Community-Based Renewable Energy Solutions

Overview Affordable, reliable access to clean energy is essential to human welfare, economic development, and wealth. The

COMMUNITY-BASED RENEWABLE ENERGY SOLUTIONS Dr. Sharon Klein, Assistant Professor, School of Economics, University of Maine, 207-581-3174, [email protected] Stephanie Coffey, Graduate Student, School of Economics, University of Maine, 207-581-3154, [email protected] way we generate, distribute and use energy has lasting impacts in all aspects of economy and society because nearly everything we make and do requires energy. Traditional energy behavior “interventions” in the US (i.e., regulations, policies, programs, measures, activities, or events that aim to influence behavior [1]) focus on individual choices operating in isolation. Approaches that consider collective action and the complex relationships between individuals, technological information, and social institutions, may be more effective at advancing widespread sustainable energy technology diffusion because they build on the power of shared knowledge, trusted networks, and existing communities [1]–[6]. “Community energy” is a collective action approach with many definitions depending on the context in which it is used. We define it as a project or program initiated by a group of people united by a common local geographic location (town level or smaller) and/or set of common interests [7],[8]; in which some or all of the benefits and costs of the initiative are applied to this same group of people [9]; and which incorporates a distributed energy generation technology based on renewable energy resources and/or energy conservation/efficiency methods/technologies. While there is a very large literature on the diffusion of innovations [10]–[15], very little is known about how and why groups adopt certain technologies/solutions, especially in the US. We have compiled the first U.S. database of community renewable energy projects and present a state-by-state analysis of project type, location, renewable energy technology, financial model, and organizational structure. We compare the financial viability (through net present value, payback period, and levelized cost of energy) of individual renewable energy adoption to a set of community energy project models that represent the most frequently adopted technologies, financial models, organizational structures, and policy incentives from our database.

Methods Using the community energy definition described in the Overview, we conducted a web-based search of U.S. community energy projects to create the U.S. Community Energy Database (CED). Notable data sources include: US Environmental Protection Agency’s (EPA’s) Local Climate and Energy Program’s [16] list of 50 Climate Showcase Communities; EPA’s State Climate and Energy Program’s [17] profiles of 32 state government initiatives to address climate change and encourage clean energy in government facilities and operations; Vermont Energy and Climate Action Network [18]; Minnesota Department of Commerce Division of Energy Resources’ list of 27 community-based renewable energy projects [19]; Solar Foundation’s list of 3,752 national solar schools [20]; Massachusetts Clean Energy Center [21] data on 40 Solarize projects; American Wind Energy Association’s [22] list of 89 community wind projects nationwide. Preliminary data searches revealed that our existing time and labor resources would not permit data collection for renewable energy and energy efficiency/conservation projects. Therefore, the current US CED focuses exclusively on community renewable energy projects. Preliminary database results informed an economic comparison of leading financial and organizational models for community solar with individual residential solar. Solar was selected as the renewable energy technology for this analysis because the vast majority of projects catalogued in the CED are solar. We used the National Renewable Energy Laboratory’s System Advisor Model [23] to calculated the annual energy production, net present value, payback period, and levelized cost of energy from an individual residential solar photovoltaic system and three community solar models: Solarize, community solar farm, and third party power purchase agreement (PPA).

Results First, we will present descriptive results from the US CED, including state-by-state analysis for the 5-10 leading community energy states. Second, we will present the results of the economic comparison, which indicate under what conditions community solar can be a more attractive economic investment than individual residential solar. Third, we will discuss future plans for the US CED and surveys/interviews we are currently developing to better understand barriers and opportunities to community energy in the US.

Conclusions Community energy projects are being implemented across the US, with Arizona, California, Colorado, Massachusetts, and New Jersey leading the way in terms of number of projects and installed capacity per capita. These projects take on many forms, which can be categorized by financial model and organizational structure. Community solar on K-12 schools through one-time funds (tax revenues, donations/grant money, or other internal funds) are the most commonly documented projects, followed by buying groups such as Solarize, and third party PPAs. Community renewable energy projects can result in higher net present value, lower payback period, and lower levelized cost of energy than individual residential projects of comparable size. Third party PPAs allow non-profit and government organizations, who cannot take advantage of the federal investment tax credit, to host cost-effective renewable energy projects. Community solar farms allow residential consumers who do not have the appropriate roof space to invest in cost-effective solar installations. Buying groups, such as Solarize, enable individual residents to achieve a lower installed cost as a group than they could individually. We will be surveying and interviewing participants in community solar projects this summer to evaluate barriers, opportunities, advantages and disadvantages to this type of renewable energy deployment.

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