FINANCING COMMUNITY-SCALE SOLAR

The report identifies a significant investment opportunity in U.S. community-scale solar (CSS), estimated by NREL to be between $8.2 and $16.3 billion by 2020. It argues that CSS, typically sized between 0.5 and 5 MW, offers a cost-effective middle ground between residential and utility-scale solar. To unlock this potential, the document suggests adapting existing project finance and securitization models, utilizing innovative tools like New Markets Tax Credits, and implementing risk mitigants such as anchor tenants and subscription cushions to address customer attrition and regulatory uncertainty.

• Community-scale solar (CSS) is defined as systems typically sized between 0.5 and 5 megawatts (MW) that feed electricity into local distribution grids, providing a middle ground between small-scale residential solar and large utility-scale solar.
• The shared solar segment of the CSS sector represents a substantial investment opportunity in the U.S., with NREL projections suggesting a value between $8.2 billion and $16.3 billion by 2020, potentially contributing up to 49 percent of the total distributed solar market.
• CSS offers several economic and operational advantages, including lower costs than residential systems due to economies of scale, the avoidance of transmission charges associated with utility-scale solar, and the ability to serve diverse offtakers such as municipalities and rural electric cooperatives.
• Financing for CSS can be structured using established models: credit pass-through transactions for creditworthy offtakers (like MUSH entities) using long-term PPAs, or bundled residential/small commercial subscriptions similar to residential solar asset securitizations.
• Innovative financing tools can increase accessibility and reduce costs, specifically the use of New Markets Tax Credits (NMTCs) for projects in distressed census tracts and the involvement of Community Development Financial Institutions (CDFIs) to better assess low-income customer risk.
• Key risks in the CSS market include customer acquisition costs, the volatility of short-term subscription agreements, and regulatory risks such as changes to virtual net metering (VNM) or the imposition of net metering caps.
• To mitigate offtake and credit risks, the report recommends using 'subscription cushions' (wait-listed customers), employing professional subscription agents, or securing a creditworthy anchor tenant under a long-term PPA for a significant portion of the project's output.

APA

Coleman, K., Blank, T. K., Probst, C., & Waller, J. (2017). FINANCING COMMUNITY-SCALE SOLAR. RMI. https://rmi.org/Content/Files/Financing_Community_Scale_Solar.pdf

Chicago

Coleman, Kieran, Thomas Koch Blank, Curtis Probst, and Jeff Waller. FINANCING COMMUNITY-SCALE SOLAR. RMI, 2017. https://rmi.org/Content/Files/Financing_Community_Scale_Solar.pdf.

Wikipedia

{{cite report |last1=Coleman |first1=Kieran |last2=Blank |first2=Thomas Koch |last3=Probst |first3=Curtis |last4=Waller |first4=Jeff |title=FINANCING COMMUNITY-SCALE SOLAR |publisher=RMI |date=February 2017 |url=https://rmi.org/Content/Files/Financing_Community_Scale_Solar.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{coleman2017financing, author = {Coleman, Kieran and Blank, Thomas Koch and Probst, Curtis and Waller, Jeff}, title = {{FINANCING COMMUNITY-SCALE SOLAR}}, institution = {RMI}, year = {2017}, month = feb, url = {https://rmi.org/Content/Files/Financing_Community_Scale_Solar.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }