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Cooperative and Community Opportunities 

in Solar Energy 

February 2021 

USDA, Rural Business-Cooperative Service

Cooperative Services Branch: coopinfo@usda.gov

This bulletin focuses on potential cooperative and community opportunities in solar energy

development and use. This document is not intended to be holistic, but rather introduces some of the

overall basic concepts in solar energy development and provides information on how solar energy is and

may be deployed in communities in the United States. This paper consists of 4 major sections: 

background information, economics of solar energy, community solar solutions, and resources for 

additional information on solar energy. 

Introduction: 

Solar Energy offers an affordable and environmentally friendly energy source to power our future. In

partnership with other renewable energy sources such as wind and geothermal, our nation’s energy grid

is expected to rise from 19% renewable in 2019 to 38% in 2050, with solar energy accounting for almost

half of all renewable energy generation in 2050.1 This bulletin provides the reader with information on

solar energy while outlining some of the various cooperative and small business models that can be

used to adopt solar energy. 

Definitions: 

kWh: An abbreviation for Kilowatt-hour. A unit to measure quantity of electricity. A typical 

American home consumes 11,000 kWh per year.2

Solar Cell Efficiency: The measure of the portion of sunlight energy that is converted into 

electricity through a solar cell. 

Part 1: Background Information 

This section describes the benefits of solar power and group action, solar energy production methods,

and government involvement that have all helped greater adoption of solar technology.

1

 EIA https://www.eia.gov/todayinenergy/detail.php?id=42655 2 EIA https://www.eia.gov/energyexplained/use-of-energy/electricity-use-in-homes.php
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Benefits of Solar Power 

Numerous benefits of solar power have been explored and documented by researchers and developers

of solar energy systems. Some of these benefits are as follows: 

• Solar power is a clean and renewable energy source. Solar technology turns the abundance of

light produced by the sun into energy.

• Solar energy does not require the purchase of an input commodity such as coal or oil. The price

of solar is based purely on the initial infrastructure investment and minimal maintenance costs.

A solar installation can function as a hedge against rising energy prices.

• Solar power creates jobs. Good, high paying American jobs are required to install and manage

the solar infrastructure. As of 2019, nearly 250,000 Americans were employed in the solar

industry, with almost 35,000 of those jobs in domestic manufacturing.3

• Utility scale solar generation is less expensive than all conventional electricity sources, costing as

low as $0.03/kwh (before subsidies are considered).

• Residential solar production is cost competitive with conventional utility sourced energy, even

before subsidies are considered. A community solar farm can cost as little as $0.06/kWh while

residential rooftop solar is as low as $0.15/kWh.4

• Solar energy used in conjunction with modern battery technology can save energy for nighttime

use.

• Battery technology can offer a consistent supply of electricity to remote locations or locations

with an unreliable connection to the electricity grid.

• An increase in solar energy adoption will increase local and national energy independence.

These benefits alone make a good case for pursuing solar energy, and in addition, there are a variety of 

tax credits and funding opportunities available on the federal, state, and local levels that further 

incentivize the adoption of solar energy. 

Benefits of Group Action 

People working together to adopt solar energy can provide even further benefits beyond the general

benefits listed above. Some reasons for promoting group action for solar energy projects include:

• Greater stimulation of local economies compared to conventional energy sources.

• The ability to lower energy prices through increased competition in energy markets.

• Installation and ownership costs can decline through economies of scale.

• Offers a green energy solution to renters or households that cannot install rooftop solar.

Methods of Solar Energy Production:

There are two main methods of harnessing solar energy for electricity: Photovoltaic Cells (PV) and

Concentrated Solar Power (CSP). PV is the more common method of turning the sun’s energy into

electricity. It is the PV solar panels you see on roofs, or in large arrays in fields. These absorb the energy

contained in sunlight and transform it into usable electricity. Alternately, CSP relies on a large array of

3 Solar Industry Association. https://www.seia.org/solar-industry-research-data

4 Lazard. October 19, 2020. https://www.lazard.com/media/451419/lazards-levelized-cost-of-energy-version140.pdf
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reflectors or mirrors to concentrate the sun’s heat energy onto a receiver. The receiver, which often

contains a steam turbine, coverts the immense heat energy into electricity.

In comparing PV and CPS technology, PV has a few competitive advantages which have led to its wider

adaptation. While PV systems are easily scalable, economically viable in a variety of climates, and are

simple to install, CSP systems require a large amount of land in a location with an exceptionally strong

amount of sunlight (such as the Mojave Desert) and are often complex to install. 

