Community solar providers often are confused with third-party electricity suppliers, and it’s easy to understand why. Both pitch the same promise of lower bills but they operate on opposite sides of your electric bill. That is a fundamental difference between the two that makes the difference between a customer-centric model (community solar), and the company-centric ESCOs. Seeing the difference matters. And nowhere is that clearer than in how states have treated community solar versus competitive electricity suppliers.
Below, we examine how that fundamental difference plays out and what you need to know before you sign up for savings on your electric bill with either. We will also take a state-by-state look at how these offers work in New York, Minnesota, Illinois, Maryland, and Massachusetts—each state has a slightly different system and those details matter.
Community Solar Providers vs. ESCOs (Third-Party Suppliers) – Quick Overview
Electricity markets like to present themselves as a menu of choices. But not all choices are built the same. Some are structured to behave like discounts—quiet, incremental, boring in the best sense, i.e. Community Solar. Others are structured to behave like replacements—contracts that ask you to outguess regulators, utilities, and pricing cycles all at once – Third-Party Suppliers.
Here’s what they have in common; both models pitch the same promise—lower bills, cleaner power, more choice. But they operate on opposite sides of your electric bill.
Community solar typically adds a discount through bill credits while you stay on your utility’s default supply. ESCOs (competitive suppliers) replace that default supply rate with a contract of their own. That distinction sounds technical; it isn’t. It’s often the difference between a predictable, regulated discount and a bet on a retail market that, in several states, regulators say has too often worked against consumers.
| Community Solar (Shared Solar) | ESCOs/Third-Party Suppliers |
| Available in both deregulated and regulated markets. | Only available in states with deregulated (competitive) electricity markets. |
| Community solar does not replace your utility as your energy supplier. | ESCOs replace your utility’s default electricity supply. |
| Subscription model: Provides solar credits on your utility bill for the clean power generated by your share of the solar project | Supply rate plan: Your utility still handles power delivery and maintenance, but the energy generation (supply) portion of your bill comes from the ESCO’s rate/plan instead of the utility’s standard rate[1] [2]. |
| Guaranteed discounts (typically 5-20% annually) through community solar bill credits. PureSky offers a minimum of 10% savings on solar bill credits and in many areas, more for income eligible families. See if you qualify for savings with PureSky Community Solar » | No guaranteed discounts – while ESCO’s promise renewable energy options or savings, in fact, regulators in several states found that many residents paid more with competitive suppliers than they would have on default utility service[3] |
| Enrollment is usually free or low-cost, and you don’t need to install any equipment on your home. | Enrollment involves selecting a supplier (often via state-approved websites or direct marketing) and signing a contract for a particular rate plan (fixed or variable rate, sometimes with “green”/renewable energy offers). |
| Highly regulated. Community solar is state-authorized program and has strict consumer protection rules in place. | To prevent overcharging and deceptive marketing, many states have implemented strict consumer protection rules (especially for low-income customers) to prevent overcharging and deceptive marketing. |
Typical Community Solar Savings
5-20% lower bills
Subscribers usually save about 5-20% on electricity costs through community solar bill credits.
New York ESCO Overpayments
$820 million
Extra amount paid by NY customers over 30 months (2014-2016) by using ESCOs instead of utility supply.
Massachusetts ESCO Losses
$738.7 million
Total that MA residents overpaid for competitive suppliers in 8 years (2015-2025). The state AG calls it a “predatory and broken” market.
Illinois ESCO Overpayments
$2 billion
Extra paid by IL consumers since 2015 on alternative suppliers’ plans, compared to utility default rates.
Maryland Third-Party Costs
$255 million/year
Approximate annual extra cost to MD households on third-party energy supply (2014-2017) versus staying with utility service.
Below is a state-by-state overview of how community solar providers and ESCOs/third-party suppliers operate in New York, Massachusetts, Illinois, Minnesota, and Maryland.
New York: Community Solar vs. ESCOs
Community Solar in New York
New York has one of the country’s most mature community solar programs, shaped deliberately by the state’s experience with deregulation. Via the NY-Sun initiative (NYSERDA), residents—homeowners, renters, small businesses—can subscribe to a share of a nearby solar project and receive credits on their utility bill for the energy that share produces. There’s no equipment on your roof. No upfront payment. You keep your existing utility—Con Edison, National Grid—and the solar shows up as math on your bill.
