Community solar billing: Four things to know

If there's one less-than-appealing thing about community solar, it's the billing process. Billing involves several companies and different steps, so it can be difficult to grasp exactly what will come in on that first monthly bill. To make it a bit easier, we've broken down the top four most important things to know about community solar billing: 

Consolidated billing is the end goal for the community solar industry. Still, unfortunately, most community solar programs today require two separate bills: your usual bill from the utility company and a separate bill from your community solar provider. 

Your utility bill will, for the most part, look pretty standard (more on that below). On the other hand, your community solar bill will summarize your earned credits and what you owe for the credits. These charges not only depend on how much your share of the solar farm generated over the billing period but also on your subscription structure:

Fixed discount on bill credits

Community solar bill charges =  Monthly solar bill credit value * (100 – discount)%

Example: You sign up for a community solar project that offers a fixed 10 percent discount on bill credits. Your share of the community solar farm generates 769 kilowatt-hours (kWh), equivalent to $100 in bill credits. Your community solar company applies the 10 percent discount, so you pay $90 for those credits and reduce your utility bill by $100 (i.e., save $10).

Fixed electricity rate from solar farm

Community solar bill charges = monthly solar electricity production from your share (kWh) * bill credit rate ($/kWh)

Example: You signed up for a community solar project that sells electricity for 11.7 cents per kWh, which is less than the 13 cents per kWh your utility company currently charges for electricity. Your share generates 769 kWh, so you pay your community solar company $90 for your credits and reduce your bill charges by $100 (i.e., save $10). 

Why subscription structure matters

In the two scenarios above, you end up saving the same amount of money. However, it's important to understand which one more resembles your offering because it doesn't always work that way! 

With the former (i.e., fixed discount on bill credits), you will receive the same % discount regardless of the price of electricity in your area, meaning locked-in savings. However, with a fixed electricity rate option, your savings largely depend on how much your community solar company charges per kWh and how that compares to your utility company's current electricity price. If utility rates continue to rise in your area and outpace any annual escalator you have for community solar electricity rates (if included), you could save more than you would under a 10 percent fixed discount offer! Alternatively, while unlikely to occur, if your utility rates drop below what you agreed to pay your community solar company, you could pay more for community solar.

Your utility company and community solar company will work together to ensure that the energy credits you buy from your local solar farm end up on your bill – no hard work is needed on your part!

The first time you receive a bill from your utility company with community solar credits, you may not immediately notice any difference: supply and demand charges will be located in the same place, as will your usage history. However, if you drill down to the nitty gritty charges of your bill, you should see a new line item with a negative value – that's your community solar credits rolling in.

We wish we could say, "Look in this exact location and for this exact name" to find your credits, but unfortunately, it looks different for every utility company and state. For example, if you live in New York, your credit will likely come through as a "CDG Value Stack Credit" or "CDG generation credit," while in Massachusetts, it may be under a "net metering" or "NEM" line item. Either way, the easiest way to find your credit will be to scan your bill for a new negative charge.

There will be months when your portion of the solar farm generates more energy than you need – this is normal! It would be impossible to match your monthly energy usage to monthly solar production from the farm since energy consumption habits and solar panel production vary season by season (in fact, we have a whole article about how seasonality impacts community solar billing).

If you're shocked by the growing credit value on your utility bill, remember that community solar is an annual savings product, not a monthly savings product. Your community solar company will size your share of the solar farm to meet most of your annual energy needs, and any extra solar bill credits you buy now can be used in future months. For many subscribers, this means banking additional bill credits in the summer to use come winter time when electricity production is lower at the solar farm. 

That said, paying for community solar bill credits you'll never use is pointless. This shouldn't happen if your community solar company sets up your solar farm allocation appropriately and your electricity usage remains relatively consistent year over year. However, suppose you decide to upgrade your home energy efficiency and cut your annual electricity consumption. In that case, it's a good idea to get back in touch with your community solar company to downsize your allocation of the solar farm.

A lot goes into the community solar billing process – much of which you won't even see! 

Here's the process, simplified:

1. The community solar company and utility company determine how much electricity the solar project generates for the grid and, more specifically, how much electricity your share generated

2. The community solar company calculates your credit value based on production and sends you a bill

3. Credits are delivered to your utility account

4. The utility company sends you a bill with solar bill credits included

Ideally, the timing of your solar bill credit delivery will closely align with when your utility company sends out bills. But schedules vary by community solar project and utility company, and the steps outlined above don't always occur in that sequential order. 

In the event your utility sends out your monthly electricity bill before your community solar company can calculate and deliver your credits, you may experience a monthly delay between when you earned/paid for the solar bill credits to when you see them on your utility bill. But in the grand scheme of things, this delay won't impact how much you save with community solar: remember, community solar helps you save on your annual electricity bills, not monthly, so it all evens out over time.

Want to compare community solar options in your area? Check out the EnergySage Community Solar Marketplace, where you can see a list of open community projects near you and get a quick estimate of potential savings. If there aren't community solar projects in your region yet, you can sign up to receive updates as new projects go live on the Marketplace.