Government Involvement

Interest in solar energy by governments, the private sector, and citizens have led to gradual and

continuing improvements in solar technology. These include:

1) Market forces and government investment have resulted in a steady decline in the cost of solar.

Utility-scale solar PV costs have fallen by 90 percent in over the last decade, and the downward

trend is expected to continue.5

2) Innovation partly funded through government involvement has gradually increased efficiency of

solar panels. The solar cell efficiency of commercially available solar PV panels is currently 20-23

percent. While solar PV panels that are not currently price competitive can achieve solar cell

efficiency over 30 percent. The general trend toward increased efficiency of solar technology is

expected to continue.

3) Federal and state financial incentives for solar gradually change over time as old legislation

expires and new regulation is introduced. Information and resources on federal or state financial

incentives are available in the “Government Incentives” section below.

4) Many states are gradually adopting new business and utility regulations to encourage the use of

solar.

Part 2: Economics of Solar Energy 

The soaring adaptation of solar energy is changing the fundamental structure of how consumers receive 

and pay for electricity. While the historic method of simply receiving and paying a monthly utility bill 

based upon energy use will continue, solar energy adoption can take advantage of a variety of funding

methods to increase local ownership of energy production. 

However, the transition toward localized production of energy may require considerable investment. A

solar installation large enough to meet an average home’s energy needs of 10,000 kWh will cost

between $10,000 to $20,000, before tax incentives. But a large community solar or commercial solar

installation has the potential to decrease the cost of solar by up to 60 percent.

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Financing Options 

This section discusses financing options and methods for managing the value of electricity generated by

solar installations. There are two basic financing options for funding a solar installation: 

5 Lazard. October 19, 2020. https://www.lazard.com/perspective/levelized-cost-of-energy-and-levelized-cost-ofstorage-2020/

6 National Rural Energy Laboratory.
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1) The purchase is made through a large initial cash investment can fully fund a solar array. For

the years following the solar installation, the electricity generated can be used or sold

without any substantial additional costs.

2) The purchase is made through debt financing to fund the installation of a solar array. In

most circumstances, the monthly payment on the debt will be lower than the market value

of the energy produced by the array providing financial feasibility.

CoBank and The National Cooperative Bank are two examples of lenders who specialize in financing

activities for cooperatives. 

Financial Management Considerations: 

To recoup the costs associated with a new solar instillation, there are a variety of financing methods to

manage the value of electricity generated from a solar installation: 

1) Solar Lease/Solar Subscription: In either a solar lease or a solar subscription, the energy

consumer pays a set monthly fee to the entity that owns the solar panels in exchange for

the energy produced by those panels. While the financer/owner of the installation benefits

from stable income, the user of the electricity must pay a fixed monthly fee regardless of

the amount of energy produced. For on-site solar installations, a contract may specify the

leaser/subscriber may own the panels after a set period, generally around 20 years.

a. Subscriber Management Organization: A subscriber management organization

operates as the middleman between the owner of a solar installation and the users

of the electricity. These organizations often allow energy users to simply subscribe

to solar through an online dashboard. Energysage, SunShare and Nelnet Energy are

three examples of subscriber management organizations.

2) Power Purchase Agreement (PPA): In contrast to the solar subscription model where

financing is based on the physical solar installation, the financing for a power purchasing

agreement is based on the amount of electricity generated from a solar installation. The end

user of the solar energy will pay a fixed rate to the owner of the installation the amount of

electricity received. While a PPA benefits the user of the electricity through maintaining a

payment structure resembling paying a utility for the electricity, the owner of the solar

installation will have inconsistent revenue. If the solar installation is debt financed, the

owner may not receive adequate monthly income to cover debt obligations.

3) Renewable Energy Certificates (REC): A REC is a marketable method of trading energy

produced by renewable energy. An owner of solar energy may sell the REC to an entity

looking to offset the pollution caused by their conventional energy consumption. The

Environmental Protection Administration offers further details on RECs, along with

resources for tracking the buying and selling of clean energy.

4) Property Assessed Clean Energy (PACE) financing: PACE financing is a local government

program where the government provides the initial financing for a private solar installation.

For the years following the installation, the property owner will repay the local government

for the costs of their solar installation through an additional charge on their annual property

tax bill. While only select areas of the United States offer PACE financing, the DSIRE

database referenced below is a valuable resource for identifying local governments that

offers PACE financing.

Government Programs: 

Tax incentives and other government initiatives are available to further reduce the costs associated with

installing solar energy systems. Local utilities, state and local governments and solar installers are often
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a valuable resource to understand local solar financing incentives. The Small Business Administration 

maintains a list of state and local energy efficiency programs, many of whom, offer financial incentives. 