Community Solar Billing – One Bill
The important design choice comes next. New York uses consolidated billing with net crediting. In practice, that means your utility applies the solar credit at a guaranteed discount—often around 10 percent—and folds it directly into your normal bill. The utility then sends the remainder to the solar provider. One bill. Fewer moving parts. Savings that don’t require vigilance.
This isn’t an accident. After years of watching customers struggle to navigate complex energy offers, New York’s regulators decided that if a program is meant to save people money, the savings should not depend on them perfectly executing a contract.
Community solar here is governed under the state’s Value of Distributed Energy Resources (VDER) framework, which is meant to reflect the actual grid value of local solar—not just its symbolic greenness. For low-income households, the state went further: Solar for All offers no-cost community solar subscriptions, funded by NYSERDA, so customers receive bill credits without ever paying a subscription fee.
Now consider what happened on the other side of the market.
New York ESCO’s
New York deregulated energy supply in the 1990s, inviting Energy Service Companies—ESCOs—to compete with utilities. The promise was choice. The outcome was messier. After years of deceptive marketing and higher-than-utility pricing, the Public Service Commission stepped in hard. In 2016, it effectively blocked ESCOs from serving low-income customers unless they could guarantee savings or provide significant renewable content. Few could. A subsequent investigation found that ESCO customers paid over $800 million more than they would have under default utility service in just 30 months.
The Key Difference in New York
The result is a bifurcated market. Community solar is structured like a discount that rides on top of your existing service. ESCOs are structured like replacements that ask you to bet that this time will be different.
The simplest way to think about it: community solar keeps the system intact and improves it at the margins. ESCOs swap the system out entirely. New York’s regulators have made clear which one they trust most households to navigate safely.
Learn more about community solar in New York »
Massachusetts: When Markets Keep Losing the Same Bet
Community Shared Solar in Massachusetts
Massachusetts tells a similar story, though with a different regulatory posture.
The state actively promotes Community Shared Solar, particularly through community solar farms built under the SMART incentive program. Subscribers receive net metering credits on their utility bill—Eversource, National Grid, Unitil—and typically save between 5 and 20 percent on the electricity portion of their bill over the course of a year.
Enrollment is straightforward. You sign up with a solar provider (often listed through MassCEC resources), continue receiving your utility bill, and see credits applied. Billing is usually two-step: the utility applies the credit; you pay the solar provider a discounted amount. The key guarantee is structural: the credit is designed to exceed the payment.
Two Bill System for Community Solar
There’s no statewide consolidated billing yet, which adds a bit of friction—but not risk. Low-income households are protected even more explicitly. Developers are incentivized to include income-eligible subscribers with minimum discounts, often 20 percent or more, baked into the contract.
Now stand that next to Massachusetts’ competitive supply market
Massachusetts’ Competitive Suppliers
The state maintains an official comparison site, energyswitchma.gov, and on paper, the offers can look appealing—fixed rates, “100% green” claims, teaser pricing. But the Attorney General’s office has studied the outcomes, not the marketing. Over 10 years, households paid an estimated $739 million more under third-party suppliers than they would have under utility Basic Service. In seven of those eight years, customers lost money. In 2024, the AG called the market “predatory and broken” and urged residents to avoid it—especially low-income and minority communities, which were disproportionately harmed.
The Key Difference in Massachusetts
This is the pattern worth noticing in suppliers. Not that every supplier offer is fraudulent. But that, systemically, the average customer is being asked to win a game that is hard to understand and easy to lose—through teaser rates, variable pricing, and contracts that reward attention most people don’t have spare.
Community solar, by contrast, is boring by design. The discount is modest. The mechanism is legible. The upside is capped—and so is the downside.
Learn more about community solar in Massachusetts »
Illinois: When the Math Is Explicit
Community Solar in Illinois
Illinois took a different approach: it made the math unavoidable.
Through the Illinois Shines program, residents can subscribe to community solar farms and receive bill credits from ComEd or Ameren. The cost of the subscription must be lower than the value of the credit—often 10 to 20 percent lower. Universal Consolidated Billing or the single-billing system ensures it all appears on one utility bill. You don’t pay the solar company separately; the utility handles settlement.
If you qualify for income eligible programs, the structure becomes even clearer and the savings larger. Understand how community solar works for income eligible households by reading our overview.
