CDG Model – Lessons Learned from Solar CDGs

Jan Borchert, Current Hydro and Dana Hall, Esq.

There might not be many hydropower CDG projects out there, but there are enough solar CDG projects to learn from. We’ve complied a list of lessons to be learned from Solar CDGs in terms of marketing, legal framework and model structures.

Community solar as a shared renewable structure has been around for more than a decade, with programs designed and offered by grass roots community groups, independent solar developers, and utilities (investor owned, municipal, and cooperative). In 2018, the Smart Electric Power Alliance (SEPA) reported a total of 734 megawatts (MW) of installed capacity in community solar programs across the United States. This short but rich history provides a significant number of examples to learn from.

For site owners with developable microhydro potential who may be considering pursuing a community DG model, there are valuable lessons to be learned from community solar. The legal framework, program design, compliance with regulation and marketing strategies for community solar are all well developed. In addition, there are lessons to be learned relating to the constituents who participate as well as barriers that persist for some constituents.

Community solar developed as a model to allow greater access to participate in solar energy. Yet the majority of community solar subscribers are primarily in the higher income brackets. Low-income customers are not accessing programs as rapidly and many states are adjusting to this pattern by creating low-income mandates within their community renewable programs. New York has initiated a collaborative process to work with interested parties to investigate and evaluate low-income customer participation in CDG, and to examine key barriers to low-income customer participation and develop solutions.

Community renewable programs can be difficult to explain to consumers and implementation is not simple. With New York’s CDG program, the allocation of credits can be a confusing concept, especially where the customer may not truly understand their electricity bill. Adding the complexity of CDG credits and a second bill coming from the CDG host, means that signing up subscribers can be a challenge and a barrier to implementation. CDG providers asked the NYPSC to prescribe automated billing, where the utilities would collect the amount owed to the CDG host on the electric bill so that the consumer only sees one bill. The NYPSC ordered utilities to file billing and automation reports, which they did in November of 2017 but as of this writing automation has not yet taken place.

CDG hosts need to prepare for the bookkeeping and records maintenance associated with operating a CDG. In order to deal with the billing confusion, some solar CDG hosts have offered and, in some cases, required subscribers to sign up for automatic or direct withdrawal from the subscriber’s bank account. Automatic payment ensures more efficient collections and may be more appealing to a potential subscriber. CDG hosts who are managing their own subscriptions have developed internal processes to receive the data from the utility each month and create invoices based on the credits applied to each subscriber account. This can typically be performed by an appropriately trained bookkeeper or clerical staff.

Lessons Learned from Community Solar Marketing

Many CDG printed and online marketing campaigns use catchy phrases and simple concepts to convey their message.  Some use a “Who, What, Where, Why and How” format or a question and answer formats to explain complicated issues.  Most have colorful and attractive designs. Several of the CDG providers offer “open house” community events including free food and beverages, to invite the public to hear their pitch and sign up in person. They use social media campaigns and online advertising to get the word out and provide digital access through QR codes and easy to remember URLs. Their websites provide a significant amount of information that is organized in a logical and visually appealing way, including webinars, videos and downloadable pamphlets, e-books and other published content, which are oriented in an educational format. Some also publish their names and logos of their business partners and subscribers, to provide credibility for their product. Some of the CDG providers describe both subscription and ownership style programs in their marketing material. Others market directly to potential landowners who may want to lease land to the CDG for a new solar farm.

Examples of catchy phrases used by solar CDG providers in New York are:

• Your neighbor doesn’t pay utility bills, why should you?
• They get their power from the sun, not NYSEG. (with a photo of a solar farm)
• Don’t put solar on your roof, put it on our farm!
• It’s sunlight savings time, pay less for your power with community solar!
• No panels, no problem. Rent your home or live in the shade? Solar is still an option.
• Your panels, our farm. The perfect solar resource.

Natural Power Group, a hydroelectric company offering CDG subscriptions for the Wallkill and Wappingers Falls projects focuses on the historic value of their hydro resources in their marketing campaigns. Their postcard includes a narrative history of the Wappingers Falls plant, which highlights the environmental commitment of their operations and the historic restoration of the site. Their Q&A sheet answers common questions that occur, some related to the billing and utility role, and others that are specific to the hydro resource.

Lessons Learned from Community Solar Legal Framework

Community solar providers registering for the CDG program are required to upload their sample contracts to the NYPSC website. Below are descriptions of four community solar contracts that are useful examples of different structures for a microhydro CDG to consider.

Retail Net Metering Credit Sales Agreement

In Grand Island Community Solar Project (BlueRock Energy Solar Inc.)’s Retail Net Metering Credit Sales Agreement customers subscribe to receive credits using volumetric net metering for a term of months.

This contract begins with a term sheet that includes:

• Subscriber Information (name, address, utility account info)
• Price for net metering credits at  $__/ kWh
• Membership Percentage Options based on 12 months historic usage, a % allocation at $/kWh
• Term  for _____ months
• Start Date
• Renewal – opt to renew or withdraw 60 – 30 days prior to the renewal date, or automatic renewal for 12 months
• Late Fees
• Right of Rescission (same as cancellation) within 3 days of signing
• Early termination fee of $100

The contract then provides an explanation of how program works. Subscriber agrees to purchase the agreed upon percentage of output to be allocated by the utility as net metering credits to the subscriber’s bill, which includes both supply and delivery charges. This contract includes a useful paragraph of legal language for each supply and delivery explaining what each is.