The Database of State Incentives for Renewables and Efficiency (DSIRE) provides compressive 

information on federal, state and local financial programs to support the adaptation of renewable

energy. Included in the DSIRE Database are a few notable federal programs which support the 

adaptation of Solar Technology: 

The USDA offers a variety of loan and grant programs which can aid in our nations transition 

toward renewable future:

1) USDA Rural Developments’ Rural Energy for America Program Renewable Energy Systems &

Energy Efficiency Improvement Guaranteed Loans & Grants: provides guaranteed loan

financing and grant funding to agricultural producers and rural small businesses for

renewable energy systems or to make energy efficiency improvements.

2) USDA Rural Developments’ Rural Energy for America Program Energy Audit & Renewable

Energy Development Assistance Grants: assists rural small businesses, agricultural

producers, and electric cooperatives by conducting and promoting energy audits and

providing Renewable Energy Development Assistance (REDA).

3) USDA Rural Development’ Business & Industry Guaranteed Loan Program (B&I): offers loan

guarantees to lenders providing credit enhancement and risk mitigation for loans to rural

businesses.

4) USDA’s Rural Utilities Services’ High Energy Cost Grants: Assists energy providers and other

eligible entities in lowering energy costs for families and individuals in areas with extremely

high per-household energy costs.

5) USDA’s Rural Utility Services’ Electric Programs: Offers loans and loan guarantees to finance

the construction of electric facilities, including system improvements and replacement

required to furnish and improve electric service in rural areas.

Congress has passed a couple of key federal tax incentives to support the adaptation of solar 

energy:

1) The Federal Business Energy Investment Tax Credit provides a tax credit for commercial

solar installations based upon the year construction begins. As of February 2021, legislation

allows for a 26 percent tax credit through 12/31/23, a 22 percent tax credit through

12/31/25, and a 10 percent tax credit for solar installations commencing in 2026 or beyond.

2) The Residential Renewable Energy Tax Credit provides a tax credit for residential solar

installations based upon when a new solar installation is “placed in service”. As of February

2021, current legislation allows for a 26 percent tax credit for systems placed in service

before 01/01/23, and a 22 percent for installations placed in service before 01/01/2024.

Managing the Inconsistency of Supply 

Since sunshine is not available 24 hours a day, the sun is unable to directly power all energy needs. Large

scale battery installations are being used as a method to store solar energy for future use. Solar systems 

working with a battery installation and smart technology can store solar energy for later use. In areas

that may suffer from frequent power outages, a home solar array in conjunction with a home battery

can provide power during the outage.

Most on-site solar installations connected with the energy grid use a system known as “net metering” to

account for the value of excess energy while ensuring a consistent supply of energy. At the end of a 

billing period, a utility provider will credit the excess energy produced against the energy supplied by
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their grid. When solar energy production is low, the solar owner(s) may buy energy from the grid. In a

process known as a “net metering”, the flow of energy into and out from the grid will be balanced out

on your monthly utility statement. The National Conference of State Legislatures offers a list of net

metering policies by state. 

Part 3: Community Solar Solutions 

A community solar farm can offer solar to individuals that may not be able to install conventional 

household solar and/or cannot afford the cost of installing an individual system. The community solar

model may be an option to offer conventional homeowners, housing cooperatives, renters, condo

owners, and others an opportunity to gain solar energy. However, since models of community solar are

dependent upon local laws, regulations, and incentives, it is important to consider the local solar 

environment when exploring opportunities in community solar.

Cooperative Models: In some cases, community solar may be achieved through the 

development of cooperatives. This section explores some cooperative models, all structured to

lower the cost of electricity and providing access to solar power to interested individuals

Purchasing Model: When multiple households of a community would like to “go solar”, 

one option would be for them to form a solar purchasing cooperative that will bulk buy 

the household solar installations. This type of cooperative would pool-purchase the 

installations at a lower cost given increased purchasing power and the individual 

household members would purchase their individual installation from the cooperative. 

These members would thus, benefit from lower installation costs and from lower 

electricity prices. Some examples of this model can be found at the Website: Solar 

United Neighborhoods, a resource platform for those interested in cooperative solar 

opportunities.

Dividend Model: Under a dividend model, community members unite to raise funds, 

install, and own a cooperative solar installation. Upon completion of the installation, the 

cooperative members receive a re-occurring dividend payment for the electricity 

produced by their proportional share of the solar installation. While individual homes 

may not receive the clean power, the cooperative contributes to a more renewable

future. People Power Solar is a Californian organization working to expand access to 

solar energy through the dividend model of solar cooperatives.