The state still allows Alternative Retail Electric Suppliers (ARES), but community solar is explicitly framed as a savings-first policy tool, not a market gamble.
Learn more about community solar in Illinois »
Minnesota: Choice, Without Deregulation
Minnesota shows what happens when you remove retail choice entirely.
Residential customers cannot switch electric suppliers. Utilities remain fully regulated. And yet Minnesota operates one of the nation’s largest community solar programs.
Customers keep Xcel Energy (or another participating utility), subscribe to a solar garden, and receive bill credits that reduce what they owe. Subscription fees cannot exceed the value of those credits. New consumer protections ban upfront fees, exit fees, and complex long-term escalation clauses. As of 2025, consolidated billing is available.
There’s no ESCO comparison here because there’s no ESCO market. The choice is simpler: standard utility service, or standard service plus a solar discount.
Learn more about community solar in Minnesota »
Maryland: A Market Mid-Reset – Partially Regulated
Maryland sits in between a deregulated and regulated market.
Retail choice remains, but recent reforms—culminating in SB1—cap how much residential suppliers can charge above utility rates. If the policy works as intended, it narrows both the risk and the reward of supplier shopping.
Community solar, meanwhile, continues to function as a discount layered onto existing service, with explicit protections for low- and moderate-income customers.
The question Maryland customers are left with isn’t ideological. It’s practical: How much complexity am I being asked to manage to save how much money?
The Through Line: Community Solar versus Competitive Suppliers
Across states, the lesson isn’t that markets are bad or that choice is inherently dangerous. It’s that product design tells you who a system is built for.
Community Solar: Stable and Predictable
Community solar is designed for people who want savings without becoming energy experts.
Competitive Supply: Variable and Requires Vigilance
Competitive supply is designed for people willing—and able—to constantly evaluate whether the deal has turned on them.
Most households don’t want a game. They want a discount they don’t have to think about.
What Kind of Energy System Do We Want to Have?
There is a larger question underlying it all here. What kind of energy system do we want to have? Ideally, it would prioritize access, choice, and affordability.
Community solar presents one kind of model that prioritizes access to the financial benefits of renewable energy and the option to participate. Energy equity is at the core of community solar.
Unregulated markets had those same intentions but in practice were often predatory. Markets and the resulting ESCOs were created under the assumption that unregulated energy markets would drive electricity prices lower. It turns out that the reality lies far from those theoretical underpinnings of free markets. Adding a middle person to electricity procurement drives the prices higher and the consumer finds it difficult to navigate.
Regulations, when they are at their best, have the ability to deliver choice but also affordable energy. It’s clear from how community solar and the unregulated energy markets have played out, which model delivers on its promise.
See if You Qualify for Savings Today
Join our community of over 10,000 community solar subscribers, enjoying clean energy savings and powering change within their local communities!
Resources
New York
- New York State Energy Research and Development Authority (NYSERDA), NY‑Sun Community Distributed Generation Program, accessed March 2026, https://www.nyserda.ny.gov/All-Programs/NY-Sun.
- New York State Energy Research and Development Authority (NYSERDA), Value of Distributed Energy Resources (VDER), established by the New York Public Service Commission in 2017, accessed March 2026, https://www.nyserda.ny.gov/All-Programs/NY-Sun/Contractors/Value-of-Distributed-Energy-Resources.
- New York State Public Service Commission, Order Adopting Phase Two of the Value of Distributed Energy Resources Tariff, issued 2019, https://documents.dps.ny.gov/public/Common/ViewDoc.aspx?DocRefId={A5D8F6B5-6F91-4ED6-9E74-6E84C46C28F5}.
- New York State Electric & Gas (NYSEG), Community Distributed Generation Net Crediting Manual, effective January 1, 2024, https://www.nyseg.com/documents/40132/5899086/CDG+Value+Stack+Procedural+Requiremens+with+Manual+Billing.pdf.
- New York State Energy Research and Development Authority (NYSERDA), New York State Solar for All Program, accessed March 2026, https://www.nyserda.ny.gov/All-Programs/Programs/Solar-for-All.
- New York Public Service Commission, Order Resetting Retail Energy Markets and Establishing Further Process, Case 15‑M‑0127 (February 23, 2016), https://documents.dps.ny.gov/public/Common/ViewDoc.aspx?DocRefId={2C13C88D-6531-4D38-B964-553BC20D6E87}.
