Community solar allows renters, apartment dwellers, and homeowners with unsuitable roofs to access solar energy benefits without installing panels on their property. This shared solar model lets multiple subscribers purchase or lease portions of a larger, off-site solar farm and receive credits on their electricity bills for the power generated.
Approximately 50% of American households and businesses cannot install rooftop solar systems due to three primary barriers: lack of property ownership (renters), insufficient roof access (multi-unit buildings and office complexes), or inadequate roof conditions (size limitations or shading issues).
Community solar eliminates these obstacles by providing remote access to renewable energy through subscription-based programs while traditional rooftop systems remain optimal for eligible properties.
The market demonstrates strong growth. By the end of 2024, the United States deployed 8.6 gigawatts of community solar capacity across 41 states plus Washington DC, with 1.7 gigawatts added in 2024 alone representing 35% year-over-year growth. Nineteen states plus DC have implemented policies specifically supporting community solar development.
Subscribers typically save 5 to 15 percent on electricity costs compared to standard utility rates without requiring upfront installation investments. Community solar programs operate through three main models: utility-owned installations, on-site systems serving private communities, and free-market solar farms selling power through purchase agreements or virtual leases.
This comprehensive guide examines how community solar farms operate, the development process for launching shared solar projects, financial incentives and profitability models, and the advantages and challenges of participating in community solar programs.
Community solar represents a distributed solar energy deployment model enabling customers to purchase or lease portions of larger, off-site shared photovoltaic (PV) systems. These installations appear globally under various names including shared solar gardens and solar power plants.
Most shared solar installations connect to local power grids, supplying generated electricity through existing infrastructure or upgraded systems designed to accommodate additional capacity. Battery-backed off-grid configurations exist but remain less common.
Community solar farms provide essential renewable energy access for electricity consumers facing circumstances preventing feasible on-property PV installations. This model serves renters and property owners with unsuitable roof conditions, expanding solar energy access beyond traditional applications.
Individual initiatives merit recognition, yet community solar development accelerates through increased local support. Before launching new community solar gardens, research existing operational or developmental green energy projects in nearby areas.
For those pursuing community solar farm development, planning stages contain crucial, time-intensive steps determining long-term project success.
One primary question requires resolution before addressing detailed specifics: Who will consume the electricity generated by the panels? This answer determines which of three categories the shared solar garden falls under.
On-Site Community Solar Farms: Buildings within designated private communities share power generated from nearby panels. These installations commonly appear in newly developed subdivisions. Condominium buildings or apartment complexes typically own the produced energy and sell it to residents.
Free-Market Community Solar Farms: These installations generate both renewable energy and revenue by selling solar power indirectly to consumers. Serving grid-connected homes and buildings, community solar farms sell or virtually lease portions of off-site energy production through outright sales and purchase power agreements (PPAs). Solar gardens operating on free markets may also adopt non-profit models.
Utility Direct Suppliers: The world's largest solar farms either belong to utility companies or exclusively produce power for utility providers. These utility-scale installations frequently exceed 1 MW capacity, enabling electric companies to sell renewable power from strengthened green energy portfolios. Large-scale commercial solar projects require comprehensive planning and development strategies.
Solar farm developers must evaluate numerous factors when selecting optimal project locations. Community solar gardens require sites receiving abundant sunlight, largely free from trees, buildings, and other obstructions creating shade or complicating ground-mounted system installation.
Legal requirements mandate that proposed solar farm locations comply with local size, offset, and zoning regulations, plus any environmental or historic site protections. Solar farm projects typically receive construction permits on most industrial and agricultural lands, though certain areas may require special use exemptions.
Proximity to end consumers significantly increases community solar farm feasibility. While desert locations offer excellent power production potential, shared solar projects require nearby infrastructure capable of interconnection and electricity distribution following state standards.
Most solar farm proposals require decommissioning plans for project end-of-life when securing local approval. Understanding permit timelines and grid connection requirements proves essential for project planning.
After selecting sites and conducting thorough feasibility analyses, developers begin acquiring necessary assets for generating and selling community solar power at scale. Site and project development costs typically represent the majority of solar farm total lifetime expenses.
Beyond property prices and land improvement costs, new community solar projects require funding for system design, components (panels, mounting, wiring, etc.), permitting, construction, and interconnection fees before producing a single kilowatt-hour of energy. Technical documentation including electrical diagrams must meet regulatory standards.
Self-financing renewable power plants proves extremely difficult without external support. To generate capital before construction, some community solar developers partner with private investors covering project costs, while others contact prospective customers directly with early-stage opportunities for purchasing clean electricity at favorable rates. Federal grant programs provide additional funding sources.
This leads to the critical question many want answered.
Traditional farms generate revenue by producing and selling products to consumers and businesses. Solar farms operate using essentially identical cash flow models.
Replacing crop rows with panel arrays, solar farms generate revenue by selling sufficient product (electricity) to recover and exceed both startup costs and ongoing expenses.
Nothing comes free when starting solar farms, except sunlight itself.
The Federal Solar Investment Tax Credit (ITC) landscape changed significantly in 2025. Following the passage of the One Big Beautiful Bill Act on July 4, 2025, the residential solar tax credit (Section 25D) expires December 31, 2025.
Homeowners must complete solar installations by this deadline to qualify for the 30% tax credit. After December 31, 2025, residential solar systems will no longer be eligible for this federal incentive.
For commercial and community solar projects, the Investment Tax Credit (Section 48E) remains available but with updated deadlines. Solar projects beginning construction by July 4, 2026, can still claim the 30% tax credit using the four-year safe harbor window.
Projects must be placed in service by December 31, 2027, to receive federal solar incentives. Projects not meeting these deadlines lose ITC eligibility entirely.
