First Solar Buys Into Clean Energy Collective’s Community Solar Model

If you live in an apartment and don’t have roof space, you can still buy into solar power through shared ownership programs—a niche market that a number of solar startups are trying to open up.

Louisville, CO-based Clean Energy Collective said today that solar panel maker First Solar has invested an undisclosed sum in the company. Two First Solar executives, including CEO Jim Hughes, will sit on Clean Energy Collective’s board and the two companies will partner to offer what are called community solar projects to consumers, businesses, and utilities.

Clean Energy Collective has developed a business model that allows consumers to invest directly in jointly owned solar projects, such as an array of ground-mounted panels. Utility bills are credited with a portion of the solar project’s output and consumers can earn any state-level renewable energy credits.

A number of small companies are now offering this sort of financing for shared solar projects, which are sometimes called solar gardens. Oakland, CA-based Mosaic, for instance, runs crowdfunding campaigns to raise money. Boston-based Next Step Living, whose main business is performing home energy-efficiency audits, began offering a community solar option for consumers earlier this year, too.

Clean Energy Collective’s twist on this model is that electric utilities purchase the power from the solar installations. By buying solar, utilities can meet renewable energy mandates or get a hedge against rising costs of natural gas or coal used to generate electricity.

On paper, the shared-purchase model makes sense since these companies are tapping into a wider pool of financing than homeowners or businesses with suitable rooftops. But making a business out of it is complicated. Community solar companies need to create relatively new financial structures and navigate a web of regulations and laws, many of which are particular to each state.

In Clean Energy Collective’s case, it takes advantage of what’s called virtual net metering, which allows people to get credits on their electric bills for solar arrays that aren’t physically attached to their homes. The company has only done solar projects since 2010, but the model could be used for other distributed energy projects, such as wind.

Tying up with First Solar, a well-established global solar panel supplier, gives Clean Energy Collective and its business model more credibility with utilities as well as access to relatively inexpensive solar panels. First Solar, meanwhile, says the investment allows it to boost its presence in distributed solar. Community solar will be a “critical part of the global energy mix for all markets,” First Solar’s Hughes says in a statement.

The deal is another indication that much of the startup activity in solar energy, particularly for residential customers, is on the financing and installation side, rather than in manufacturing technology. And as the prices of hardware continue to go down, software and financing will play a bigger role simplifying distributed solar power and making it cheaper than grid energy.

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