Virtual net metering has not only made solar power available to more consumers, it has also created opportunities for entrepreneurs to develop new business models.
With virtual net metering, electricity customers can gain the benefits of net metering from solar panels that are not on their own property, such as in community or shared solar projects. Community solar experts say the solar-for-all concept is an important driver in solar development and in the development of related entrepreneurial businesses.
‘We believe, and others believe, that community solar is the next big growth engine,’ says Thomas Sweeney, chief operating officer for Clean Energy Collective in Carbondale, Colo. ‘This business is driven by financing and the structure of financing more than the structure of the technology. A good example of that is virtual net metering, which lets you share the bill with customers who are not connected to that meter.’
Sweeney points out that Colorado was the first state to pass legislation implementing community solar. States such as Minnesota, New Hampshire and Massachusetts now have virtual net metering policies. Other states are working on similar legislation. ‘It's gaining traction,’ he says.
Consuming solar power as a collaborative transaction ties into the burgeoning ‘sharing economy,’ wherein people pay to use cars, homes and other goods that belong to others. Boston-based Yeloha uses an approach it calls ‘Solar Sharing’ that brings together people who can have solar panels on their own rooftops and others who would like solar but are not able to host arrays.
In the Yeloha model, the ‘Sun Hosts’ are homeowners, small businesses or nonprofits that get free installation of solar panels on their roofs and receive credit for 25% of the renewable energy that the system generates. The ‘Sun Partners’ subscribe to solar power generated by the hosts and, ideally, save money in the process.
‘We enable peer-to-peer sharing of solar electricity generation,’ says Joel Gamoran, regional director for Yeloha. ‘We're bringing together people who could not go solar as individuals but are able to do so together.’
The analogy that often comes up for Yeloha is Uber – the on-demand system of people driving their own cars and passengers finding and paying them through an app. Similarly, Sun Partners can use an app for near real-time monitoring of the solar energy being produced.
‘Just like Uber is leveraging existing roadways, we are leveraging the utility grid,’ Gamoran says. ‘The online aspect of our business is going to really be key to breaking down physical barriers.’
Yeloha recently received venture capital funding and reports that some solar projects are currently under construction.
Virtual net metering – and the shared economy – is opening up a new segment of the solar market, says Sean Garren, Northeast regional manager for Vote Solar. ‘It could be a powerful tool to enable more people to access solar in a distributed community-based way,’ he says. ‘This concept of sharing property and goods is taking the world by storm.’
The virtual net metering startups are creating new business models, but the old challenges remain.
‘Financing is such an important component of solar development right now – more so in shared solar,’ Garren says. ‘You are typically building those projects or getting them under way before you've signed up all the subscribers.’
One startup that is handling this challenge is Boston-based Solstice Initiative. The social enterprise uses community solar to help churches, college campuses and other organizations bring solar to their constituents. The company, which recently completed a pilot project, is still in startup mode. The nonprofit is counting on securing large anchor subscribers to attract financing.
‘If you can get lenders comfortable with the 'un-riskiness' of large institutional subscribers, there is greater opportunity from our vantage point,’ says Steve Moilanen, CEO of Solstice Initiative. ‘One way to think about community solar is you're creating a risk pool.’
Moilanen says the model is analogous to diversifying an investment portfolio with a combination of high-risk and low-risk assets. The irony, he says, is that renters and others who want to participate in solar are usually people who have indeed paid their electric bills over the years and should not be considered a high risk to pay a solar-based electric bill. This should be especially true if the solar bill is lower.
Stephanie Speirs, co-founder of Solstice Initiative, says the model also makes business sense because it does not rely on cold calls, referrals and other uncertain sales techniques.
‘We are doing it differently,’ Speirs says. ‘We're selling solar through organizations that people trust, such as their workplace and their house of worship.’
Speirs adds that virtual net metering is changing the way people talk about community solar. ‘Everyone can buy solar now, and anyone can offer solar to constituents or members,’ she says.
Nora Caley is a freelance writer based in Denver.