In communities across the United States, people are seeking alternatives to conventional energy sources. Whether they aim to increase energy independence, hedge against rising fuel costs, cut carbon emissions, or provide jobs, people are looking to community-scale renewable energy projects for solutions. Falling costs and creative new financing models have made solar projects-including community shared solar projects-more financially feasible. This guide is a resource for those who want to develop community shared solar projects, from community organizers or solar energy advocates to government officials or utility managers. By exploring the range of incentives and policies while providing examples of operational community shared solar projects, this guide will help communities plan and implement successful energy projects. In addition, by highlighting some policy best practices, this guide suggests changes in the regulatory landscape that could significantly boost community shared solar installations across the nation. HOW TO USE THIS GUIDE The information in this guide is organized around three sponsorship models: utility projects, special purpose entity projects, and nonprofit projects. The guide begins with examples of the three project sponsorship models, discussing the legal and financial implications of each model. This is followed by a discussion of state policies that encourage community shared solar. The guide then reviews some of the tax and financing issues that impact community shared solar projects. While the guide cannot offer legal or tax advice, the authors hope to provide an outline of the legal hurdles that every project organizer should consider. Finally, Section 6, Getting Started provides readers with practical tools and tips for planning their own projects. The Appendices provide a more detailed comparison of business structures suitable for special purpose entities pursuing solar projects and the Interstate Renewable Energy Council's Model Community Renewables Program Rules. As with the first version of this guide, the case studies have been provided by the program sponsors or developers and have not been independently verified by the authors or by NREL. Please contact the program sponsor for further information. This guide cannot possibly describe all available incentives or cite all the examples of community shared solar efforts nationwide. For information regarding the most recent developments, see Section 7, Resources.
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This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications. U.S. Department of Energy (DOE) reports produced after 1991 and a growing number of pre-1991 documents are available free via www.OSTI.gov.
NOTICEThis report was prepared as an account of work sponsored by an agency of the United States government. Neither the United States government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorsement, recommendation, or favoring by the United States government or any agency thereof. The views and opinions of authors expressed herein do not necessarily state or reflect those of the United States government or any agency thereof. Printed on paper containing at least 50% wastepaper, including 10% post consumer waste. 1 AcknowledgementsThe authors thank the U.S. DOE sponsorship and direction of this work, especially Jaime Carlson and Richard Kauffman. In addition, we appreciate the critical reviews of the following individuals, which greatly improved and informed the work:• Robert Margolis, NREL• Thomas Jenkin, NREL ContextOne of the requirements for solar electricity 1 to achieve broad adoption and cost competitiveness with traditional forms of energy generation in the United States is widely accessible and low cost financial capital. The Department of Energy's SunShot goals, which would result in solar energy contributing to 14% of the nation's total electricity production by 2030, would require approximately $250 billion of solar electric generation deployment (DOE 2012). Currently, solar electric generation projects are primarily financed by institutions deploying private capital, which often require a high return on their investment. As a result, there has been a growing interest in financial policies and structures that would help migrate financing of renewable energy projects from private sources of capital to public capital markets (Mendelsohn 2012).One investment vehicle that has been discussed by legal and financial experts in the project finance community to accomplish this is a real estate investment trust (REIT). While REITs have historically provided capital for buildings, they have recently been used to help finance other types of property, such as cellular towers and transmission lines. The purpose of this study is to examine the fundamental physical, functional, and operational characteristics of a photovoltaic (PV) system in the context of the characteristics of "real" property as defined by the tax code, to help determine whether REITs can own PV systems. The solar market has treated PV as "personal" property for federal and state tax purposes. If the IRS were to classify PV as "real" property, it would likely have implications on existing market structures. This work has been reviewed and informed by real estate, tax and project finance attorneys as well as...
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