Tax credits belong exclusively to property owners where PV systems are installed, representing important considerations when calculating community solar project numbers. Additional incentives for establishing community solar exist through numerous national, state, and local programs.
Beyond the ITC, developers can access additional federal grants and various state solar incentives nationwide. Community solar projects "selling" property portions to consumers must ensure proper incentive allocation.
The Solar Energy Technologies Office of the US Department of Energy's National Community Solar Partnership (NCSP) continues supporting shared solar development. The NCSP provides personalized consulting and hands-on technical assistance for community solar developers, helping expand access to solar power for households unable to install traditional rooftop systems.
Generating positive returns on investment requires community solar farm developers to make accurate project cost and solar power production estimates. Knowing precise on-site energy production quantities enables solar farm owners to weigh total expenses against business models targeting long-term profitability.
Whether enabling customers to "buy and own" farm portions or executing fixed energy lease agreements, developers forecast customer cash flows against startup costs determining subscriber numbers or electricity sales quantities necessary for breaking even with initial expenses.
While operational maintenance typically remains minimal for small-scale solar energy installations, mid-sized and large solar farms must prepare for occasional component failures, repairs, and replacements.
When calculating long-term ROI, community solar farm developers must factor in operation and maintenance costs, property tax, sales and use tax, excise tax, and other ongoing expenses.
Engineering calculations ensure systems meet interconnection standards and technical requirements.
Community solar enables solar adoption in situations previously considered non-viable. The model includes both advantages and limitations. Consider these common benefits and challenges.
Solar Power for Everyone: Community solar allows communities to access solar power in distributed formats where traditional installations may not suit the situation.
Defrayed Costs: Community solar distributes upfront solar installation costs among multiple households and stakeholders. The community effort absorbs installation and maintenance costs through co-owning neighbors, purchase power agreements (PPAs), virtual leases, or utility bills from energy companies.
Community Solar Flexibility: Unlike owning individual PV systems, most community solar customers can discontinue solar power purchases with minimal or zero penalties and fees. Many community solar customers purchase from the solar project, the grid, or combinations of both, providing exceptional flexibility.
Space Requirements: Community solar typically applies when rooftops fail solar suitability standards. Best-case scenarios install community solar farms on unusable land like landfills or brownfield sites, or serve dual-use functions such as agriculture or gardening. Worst-case scenarios require clearing previously undisturbed or valuable land, resulting in potential environmental and economic losses.
Limited Incentive Access: Most community solar models use rental or subscription structures, meaning solar customers don't actually own the panels. Most incentives, notably the ITC, remain available only to land owners where solar farms are installed, preventing customers from accessing incentives or rebates directly. Co-ownership models might allow shareholding customers access to certain rebates and incentives.
Geographic Availability: Installing community solar farms and selling remote electricity to customers may prove challenging in some states. Even in community solar-friendly states, not every community possesses the space required for large solar installations. State regulatory frameworks significantly impact project viability.
Community solar programs solve renewable energy access for approximately 50% of households and businesses unable to install conventional rooftop systems. With over 8.6 gigawatts operating across 41 states following 35% growth in 2024, shared solar gardens deliver proven results for renters, apartment dwellers, and properties with unsuitable roof conditions.
Critical deadlines approach for federal incentives. Residential solar systems must be installed by December 31, 2025, to qualify for the 30% tax credit, while commercial community solar projects beginning construction by July 4, 2026, can still access the Investment Tax Credit through 2027. Professional solar design services streamline development processes and ensure compliance with evolving regulations.
Community solar installations generate competitive returns while expanding clean energy access to diverse electricity consumers. Explore additional solar resources for comprehensive industry insights and project planning guidance.
What is a solar farm?
A solar farm represents a distributed solar energy model allowing customers to purchase or lease portions of larger, off-site shared PV systems. Community solar farms also carry names like shared solar gardens and solar power plants, with models including rentals, power purchase agreements (PPAs), or co-ownership arrangements.
Are solar farms profitable?
Yes. Traditional solar farms achieve 10 to 20 percent returns on investment and typically reach payback within 10 years, providing 30 years or more of pure profit-earning potential after recovering solar farm costs. Professional consultation helps optimize project economics.
What are the different community solar business models?
Utility: Customers purchase electricity from utilities or third parties owning installations. Community members typically own installation shares and receive bill credits corresponding to share sizes.
On-Site: Buildings within private, designated communities share all power generated from nearby panels. Commonly seen in newly developed subdivisions, on-site solar farm energy is typically owned by condominium buildings or apartment complexes and sold to residents.
Free-Market Community Solar Farms: Free-market community solar farms sell solar indirectly to consumers. Serving grid-tied homes and buildings, these farms sell or virtually lease portions of off-site energy production to electricity users through outright sales and purchase power agreements (PPAs). Free market solar gardens may also operate on non-profit models.
Who can participate in community solar programs?
Community solar programs welcome renters, homeowners, and businesses unable to install traditional rooftop systems. Participants typically require residence or business operations within the utility service area where the solar farm operates.
Most programs accept subscribers without credit checks or upfront costs, making participation accessible to diverse income levels.
Property ownership is unnecessary, allowing apartment dwellers and renters to access solar energy benefits previously restricted to property owners.
How much can subscribers typically save with community solar?
Subscribers generally save 5 to 15 percent on electricity costs compared to standard utility rates. Savings vary based on program structure, state regulations, and local electricity prices.
Some programs offer fixed monthly credits, while others provide percentage-based discounts on generated power.
Unlike rooftop solar requiring substantial upfront investment, community solar typically involves no installation costs, allowing immediate savings without capital expenditure. Subscription agreements often guarantee specific discount rates, protecting participants from utility rate increases throughout contract terms.
We are dedicated to providing top-notch solar permit services to homeowners, business owners, DIY, and solar installers. Contact us today.
