Community solar, sometimes called shared solar, allows individuals and organizations subscribe to a portion of a larger solar farm, providing them with energy savings and renewable energy credits without needing to install panels on their own property.
It is a rapidly expanding concept across the U.S. as it promotes broader participation in renewable energy, especially for renters, those with shaded roofs, and low- to moderate-income (LMI) communities. As of 2023, the sector has installed over 5 GW of capacity, with more states passing legislation and creating new programs to support expansion.
Each state has unique policies and program designs driving the development of community solar. First, we discuss the key trends in community solar and then provide a summary of community solar in key states.
The Inflation Reduction Act (IRA) of 2022 provides a strong foundation for community solar's growth through its tax incentives, including the Investment Tax Credit (ITC), which can now be transferred or sold, benefiting community solar developers. This will help projects pencil out more easily, making the financing of smaller projects more feasible.
In summary, the outlook for community solar in the U.S. is highly positive, with strong tailwinds from federal policy, state-level initiatives, and consumer demand for cleaner, cheaper energy sources. The next year will likely see more states passing legislation, an expansion of subscription models, and greater emphasis on inclusivity for underserved communities.
While over 22 states have formal community solar, there are a few key states that have emerged as leaders in innovative programs and implementation. Below is a detailed overview of community solar in some of the top states leading this transition, focusing on their policies, installed capacities, and the number of beneficiaries.
Energy Policy:
Colorado became the first state to implement a community solar program in 2010 with the passage of the Community Solar Gardens Act. This act allows residents, businesses, and organizations to subscribe to solar gardens and receive credits on their electricity bills. Colorado is also a national leader in low-income solar inclusion, offering incentives specifically for low-to-moderate income (LMI) households through the state's Renewable Energy Standard (RES), which requires investor-owned utilities to meet specific LMI solar targets.
Installed Capacity:
As of 2023, Colorado has over 100 MW of installed community solar capacity. Xcel Energy, the state’s largest utility, has been a key driver, with plans to expand capacity further to meet state clean energy goals.
Beneficiaries:
Colorado's community solar programs serve approximately 30,000 households, with a significant portion of subscribers coming from low-income communities. The state has a strong focus on equitable access, ensuring that underserved populations can participate in the clean energy transition.
Energy Policy:
Illinois has strong policies supporting community solar through the Future Energy Jobs Act (FEJA), passed in 2016. FEJA created the Adjustable Block Program (now Illinois Shines), which supports the development of community solar projects. The 2021 Climate and Equitable Jobs Act (CEJA) has further bolstered community solar, setting ambitious renewable energy goals and prioritizing LMI inclusion. The state’s goal is to achieve 100% clean energy by 2050.
Installed Capacity:
Illinois' community solar market has grown significantly, with over 200 MW installed or under development by 2023.
Beneficiaries:
Approximately 12,000 to 15,000 subscribers are benefiting from community solar in Illinois. Many of these projects aim to include LMI communities, with incentives to ensure equitable participation and savings for lower-income residents.
Energy Policy:
Massachusetts has long been a leader in community solar, bolstered by its Solar Massachusetts Renewable Target (SMART) program, which offers performance-based incentives for solar energy projects, including community solar. The program encourages solar development on brownfields and rooftops, and it includes bonuses for projects that serve LMI customers.
Installed Capacity:
Massachusetts has installed over 500 MW of community solar capacity as of 2023. The state is recognized for integrating community solar within its broader renewable energy programs, ensuring long-term growth.
Beneficiaries:
Approximately 25,000 households in Massachusetts benefit from community solar subscriptions, with an emphasis on expanding access to renters and low-income residents. The SMART program plays a crucial role in making community solar more accessible and cost-effective.
Energy Policy:
Minnesota has the largest community solar program in the U.S., thanks to its Solar*Rewards Community Program created under the state’s 2013 solar legislation. Xcel Energy is the main utility behind the program, which allows customers to subscribe to solar gardens and receive bill credits for the energy produced. The program’s subscription-based model is popular because it requires no upfront costs for subscribers.
Installed Capacity:
Minnesota leads the nation with over 1 GW of installed community solar capacity. The state’s early commitment to community solar has made it a benchmark for other states.
Beneficiaries:
Minnesota’s community solar program serves more than 24,000 subscribers, a mix of residential, commercial, and nonprofit customers. The state has focused on expanding the program to include a broader range of participants, with recent efforts to streamline interconnection processes and reduce project delays.
Energy Policy:
New Jersey launched its Community Solar Energy Pilot Program in 2019 under the Clean Energy Act of 2018. The pilot aims to increase access to solar energy, especially for low-income communities. The state has a target to transition the pilot into a full-scale permanent program and achieve 100% clean energy by 2050.
Installed Capacity:
As of 2023, New Jersey’s community solar program has about 150 MW of installed or planned capacity. The pilot program’s second year saw significant participation, with more projects in the pipeline.
Beneficiaries:
Around 12,000 subscribers are already benefiting from community solar in New Jersey, with a strong focus on providing benefits to LMI households. The pilot program is designed to allocate at least 40% of the project capacity to LMI customers, reflecting the state's commitment to energy equity.
Energy Policy:
New York has one of the most comprehensive community solar programs in the U.S., largely driven by the state’s NY-Sun initiative under the Clean Energy Standard (CES). This program aims to install 6 GW of distributed solar by 2025, including community solar. The Value of Distributed Energy Resources (VDER) tariff compensates community solar projects based on the benefits they provide to the grid, including energy, capacity, and environmental benefits. The state has also set a goal to reach 100% clean energy by 2040.
Installed Capacity:
New York leads in community solar installations, with over 1.3 GW installed as of 2023, making it one of the largest community solar markets in the country.
Beneficiaries:
More than 150,000 subscribers benefit from community solar in New York. The state’s Solar for All program, managed by NYSERDA, specifically targets LMI households, aiming to provide low-cost solar subscriptions to underserved communities across the state.
Community solar is flourishing in states with supportive policies and incentives that prioritize equitable access to renewable energy. Colorado, Illinois, Massachusetts, Minnesota, New Jersey, and New York are leading the way, with substantial installed capacities and programs that ensure broader participation, especially from low-income communities. These states not only contribute significantly to the nation’s clean energy goals but also serve as models for other regions looking to implement or expand community solar initiatives.