Subscriber must be a customer in the utility service territory and cannot sign up for other community DG or install renewable generation on site. This contract requires ACH automatic bank account debits based on monthly invoices to be emailed to the subscriber. The term sheet has signature lines at the bottom, then is followed by additional terms and conditions (utility service, net metering credits, dispute resolution, limitations of liability, taxes, force majeure, warranties, assignment, severability, information release, consumer protections and other miscellaneous provisions.

Community Solar Power Services Agreement

In High Peaks Solar, LLC’s Community Solar Power Services Agreement customers subscribe to receive credits using volumetric net metering for a term of five years. There is an option to prepay for 20 years of solar credits.

This contract begins with a useful list of definitions. High Peaks is agreeing to install, maintain and operate a solar PV system and the subscriber agrees to purchase a defined amount of kWh from that system to offset the supply and delivery charges on their electric bill.  If more energy is used than the defined amount, the utility will bill subscriber the difference between credits and actual usage, at the utility’s normal retail rate. High Peaks retain title to and ownership of the system at all times and also retains ownership of all environmental and tax attributes.

Subscriber agrees to pay for the kWh credits at an agreed upon rate (in this example $0.102) for a term of five years. High Peaks will bill subscriber monthly for the credits at that price. ACH payments are mandatory. There is a prepayment option that gives the subscriber rights to 20 years of solar credits at no additional cost. Additional terms include payment disputes, change in law, $110 down payment at contract signing, subscriber has a unilateral right to terminate on 60-day notice and cancellation is allowed within 30 days of signing.

At any time that electric production from the system is greater than subscriber’s requirements, the subscriber shall nevertheless pay the provider for all of the electricity produced by the system at the rates and in the manner agreed upon. However, if the agreed upon number of annual kWh credits that the customer received exceeds their annual usage, the provider can adjust the subscription amount to lessen the subscriber’s expected annual allotment.

Community Solar Sale Agreement

In Renovus’ Community Solar Sale Agreement the subscriber physically owns a portion of the generation resource located at the CDG host site.

The Renovus contract is a sale of selected solar panels, identified by serial number and paid for in full by the subscriber. The panels will be located on a farm controlled by Renovus, who is designated as agent for the subscriber to sell the output to the utility and apply net metering credits to the subscriber’s account. The selected panels are the subscriber’s personal property and the subscriber is entitled to apply for federal tax credits associated with the purchase. The subscriber can also sell or transfer ownership of the panels to anyone they want and can request Renovus to remove the panels and deliver them to the subscriber with 30 days written notice.

This contract uses net metering and applies a kWh volumetric bill credit. The contract includes a place to provide the $___/ kWh for informational purposes only.  The agreement is pursuant to the utility rules and the CDG program.  Renovus is responsible for O&M but applies a $180 annual charge to pay for O&M, with an optional 2% annual escalator.

Community Solar Subscription Agreement

With Monolith Solar Associates, LLC’s Community Solar Subscription Agreement customers can subscribe to receive credits using Value Stack monetary credits for one year with one-year automatic renewals.

The Monolith contract begins with a form for the subscriber to provide their information. It explains that Monolith is selling the subscriber a portion of solar credits based on an allocation of kWh generated from their solar facility each utility billing cycle. Monolith uses a monetary credit with value stack compensation.  They provide a link for subscribers to learn more about the Value Stack http://mncommunitysolar.com/faq. The length of the term is one year, with one-year automatic renewals.

The monthly fee is based on the solar credits allocated to the subscriber’s bill and is 10% less than solar credits applied by the utility for the billing period. For example, if the solar credit is $100 for a period, the fee owed to Monolith would be $90. Invoices will be sent monthly, and the subscriber can pay by ACH or by check.  

Monolith also offers a new subscriber discount of one free month of credits. If a subscriber maintains their account in good standing they then receive a credit for the January after their first full year of service. This contract has a good example of “Subscriber Authorization Form for Release of Utility Data”. This can be a useful example separate from the contract.

Additional Community Solar Models

This section provides a few examples of community solar models across the United States. These include third party developed models and utility models.

Third Party Models – Lessons Learned

Solar United Neighbors is a 501c3 non-profit organization created in 2007 by concerned citizens who knocked on the doors of their neighbors to build the Mt. Pleasant Solar Cooperative helping 45 neighbors share a new solar project. Since then they have expanded their efforts to assist communities in shared solar projects through education and policy advocacy. They have significant resources available to the public to understand how community solar works.

My Generation Energy in Massachusetts successfully created LLCs to purchase solar installations funded by groups of investors. The benefits are limited to a small group of tax-motivated investors.

Utility Models – Lessons Learned

The Clean Energy Collective develops community owned solar gardens in Colorado. Their business structure offers participation to an unlimited number of utility customers.

Many of the municipal utilities who have pioneered community solar have invested a considerable amount of research into market assessments and marketing strategies to improve on their product offerings. One such utility is the Sacrament Municipal Utility District (SMUD) who first offered a Shared Solar product in 2008. SMUD has published a “Lessons Learned” webinar from 2017 which offers advice (primarily to utilities offering community solar) on program design, marketing strategy and other considerations.

Next Steps

At this point you’re probably ready to file your CDG registration and get started, but first check out our list of useful resources and links, related to setting up your CDG.

If you want to know more about alternative financial models to sell your hydropower, like the ownership model or power purchase agreements, follow the links in our financial models overview post.

Or download our full Microhydro Community DG report.