What is community solar?

What Is Community Solar?

Community solar enables renters, homeowners and businesses to benefit from solar energy without installing solar panels. 

Over 30 states in the U.S. offer community solar through a utility billing mechanism called virtual net metering (VNM). which allows subscribers to receive a credit on their utility bills for their share of the electricity produced by a utility scale solar project.

What Is Community Solar?

Approximately 50% of American households and businesses lack the rights and/or proper roof orientation to install solar energy. 

Community solar programs, also called shared solar programs, enable renters, homeowners or businesses to benefit from renewable energy if they are otherwise unable to do so.

Community solar offers an alternative way to access clean energy if there is no on-site renewable energy where you live or work. 

In addition to subscriptions, some shared solar programs may allow you to physically own a piece of a utility scale solar project.

What Is Virtual Net Metering?

Community solar programs utilize a billing mechanism called virtual net metering, which is a form of “net metering“. 

Net metering allows you to generate your own electricity from on-site solar power to send excess renewable energy back to the grid as well as utilize energy from the grid. 

As described in the video above, the rate payer receives a bill that is the “net” of the electricity used. 

In other words if your rooftop solar system generates more electricity during a month than you use from the grid, you will receive a credit on your utility bill.

Community solar projects rely on virtual net metering to credit customers for the electricity generated by an off-site solar farm.1

What Insurance Do Community Solar Developers Need?

Community solar developers purchase insurance and bonding based on project risks and state and local requirements.

For instance, pure solar developers (aka “briefcase solar developers”) should have general liability, professional liability and other insurance as needed.

Independent power producers (IPP), or non-utility generators, may purchase solar projects from developers to build and operate projects… In doing so, an IPP may act as a general contractor who oversees sub-contracted construction of a solar farms prior to ownership and long-term operations and maintenance.

Depending on location, a solar EPC or IPP acting as a GC should have a solar insurance program that protects their exposures to bodily injury and property damage claims in the course of their work.

Cyber Liability Insurance

State and local governments often require shared solar IPPs and service providers to protect subscribers by mandating insurance, warranties and surety to transfer risk of production, maintenance and repairs of community solar projects.

Solar subscriber management companies collect personally identifiable information (PII) from customers are are subject to cyber risks such as hacking and data breach. 

Cyber liability insurance for shared solar system subscriber managers provides 1st and 3rd party coverage in the event of a data breach, coverage for fines and penalties, notification of customers impacted by the breach, data restoration, ransomware and forensic analysis. 

Environmental Liability Insurance

The Solar Energy Industries Association (SEIA) recommends shared solar developers avoid, minimize and/or mitigate any environmental impacts associated with community solar construction. 

Community solar developers seeking federal, and in some cases state approvals, have been required to assess the environmental impact of their proposed projects, and develop alternatives that address environmental concerns. 

Environmental liability insurance can protect your business against liability that arises from an environmental related claim and the required cleanup.

Community Solar And Decommissioning Bonds

Solar decommissioning bonds are often required to restore the shared solar land to its original state and minimize environmental impact at the end of a community solar project’s useful life.

Solar developers who are working on community solar project are encountering new bonds such as community solar subscription manager bonds (aka subscription manager bonds, subscriber bonds or subscriber organization bonds).

Subscription manager bonds are designed to protect the organizations behind state programs for shared solar.

In New York State this might be an organization such as NYSERDA. In the State of Maryland, the Community Solar Energy Generation System (CSEGS) pilot program requires subscriber organizations that are not non-profits or collectives to post a $10,000 bond plus an additional $25,000 for each megawatt in excess of 1MW.

The CSEGS bond is a safety measure in the event a subscriber organization fails to fulfill their obligations under the shared solar program.

Community Solar Is A Win-Win

Community solar programs are taking off throughout the U.S. because they allow people who are otherwise unable to benefit from solar panels to buy clean energy and save money on their electricity bills. 

The programs are a win-win for the subscribers, the developers and IPPs who are investing their time and money to make them happen.

However, state and local requirements often include decommissioning bonds, cyber liability insurance, general liability and environmental liability insurance to protect subscribers and the projects themselves from potentially disastrous insurance claims… 

If you are a solar developer, EPC or IPP building community solar projects, work with your insurance broker to make sure you have the proper coverage and contractual indemnity in place to protect your business and long-term investments.


  1. Net metering - and virtual net metering policies - are under attack by utility lobbyists in some states, such as Florida and North Carolina, because net metering allows rooftop solar customers to receive credit against their utility bills for the electrons they produce.

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