Challenge

Households unable to install rooftop solar because of cost considerations, roof condition, or renter status are typically denied access to the benefits and utility bill savings associated with a transition to solar energy. In addition to these barriers, many states lack community solar enabling legislation, meaning that any community solar programs that are offered within the state are generally restricted to installations owned by investor-owned, municipal, or cooperative utilities. For those utility-operated “community solar” programs that do exist, they often fail to provide meaningful financial benefits to low- and moderate-income customers.

Policy Solution

“Community solar” refers to solar projects or purchasing programs that benefit multiple customers. Customers typically subscribe to a portion of the energy generated from the project and receive an electricity bill credit for their share of energy generated.¹ Equitable community solar projects, which are facilitated via enabling legislation at the state level, enable community members who would not otherwise benefit from solar energy (e.g., renters, homes needing roof repairs) to participate in the clean energy transition.  Community solar, when designed for equity, can operate as both an immediate affordability tool and a long-term community asset—delivering energy savings, local ownership opportunities, and resilience within communities historically excluded from clean energy investment. Projects that engage low-income and disadvantaged communities in the design, implementation, and/or ownership of community-centered projects and that deliver meaningful, guaranteed benefits to participants can create a more resilient, reliable, democratic, and affordable energy system.

Model Policy Features

• Meaningful, guaranteed, affordable benefits to customers (e.g., minimum 20% savings on utility bills).²
• Virtual net metering, which enables multiple subscribers or owners to share in the benefits of a single solar energy generation system.³ 
• Third-party non-utility and multiple-party ownership with appropriate safeguards, such as ensuring that community solar rates are affordable to subscribers and do not incentivize profitmaking.⁴
• Subscription models (e.g., purchasing, leasing, or pay-as-you-go bill credits) with consolidated billing (i.e. the customer only receives one bill rather than separate bills from the utility and the community solar provider).⁵
• Set-asides for low-income households (e.g. a majority of subscribers must have incomes at or below 200% of the Federal Poverty Level).⁶
• Reduced transaction costs (e.g., enrollment, billing and collections).
• Financing (e.g., grants to project developers, low- or no-interest loans).⁷
• Community-centered development, siting, outreach, and education.⁸
• Includes high road job and training or apprenticeship opportunities, including strategies to reach underemployed communities.
• Provisions to require timely interconnection by utilities (e.g., within 20 business days), with enforceable timelines and potential penalties for delays.⁹
• Includes provisions for regular data reporting and public transparency (e.g., public-facing data dashboard with interconnection requests and utility response time.¹⁰ 
• Subscription rate should not include pay escalators.¹¹

Potential Policy Drawbacks and Pitfalls

• There is a risk of “community solar” legislation being introduced that mirrors equitable models in language (e.g., referencing bill credits) but favors large producers or out-of-state companies and limits overall solar energy generation. Policymakers should watch for bills that cap participation, restrict ownership to utilities, or rely on “cost-shift” arguments to justify barriers to equitable community solar.  (e.g., Michigan’s “Maximizing American Grid Affordability [MAGA] Act).¹² 
• There is an additional risk of “utility gatekeeping” through protracted interconnection studies and approvals, which can stall or cancel projects. Data from Lawrence Berkeley National Laboratory shows that interconnection delays are a primary bottleneck for utility-scale clean energy projects. The typical project built in 2023 took a median of five years from request to operation, and historical data shows that only 14% of the requested capacity in the queues is ever successfully built.¹³ This risk can be mitigated by legislating strict, enforceable interconnection timelines and “deemed approved” provisions.

Complementary Policies

CComplementary policies that can enhance the functionality of community solar policies include: 

• Distributed energy interconnection reform to enable project development.
• State refundable tax credits to fund low-income participation.
• Low- and moderate-income solar+storage to enhance resilience benefits.
• Bill assistance programs to provide parallel energy affordability.
• Comprehensive Distributed Energy Resource (DER) valuation, which enables community solar to be paid for, in part, through compensation of any broader benefits provided to the grid, such as deferral of distribution upgrades or peak demand reduction. 

Additional supporting policies include contractor education, balcony solar, and bill credits.

Additional Information: As of 2025, 23 states and the District of Columbia have adopted enabling legislation to facilitate community solar development.¹⁴