Community Solar vs. On-site Solar: Which One is Right for Your Business?

Community Solar vs. On-site Solar: Which One is Right for Your Business?

If your business is considering going solar, there are two main options for reducing your electricity bill and supporting a cleaner grid. Many businesses in Colorado are now starting to consider community solar programs as an alternative to the tried and true option of installing solar on their properties. Let’s break down the differences between both approaches and see which might be best for your facility.

What is community solar and how does it differ from traditional on-site solar?

On-site solar refers to a solar power system installed directly on your property. On the contrary, community solar projects are at an off-site location whereby businesses participate by subscribing to a renewable energy program without needing to install solar panels on their property. Both community solar and on-site solar can allow your business to enjoy electricity savings and support the environment at the same time.

The table below provides a more detailed comparison between community solar and on-site solar:

Community Solar vs. On-site Solar

Given that community solar projects are off-site, how do I know that my business is receiving “clean” energy?

When you subscribe to a community solar program, it does not mean that the electricity running through your property is provided directly from the off-site solar arrays. This is because once the electricity enters the grid, there is no way to separate the “green” electrons from the “dirty” electrons produced from oil and natural gas. However, community solar programs still increase the amount of renewable energy on the grid.

If community solar is so great, how come I have not heard about it until recently?

Federal incentives, such as the solar Investment Tax Credit (ITC), and individual state clean energy initiatives have historically focused on growing the on-site solar market. As of 2020, only 16 states in the U.S have passed legislation that allows utilities or solar companies to develop community solar projects, Colorado being the first in 2010. The good news is that, while community solar programs are not available everywhere, they are gradually expanding to more states.

Deciding on the right approach

Consider the following factors to decide between community solar or on-site solar for your business:

1. Geographic location

Community solar programs are available in only 16 states that have enacted legislation for it. Lucky for you, Colorado is one of the states where community solar is an option for your business and Xcel Energy’s Solar* Rewards Community program allows customers to subscribe to local solar projects.

2. Property Ownership

Businesses that operate in rented properties may find it difficult to get approvals to install on-site solar. In these cases, community solar programs are the better option.

3. Installation Cost and Maintenance Expenses

Both community solar and on-site solar options are available to businesses that do not have the money to invest in system ownership by offering solutions without any upfront cost. However, if you decide to purchase on-site solar directly, you would be able to take advantage of incentives like the federal investment tax credit (ITC). In this case, you would pay for upfront installation costs and bear the responsibility for future maintenance expenses.

4. Maximizing Financial Benefits

In terms of getting a greater return on investment (ROI), on-site solar typically provides a higher savings opportunity than community solar. While subscribing to a community solar program typically still provides some savings, the greater benefit is the ease at which it is to subscribe and the contract flexibility over time.

5. Property Suitability

If your commercial property has large available surface area, such as roof space or a parking lot, on-site solar may be more suitable for you. If there are structural hindrances such as pipes or a curved roof, community solar may be the optimal option.

Ask an Expert

Deciding on a renewable energy strategy for your company can be challenging. Given our experience with solar in Colorado, the Pivot Energy team is ready to support your business in choosing what approach is best to achieve your solar goals. Reach out to speak with a member of our team.