NRG Energy is the latest company to get into community solar, with the launch today of a 1-megawatt shared solar project to serve approximately 200 homes in Freetown, Massachusetts.
The project is being jointly developed by NRG Home Solar and NRG Renew, which have more than 100 megawatts of shared solar projects already in the works in both Massachusetts and Minnesota, and are actively seeking to expand into other markets.
“It’s not a huge deal, but it’s a beginning of a series of modest deals that will get us into the space in a big way,” said Steve McBee, CEO of NRG Home, in an interview. “Shared solar will be a meaningful part of our solar volumes this year and going forward in 2016 and beyond.”
The program will leverage NRG Home's ability to acquire and retain customers through its residential solar business, draw on the expertise of NRG Renew (the commercial- and utility-scale renewables arm of NRG) to site, develop and operate large solar projects, and monetize the projects through NRG Yield.
This structure positions NRG as the first vertically integrated company in the community solar space, said McBee.
NRG isn't working entirely alone, however. The company partnered with Borrego Solar to build the Freetown site, and could partner with other companies on customer acquisition going forward. Tendril, for instance, recently came out with a targeted customer engagement solution for community solar.
NRG has already been active in the community solar space through a partnership with SunShare, and is expected to complete an 8.2-megawatt community solar portfolio in Colorado this year. While the company will still rely on some partnerships, today's announcement marks NRG's shift into becoming a more independent community solar player.
Shared solar could be a huge business opportunity. According to McBee, 73 percent of people NRG approaches can't put solar on their roofs -- perhaps because they don't own their home, have structural issues, or have too many obstructions that would limit the system's output.
Subscribers to the Freetown project will enjoy price stability and savings through a 20-year agreement with NRG Home Solar. These customers will earn credits toward their energy bill, calculated based on how much renewable energy their portion of the project generated in a given billing cycle.
“One of the most exciting things about solar is that as it grows explosively we create new opportunities for people to make renewable energy part of their lives,” said Kelcy Pegler, president of NRG Home Solar, a division of NRG Home. “Shared solar represents that opportunity -- a simple, inexpensive path for people who buy power to go solar without limitations.”
However, in many states, community solar isn't even an option. Massachusetts, Minnesota, Colorado and California are the only states where policies are in place to support meaningful community solar development.
“If our customers want solar, they ought to be able to get it, and the only thing standing in their way is that there isn't a regulatory scheme worked out that will allow that to happen," said McBee. "The technology is there, the market demand is there, the cost is right -- we’re just waiting on a policy signal. That frustrates me.”
"This is a new space, and so it will take time to get the policy pieces in place," McBee added. "But it shouldn't take 100 years."
NRG plans to actively lobby policymakers and regulators on boosting community solar to help grow the market.
As community solar expands, it could increase tension between utilities and third-party solar companies. There have already been conflicts over project sizes, net metering caps and allowing fair access to the budding community solar market.
States that allow for third-party community solar development are expected to account for the vast majority of shared solar installations over the next two years. But the market will also become more geographically diversified as developers create new offerings for utilities in states where there's no community solar legislation in place. Some utilities, such as Tucson Electric Power, are likely to develop their own community solar programs through the regulatory process.
How community solar grows around the country will depend heavily on policy structure, and how utilities decide to approach the market.
“In some ways, I think this is more in [utilities'] sweet spot than conventional residential solar," said McBee. "So it will be interesting to see whether they’ll decide to play, or whether they’ll decide to slow-roll it. It looks to me like it could go either way.”