-based solar companies such as Maine Community Solar, which provides solar power to 350 Maine businesses, do keep the profits in state.

But Scott Vlaun, executive director of the Center for Ecology-Based Economy, based in Norway, is among those who believe community-owned solar should be a priority in Maine. 

“The difference between a cooperative solar model, or a solar co-op, and the community solar that we see (marketed) in our mailboxes every week, is community – it’s the community involvement,” Vlaun said. “When you have a company that has no relation to the state that comes in, talks to private landowners in our communities, cuts a deal and then just shows up and starts cutting down trees and  installing solar, things go wrong really quickly.”

The 2019 reforms increased the size limit of solar facilities from 660 kilowatts to 5 megawatts, eliminated the cap on the number of members or subscribers to a system, created a tax-exemption for solar installations and a system of monetary credits for solar generation, allowing commercial users who are billed differently than residential accounts to participate. This prompted a flood of developer applications to electric utilities to connect new solar projects to the grid.

Solar installations are now facing long delays as Central Maine Power and Versant Power asses the impact of those projects on the power grid, frustrating subscribers. And several communities have put solar moratoriums in place, citing their lack of control over where the projects would be sited.

RETURN ON INVESTMENT

Back when community solar farms had a cap of 10 owners or subscribers, the co-op model prevailed. Crystal Spring Farm Community Solar Association in Brunswick was one of the early cooperatives formed in 2016 in which eight families pooled their resources to build a small, 79-kilowatt solar array on a piece of farmland with little agricultural value. Each received a portion of the credits from power generated by the array based on their percent ownership.

But the group didn’t expect to earn its investment back until 17 years had passed. Steve Weems, president of the association and executive director of the Solar Energy Association of Maine, said that when photovoltaic systems became tax-exempt as part of the reforms of 2019, the time to recoup their investment dropped to about 12 to 13 years, depending on the fluctuating value of energy credits.

Such arrangements are still possible under the new rules, despite long delays and moratoriums in some places, but participants can now take advantage of economies of scale.

A Climate to Thrive, a Mount Desert Island nonprofit dedicated to energy independence, partnered with ReVision Energy to build an 840-kilowatt solar farm for up to 100 members in Southwest Harbor that was connected to the grid in December 2021, after over a year delay.

Beth Woolfolk, solar coordinator for A Climate To Thrive, said she expects members to be able to recoup their investments in seven years or less. Upfront costs were lower because system costs have fallen dramatically, and the price per watt goes down as the arrays become larger. Dramatically rising energy costs are making the time it takes to recoup such an investment even shorter, based on money saved by not having to purchase energy. 

In the member-owned model,  Woolfolk said, for every kilowatt-hour the array generates, the member is credited one net-energy-billing credit, and then that is applied to the customer’s account directly, offsetting a kilowatt used. But in the subscriber model, the customer has to buy the generated kilowatts from the investor-owner, which charges a rate that is based on the state’s “standard offer” rate for electricity generation, minus a discount that usually falls between 10 and 15 percent.

Once the initial investment is recouped, that’s when the wealth-building potential of solar generation takes off. Those continued subscription payments, tied to fossil-fuel prices, become pure profit for the investor. For co-op members, the money saved on electric bills can be saved, invested or spent however the owners choose.

Another financial benefit member owners of solar farms can take advantage of that subscribers cannot is the federal solar tax credit, which is currently set at 26 percent of the investment through 2022.

THE INCOME BARRIER

Even with bigger arrays and more members, the upfront investment required to buy a share in a cooperatively owned solar farm is often prohibitive for middle- to low-income electricity customers, leaving those advantages out of their reach.

“Income is a real barrier for people owning clean energy,” Woolfolk said. “We can’t just have white-collar green energy, it has to be for everyone.”

If Maine can develop a model that allows access for low- and middle-income residents to invest in owning solar,  it would significantly help promote the state’s green energy goals and help communities realize the equity from solar arrays “instead of letting a developer reap all the benefits,” she said.

Organizations have been experimenting with different financing structures and have been having success with a tax-equity-flip arrangement that combines the investor-owned subscription model with co-operative ownership.

In that arrangement, the federal tax credit is used to attract investors to put their money into solar projects for a set number of years, usually six to seven, during which time the community organization or co-op members pay them as subscribers, Connor, of Co-op Power, explained. When the tax credit runs out and the developer reaches the agreed-upon return on investment, the investor’s allocation  flips to around 5 percent and the cooperative has the option to buy them out.

“Probably the organization still needs to take on some debt at that point,” Connor said, “but generally, that is debt a credit union will approve because they have a generating array and it’s up and running.”

A Climate to Thrive is currently working with potential partners to develop a co-op owned solar array using this type of financing structure to reduce the barrier to access. They are in the early phases and have not yet picked a location, but are looking at multiple distressed sites across MDI with a goal of avoiding forest fragmentation.

HOUSING CO-OP ADVANTAGE

ReVision Energy, a Maine-based solar developer, worked with Greystone Mobile Home Park, a resident-owned community in Veazie, on an agreement for a 600-kilowatt community solar co-op on the property. Vaughan Woodruff, director of workforce development at ReVision, said resident-owned communities are poised particularly well to invest in community-owned solar because they already have a cooperative structure in place.

The Greystone arrangement would involve a power purchase agreement with an outside investor who would own it for about six years, after which the residents would borrow money to buy it. The array would have additional capacity members could use to sign up outside customers and create a future revenue stream for the community. That project, like many others, is currently on hold because of delays involving the utility companies and the Maine Public Utilities Commission.

In order to accommodate Maine’s solar energy expansion and increasing electrification needs in the transition away from fossil fuels, Woodruff said, the next phase of reform must be to update the state’s interconnection rules and find a way to upgrade its grid. Advocates have been collecting signatures to get a public-owned-utility referendum question on the November 2023 ballot, as a way to hasten the needed upgrades, and others have been exploring the possibility of constructing power micro-grids.

“The investor-owned utilities are a major constraint,” said Connor. “Unless we find funding to start building micro-grids, no community solar project can get financing without an interconnection agreement.”

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