Community solar is gaining attention for the benefits it can bring to electricity customers. But one question comes up again and again in our conversations with potential subscribers: “How does it actually work?”
In this guide, we’ll walk through the structure step by step so you can see how community solar creates savings and what participation looks like once your home, apartment or business makes the switch.
What is Community Solar?
Community solar makes it possible to benefit from solar power without having panels installed on your own property.
As long as you and the solar project are located within the same electric utility territory, you can subscribe to a share of the project. Instead of receiving electricity directly from the solar farm, you will receive bill credits on your utility electric bill each month tied to your share of the project’s production.
In many ways, it works like having solar panels of your own — without needing to install, maintain, or finance them yourself.
This structure makes community solar accessible to those who want to take advantage of the benefits of cheap, clean electricity, but don't have the capabilities to install or afford a system put directly on their property.
How Community Solar Works: Step by Step
- You enroll in a community solar project with a subscription sized appropriately for your electricity usage.
- The solar farm generates electricity as sunlight hits the panels.
- Bill credits begin appearing directly on your utility bill based on your share of the project’s production.
- You pay the solar project owner for a fixed portion of the value credits received.
- The difference between the credits received and the payment made back to the solar farm becomes your savings.
Lets look at an Example
Suppose you spend $10,000 per year on electricity.
A community solar project would provide
$10,000 in bill credits, effectively reducing your utility bill to $0.
The solar farm then charges
90% of the value provided to you, or $9,000.
Once payment is made, the remaining difference — $1,000 in this example — becomes your effective savings.
Why People Choose Community Solar
Since payment is structured as a fixed percentage of the value delivered, participants never pay more than the benefit they receive. This means that as solar production varies from month to month, or as credit values may fluctuate, the payment made to a solar farm is always less than the value provided by reducing your electric bill.
These savings are also not a one-time discount. They continue month after month for the duration of the agreement, which for homeowners and renters is quite flexible with cancelation available as an option at anytime.
In short: There’s no equipment to install on your property, no disruption to your electricity service, and no change to how power reaches your home or business.
The primary difference is simple: your electric bill becomes lower and more predictable over time.