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Community Solar

Community solar refers to property owners buying into or leasing part or all of a solar farm. Community solar is used to invest in solar without a well suited property, including cases where a roof is not angled correctly or there is too much shade. Each community solar project has different rules for how to subscribe, such as buy or lease a certain percentage of the farm, buy and own a certain number of panels, subscribe for different lengths of time, etc. Each community solar farm determines the price for buying panels or credits. Community solar utilizes virtual net metering credits so investors in the community realize the electrical cost-saving benefits of going solar.

Customer Charge

Customer charge is a fixed charge that utility companies require each month for expenses like maintenance and customer service. This rate is typically between $10–$20 per month (in MA) and is charged even if your solar panel system produces 100% of your electricity.

Federal Income Tax Credit (FITC)

The FITC is a tax credit used to subsidize the solar panel system owner’s yearly income tax. As it currently stands, in 2021 and 2022 the FITC rate will be 26%, in 2023 the rate will drop to 22%, and in 2024 the rate will drop to 10% for commercial solar and 0% for residential solar, barring congressional revision. This means, if a solar system costs $10,000 in 2021, the property owner will receive $2,600 in tax credits that can be carried forward for up to 20 years ($10,000 * .26 = $2,600).

Kilowatt (kW)

A kilowatt is a measure of energy which is equal to 1000 watts.

Kilowatt Hour (kWh)

A kilowatt hour is a unit of energy used to calculate your electric bill. One kWh is equivalent to a one kW (1000 watt) device used for exactly one hour. Each state’s geographical location determines the amount of peak time solar panels are exposed to the sun, excluding outside factors such as shade from buildings or trees.

Load Capacity - Power Lines

Load capacity is the amount of electricity the power lines connecting your property to the grid can handle. If there is not sufficient capacity available on the power lines to support the solar panel system, the solar developer will need to pay the local utility company to install additional power lines at cost. Load capacity is generally only an issue for large site leases or power purchase agreements that generate large amounts of electricity.

Net Metering

During the day, if your solar panel system produces more electricity than you are able to use (excess electricity), that electricity is sent back to the grid and your meter physically moves backwards. When you send electricity to the grid, you receive net metering credits for the electricity provided. Then, at night, when your solar panels are not generating electricity, the grid will charge you for your electricity consumption and your meter will move forward. With the right system size, you can generate enough credits to offset your entire electric bill, avoiding all costs from your utility provider except for a minor customer charge.

Net Metering Credits

When your solar panel system produces more electricity than you are able to use, the extra electricity gets sent to the grid in exchange for credits. These credits are then used to cover electrical costs at night when your solar panel system is not generating any electricity or if your electricity consumption increases above what the panels generate. Net metering credits are found on your electric bill represented with a dollar value (not a kWh value); however, they cannot be exchanged for money. Unused credits roll over to the next month’s billing cycle.

Open Auction

An open auction is an auction format for determining market value by allowing buyers / sellers to set their own price (bid) against each other. In an open auction, bidders see other bid values, raising their own bid as many times as they want. In a traditional open auction, the top bid is the winner. In the case of NRG Market, however, that is not always the case. Because commercial solar is very large in scale and long term, a property owner may feel more comfortable with a certain developer over another. Some characteristics that a property owner may look for besides bid value is a developer's size, headquarter location, experience, etc.

Request for Proposal (RFP)

A Request for Proposal is an official project description soliciting competitive bids from multiple parties for the project, item, or service. RFPs are typically published as public documents that anyone can view and qualified parties can bid on. Government organizations and large business institutions often utilize RFPs, but any sized organization or institution can submit one.

SMART

Solar Massachusetts Renewable Target (SMART) is an incentive created by the Department of Energy Resources (DOER) that pays owners of solar panels directly through the utility company. SMART only applies to National Grid, Eversource, or Unitil customers in Massachusetts. The incentive value is determined by a combination of system size, region, and utility provider.

Sub Meter

Sub metering is a way for individual tenants to get billed directly for their own electricity usage. In the case of solar, sub meters are the devices that communicate with the solar panel system, telling them when to stop providing electricity based on the utility allowance agreement (net metering still applies). Sub meters are physical devices that range in cost, and just like regular meters, they measure energy usage from both the utility and non-utility devices, such as solar panels.

Substation

Substations are electric plants, owned either by a utility or private company, for the purpose of transforming voltages from high to low or low to high. Substations are an important part of the electric grid, as they allow for electricity to be converted into a usable voltage for businesses and homes, as well as serve as a tie in point for solar systems.

Utility Price vs Solar

Utility prices have historically increased over time, meaning your solar system will generate more money over time. This is because a solar system offsets how much electricity you use in kWh, not how much money you spend on your bill. This is a seemingly small but important distinction.

Virtual Net Metering (VNM)

Virtual Net Metering is when the solar panel system is off-site, meaning the solar panel system is not located on the property that is receiving the net metering credits. The credit system is the exact same as an on-site solar panel system. This is how community solar works.

Watt

A watt is a unit of power equivalent to one joule of work performed per second. When a 40 watt lightbulb is used for one hour, 40 watt-hours of electricity are consumed, or 0.04 kilowatt-hours (kWh).

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