Community solar lets you go solar without installing anything on your property. Instead, you join a solar project in your area and get credits on your electric bill for the power it makes. In this guide, you'll find everything you need to know about how community solar works, what it costs, and whether it's right for your home.
Key takeaways
Community solar – also called shared solar or solar gardens – means local solar panels that many people in the community share. Unlike rooftop solar that serves just one home, these solar farms are usually built on open land and can power hundreds or thousands of homes. The basic idea works in one of two ways: you either buy a portion of the solar panels or you subscribe to a share of the power. Most people choose the subscription model, where you pay a monthly fee and get guaranteed savings on your electric bill.
When it comes to costs, community solar requires little to no upfront payment. Most subscription programs have no initial fees, unlike rooftop solar which can require thousands of dollars upfront or financing approval. Your monthly subscription cost is typically set at 10-20% below the value of the electricity your share produces. For example, if your share generates $100 worth of electricity credits, you might pay $80-90 for your subscription, saving $10-20 each month.
Contract terms range between 5-25 years and usually include an early termination option with notice periods from 60 to 90 days. Some providers charge an early termination fee of $200-500, while others allow penalty-free cancellation if you find someone to take over your subscription. Most contracts also include a rate escalator of 1-2% per year, meaning your subscription cost increases slightly each year, though is at a lower rate than historical utility price increases.
The U.S. has over 7 gigawatts of community solar spread across 44 states and the District of Columbia, enough to power roughly a million households. If you're looking for community solar options, your best bet is in Florida, New York, Massachusetts, or Minnesota – these four states host over three-quarters of all projects.
Community solar solves many problems that stop people from getting rooftop solar panels. Here are the main situations when community solar can be an attractive option for thousands of American households.
Despite its advantages, community solar has some limitations and challenges you should understand before signing up. Here are the drawbacks you should consider to make sure community solar is truly the right fit for your situation.
✗ You need to pass the credit check
Most programs require credit checks and may deny participation if your score is too low. Some programs serving lower-income communities offer alternatives to traditional credit checks, but these programs often have limited spots and waiting lists.
✗ You need to think long-term
Contract length is another concern. Most community solar agreements run for 5-25 years, which is a big commitment. While you can usually cancel early, you might face fees unless you transfer your subscription to another eligible customer. Always review cancellation terms carefully before signing.
✗ You need to live in a solar-friendly area
Location is the biggest barrier for many potential subscribers. Some states have many community solar options, while other states have few or none. Even within states with active programs, projects may only be available to customers of certain utilities or in specific areas.
✗ You need to wait your turn
Many utility territories limit how much community solar is allowed, creating situations where projects fill up quickly. Waiting lists for popular programs can stretch for months or even years in some areas, delaying your access to solar benefits.
Not every energy solution works for everyone, and community solar offers particular advantages for certain homeowners and situations. Here are the three types of homeowners who typically benefit most from community solar programs.
Homeowners with challenging roof situations: Many homes have roofs that face the wrong direction, have too much shading from trees or nearby buildings, or have structural limitations that make installing panels impossible or too expensive. Historic homes with slate roofs or homes in historic districts with installation restrictions face similar challenges. With community solar, you can get the financial benefits without modifying your home or cutting down treasured shade trees.
Homeowners without cash to invest: If you're looking to reduce monthly expenses without a major upfront investment, community solar offers a compelling low-risk option. Unlike rooftop solar that requires either a large cash payment or financing approval, community solar subscriptions require no money down and minimal credit requirements. The guaranteed savings model provides immediate reductions on your energy costs without maintenance responsibilities or performance risks.
Homeowners planning to move in the next 5-10 years: If you don't plan to stay in your current home long-term, community solar offers a flexible alternative. Most subscriptions can be transferred to your new address or canceled with reasonable notice. This flexibility makes community solar ideal for homeowners in transition – whether you're planning to downsize for retirement, anticipate a job relocation, or simply aren't ready to commit to your current location for the next 20+ years.
If community solar isn't available in your area or doesn't fit your needs, you have several other ways to go solar. Here are four alternative solar options to consider, each with different costs and ownership arrangements that might better match your situation.
Buying a solar system outright gives you the highest long-term return. When you pay cash for solar panels, you own the system completely and get all the financial benefits, including electricity savings, tax credits, and increased home value. The upfront cost is steep – typically $15,000 to $30,000 depending on system size – but most homeowners break even in 7-10 years. After that, the electricity is essentially free for the remaining life of the system.
Solar loans work much like other home improvement loans but are specifically designed for solar purchases. They allow you to own your system with little or no money down while spreading payments over 5-20 years. With a solar loan, you still get all the benefits of ownership, including the federal tax credit. Your monthly loan payment is typically less than what you save on your electric bill, creating positive cash flow from day one. Interest rates and terms vary widely, so shop around – credit unions and specialized solar lenders often offer better rates than traditional banks.
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Solar leases let you go solar with zero upfront cost. Under a lease, a solar company installs and maintains a system on your roof, and you pay a fixed monthly fee to use the electricity it generates. Lease payments typically start 10-30% below your current electric bill and increase by a small percentage, usually 1-3% annually. Leases usually run 20-25 years, and the company handles all maintenance and repairs. This option is simplest but provides the least financial benefit long-term.
PPAs are similar to leases but with a key difference – instead of paying a fixed monthly fee, you pay for each kilowatt-hour of electricity the system produces, usually at a rate 10-30% below your utility's rate. Like leases, PPAs require zero upfront investment, and the provider handles all installation, maintenance, and repairs. The PPA rate typically increases 1-3% annually, still remaining below projected utility rates. This option provides more predictable savings than community solar but less than direct ownership.
Think about your money situation, whether you're staying put for years, and what you want from solar power. Once you weigh these factors against each option, you'll know which path makes the most sense for you.
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Years of experience in translation and a love of nature help Julia find the right words to encourage going solar. She joined the team in 2023 and is happy to make her contribution to a greener future.
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