- New York Public Service Commission Staff, ESCO Market Review, summarized in multiple filings and press coverage, 2018; see also USA Today Network, “NY’s electric, gas free‑choice program at risk; costlier to consumers,” February 10, 2018, https://www.usatoday.com/story/news/2018/02/10/risk-ny-groundbreaking-program-allowing-customers-select-electric-gas-suppliers/302146002/.
Massachusetts
- Massachusetts Department of Energy Resources, Solar Massachusetts Renewable Target (SMART) Program, launched 2018, accessed March 2026, https://www.mass.gov/info-details/solar-massachusetts-renewable-target-smart-program.
- Massachusetts Clean Energy Center, Community Solar Consumer Resources, accessed March 2026, https://www.masscec.com/community-solar.
- Massachusetts Office of the Attorney General, The Competitive Electric Supply Market in Massachusetts: 2026 Update (Boston: AGO, March 31, 2026), https://www.mass.gov/doc/2026-competitive-supply-report/download.
- Massachusetts Office of the Attorney General, The Competitive Electric Supply Market in Massachusetts (series of market study reports, 2017–2025), https://www.mass.gov/orgs/office-of-the-attorney-general.
- Commonwealth of Massachusetts, Energy Switch Massachusetts, official state comparison site, accessed March 2026, https://www.energyswitchma.gov.
Illinois
- Illinois Power Agency, Illinois Shines (Adjustable Block Program), authorized under the Future Energy Jobs Act (2016) and expanded under the Climate & Equitable Jobs Act (2021), accessed March 2026, https://illinoisshines.com.
- Illinois Commerce Commission, Universal Consolidated Billing for Community Solar, policy guidance issued 2021–2024, https://www.icc.illinois.gov.
- Elevate Energy, Illinois Solar for All: Community Solar, accessed March 2026, https://www.illinoissfa.com/community-solar.
- Citizens Utility Board of Illinois, Community Solar and Alternative Supplier Guidance, accessed March 2026, https://www.citizensutilityboard.org.
Minnesota
- Minnesota Department of Commerce, Community Solar Gardens Program, launched 2013; restructured under 2023 legislation, accessed March 2026, https://mn.gov/commerce/energy/consumer/energy-programs/community-solar-gardens.jsp.
- Minnesota Legislature, HF 2310: Environment, Natural Resources, Climate, and Energy Omnibus Bill, signed May 24, 2023, https://www.revisor.mn.gov/bills/bill.php?b=House&f=HF2310&ssn=0&y=2023.
- Minnesota Department of Commerce, Low‑ and Moderate‑Income Accessible Community Solar Garden Program, effective January 1, 2024, https://mn.gov/commerce/energy/consumer/energy-programs/community-solar-gardens-consumers.jsp.
Maryland
- Maryland General Assembly, Senate Bill 1: Electricity and Gas – Retail Supply – Regulation and Consumer Protection, enacted 2024, effective July 1, 2024, https://mgaleg.maryland.gov/2024RS/fnotes/bil_0001/sb0001.pdf.
- Maryland Public Service Commission, Residential Retail Energy Supplier Pricing and Green Marketing Orders, issued December 2024–January 2025, https://www.psc.state.md.us.
- Neighborhood Sun, “What Maryland Residents Need to Know About Recent Changes to Third‑Party Energy Provider Services,” March 11, 2025, https://neighborhoodsun.solar/maryland-residents-need-to-know-this-about-recent-changes-to-third-party-energy/.
- Maryland Public Service Commission, Community Solar Energy Generating Systems Pilot Program, COMAR Title 20, Subtitle 62, accessed March 2026, https://www.psc.state.md.us/electricity/community-solar/.
Cross‑State & Comparative Analysis
- Institute for Local Self‑Reliance, Community Power Scorecards and State Community Solar Program Analyses, accessed 2025–2026, https://ilsr.org/energy-democracy/.
- Multiple state attorneys general offices (NY, MA, IL, MD), Retail Electricity Market Enforcement Actions and Consumer Protection Reports, 2016–2026; compiled via official state publications linked above.
[1]https://utilityproject.org/think-twice-before-switching-your-electricity-or-natural-gas-supplier/
[2]https://smartenergychoices.org/escos-faqs
[3]https://utilityproject.org/think-twice-before-switching-your-electricity-or-natural-gas-supplier/
