Solar energy is having a moment. It’s an industry that has grown significantly over the last decade, with an average annual growth rate of 24 percent, according to recent research. This might be due in part to the fact that the cost to install solar has dropped by more than 40 percent over the last 10 years. The renewable energy source is popping up all over the place in real estate, from traditional rooftop arrays to new technology like solar windows and setups that combine both solar and wind energy. Solar is even being applied to the transportation industry, whether it’s solar cars being unveiled in Australia or solar-powered trains, planes, and even roadways. The emerging uses are coming at a time when a lot of pressure is being put on property owners to shift to using renewable energy instead of fossil fuels. But for property owners who are unable to put solar panels on their property, the growing community solar market offers an attractive option.
Community solar offers communities the chance to reap the benefits of solar energy without having to install solar on their own properties. In a community solar model, a solar facility or farm is built, and homeowners, businesses, and even renters can subscribe to the energy source and receive credit on their electric bills for their share of the power produced. The community solar model has been around for at least a decade, but the market has grown substantially over the last five years. “There’s been an expansion of these types of programs and mechanisms across the country,” said Aaron Halimi, the founder and president of Renewable Properties, a company that develops these kinds of solar facilities in several markets around the U.S.
There are now 23 states that have community solar programs where homeowners and building owners can participate. The leading states for these programs are New York, Massachusetts, Illinois, and Minnesota, places where programs are robust or have been around for a while. Other states are just starting to get programs off the ground, including New Mexico, Ohio, and Pennsylvania. Halimi’s firm, which is based in San Francisco, counts New York, California, Maine, Massachusetts, and Minnesota as its biggest markets. “It’s one of the fastest growing segments within solar right now, and there’s a lot of room to run,” Halimi said. Community solar is one of the many solutions states and localities are looking at in order to meet climate change goals. Aside from being a renewable energy source, it’s a technology that has other upsides as well. Unlike other energy sources, community solar is done at the distribution level and has fewer interconnection challenges faced by other sources. “It’s a way to get a lot more renewables onto the grid in a fast fashion,” Halimi said.
The real estate industry has been eyeing community solar recently, with major players announcing big investments in the segment. Though solar installations slowed down during the pandemic, the industry is expected to rebound in the coming years, according to CBRE, which estimates that only around 5 percent of the market for commercial solar installations has been developed in the U.S. Industrial owners, in particular, are using their large properties to generate energy at a large scale. Prologis, the largest industrial property owner in the world, recently partnered with the Clean Power Alliance (CPA) to install solar panels on existing warehouses and then sell the power generated to the CPA, which provides power for the surrounding communities. Prologis executives are also exploring community solar initiatives, especially in Southern California.
Public Storage, the world’s largest self-storage owner and developer, recently announced a partnership with rooftop solar developer Solar Landscape to develop 133 rooftop community solar projects in Maryland, New Jersey, and Illinois. The arrangement entails Solar Landscape leasing rooftop space from Public Storage, where it will install its own solar panels. Public Storage will be responsible for maintaining the solar panels. The 87.53-megawatt portfolio is one of the largest in the nation and will serve many low- and moderate-income residents in the communities where the solar is being installed, the company said. In Maryland, 57 of the rooftop community solar projects will be focused on low-income communities. Lower and moderate-income residents that subscribe to community solar typically have a 20-30 percent on their energy bills compared to prevailing energy rates.
While it’s easy to see the advantages community solar facilities offer, one big hurdle holding back more widespread growth in the segment is community opposition. In places where solar farms and community solar facilities are being proposed, there has often been a backlash from local residents who don’t want these built. “At a high level, it’s fear of the unknown,” Halimi said about what’s fueling opposition to these projects. Solar has been around since the 1980s, and most people think about the technology as something that some homeowners and business owners choose to put on their roof. But seeing it take up a sizable chunk of land, which for bigger projects can range from 600 to 1,000 acres, has led some to have a negative take. “While solar has been around for so long, solar at this scale hasn’t been around that long,” Halimi said. “People are still getting educated on what it is and what it isn’t.”
Many opponents say they don’t like how it looks, something that Halimi says can be mitigated through landscaping and screening. Other criticism centers around land conservation. Solar is predominantly sited on open space or agricultural land because it’s more economical than using land zoned for commercial use. Pushback has come from environmental groups, farm bureaus, and agricultural groups who would rather not see land used to host solar panels. “I try to remind them that if we don’t do our part to get renewables on the grid, there’s no point in conserving that because we’re going to have bigger problems,” Halimi said. He actually makes the case that in the long-term, solar facilities actually do conserve land. After the useful life of solar, the equipment can be easily removed, and the land can be transitioned back to what it was before. “We are conserving land; we’re ensuring it’s not going to be turned into a parking lot and destroy the ecology on site,” he said. There are also more recent arguments from community solar opponents that claim solar facilities harm property values. Recent research on the impacts of solar farms on home prices found that solar projects largely do not have a negative impact on property values.
Still, despite backlash from the public over the development of solar community facilities, the industry continues to grow. California, despite historically being a leader in renewable energy and the only state that requires most new residential projects to have rooftop solar, has not been able to build a community solar market for residents. However, legislation passed last year is expected to open the gates to community solar expansion around the state over the next couple of years. New projects are happening in major markets like New York City, where a community solar project is being developed in Brooklyn’s Red Hook neighborhood. At the heart of the plan is lowering electric bills for low and moderate-income area residents. The waterfront neighborhood is home to the borough’s largest public housing complexes. New York City’s public housing agency, NYCHA, has its own separate community solar initiative that is gearing up to add solar to its properties around the city in the coming years. In the nearby Sunset Park neighborhood, Sunset Park Solar is set to be NYC’s first community-led solar project. The solar facility will be installed on the roof of the sprawling Brooklyn Army Terminal, a 95-acre complex along the East River waterfront.
As the solar industry continues to grow, spurred by new legislation around renewables, community solar is poised to become a big part of the transition to clean energy. Nearly half of the states in the U.S. have community solar programs that homeowners and building owners can take part in, and that number is expected to increase. But, the expansion of this new segment is facing opposition from many who don’t want the technology in their neighborhoods and are concerned over the potential for negative impacts on property values, among other worries. Community solar developers and their partners will have to work with communities in order to dispel fears and educate communities about the benefits that these projects can bring. It may take some time for opponents of solar to get used to seeing large solar facilities and farms, but once they eventually come around, the potential for property owners, community solar developers, and other partners could be huge.