Standard Model: People interested in solar energy have the option of forming a 

cooperative that would both own the solar panels and use the electricity generated 

from the installation. To account for the energy distributed among cooperative 

members, a variety of energy or financial instruments can be utilized, including net 

metering, purchase power agreements, renewable energy certificates or solar 

subscriptions. 

Solar Power via Utility Cooperatives: Forty-two million Americans receive their 

electricity through an electric cooperative. As customer-owned entities, these 

cooperatives serve the needs and wishes of their customers. As a result, 227 utility 
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cooperatives in 33 states offer a form of community solar. Models of utility-scale

community solar vary considerably and the best source for information on local options 

for utility solar is your utility provider itself.7

 

Non-profit Community Solar Model: Non-profits can form to raise funds for the 

purchase of a community solar installation. The solar installation benefits the community, 

while the financers of the installation do not receive any profit. As an example, a non-profit 

purchasing organization may form to fund a solar installation for a public school. Upon 

completion of the installation, the school and community will benefit from clean energy and a 

lower electric bill. Unfortunately, non-profit entities are generally not able to take advantage 

of federal and state tax credits. 

For-Profit Community Solar Business Models: Small businesses around the nation have 

been implementing innovative business models to transition the Nation toward a greener

future.

Special Purpose Entities: In this model, a legal entity is created to directly own and 

manage a solar installation. The entity can be an independent organization or owned by 

a parent organization. The most common business structure of a solar special purpose 

entity is an LLC; though public benefit corporations, partnerships or other business 

structures are also used. A community solar special purpose entity can take advantage 

of a subscriber management organization, purchase power agreement, solar leases, or

renewable energy certificates. 

Developer Model: A solar developer holistically installs, owns, and manages a solar 

installation. The developer is responsible for acquiring the land, adhering to necessary 

regulations, and working with local utilities. The developer model often takes advantage 

of a subscriber management organization, though power purchase agreements, solar 

leases and renewable energy credits may also be used.

Utility Model: Utilities operate similarly to a solar developer model. In fact, some utilities may 

purchase solar directly from a solar developer. The community solar model for utility companies

will generally be structured through a power purchase agreement or a solar lease. A key benefit 

of the utility model community solar is the ability for your solar energy bill and utility bill to be

combined into one place.

Small Business and Cooperative Installers

Small businesses have formed to install solar for homeowners, electric utilities, and everything in

between. In order to compete against the larger solar installers, Amicus Solar formed to unite the 

purchasing power of small solar installers. Although its members include both small corporate installers

and cooperative installers, Amicus itself is a member-owned cooperative helping small businesses to

thrive in a competitive marketplace.

Cooperative Installers: Cooperative installers, such as Evergreen Energy Solutions in Cleveland, 

Ohio, is a worker-owned cooperative that installs community solar farms, private solar, and 

corporate solar systems. Among the benefits of a solar installation cooperative over a traditional 

corporate installer include: (a) worker-owners have increased control over their compensation 

7 National Rural Electric Cooperative Association. https://www.electric.coop/wp-content/Renewables/communitysolar.html
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and (b) worker-owners have a greater incentive for efficient and quality work compared to a 

employees that don’t share ownership of the businesses. 

In summary, the increasing adaptation of solar energy is fueling a localization of energy production. This

changing dynamic of utility grids has resulted in a variety of new community models of energy

production. Different models of community solar being employed or developed help expand the

opportunities for greater solar energy use for those who may not be able to install conventional rooftop

solar. Other small businesses can also form to install and manage community or other large solar arrays. 

Solar energy development and use offers many opportunities for new jobs and economic growth while

lowering energy costs and benefiting the environment. 

Part 4: Resources for Additional Solar Energy Information 

This section provides some of the resources described in the text and some additional information about

solar energy, including government programs, for those interested in exploring and learning more. 

USDA Rural Development 

Rural Development Energy Programs

Rural Business-Cooperative Services: REAP Renewable Energy Systems Loans and Grants

Rural Business-Cooperative Services: REAP Renewable Energy Audit & Development Assistance Grants

Rural Utilities Service, High Energy Cost Grants, Electric Programs

Database of State Incentives for Renewables and Efficiency (DSIRE) 

DSIRE

National Renewable Energy Laboratory: 

Shared Solar: Current Landscape, Market Potential, and the Impact of Federal Securities Regulation

(2015)

A guide to Community Solar (2010)

US Department of Energy: Office of Energy Efficiency & Renewable Energy 

Solar Energy Technologies Office

Community and Shared Solar

Solar Powering America Program

Homeowner’s Guide to Going Solar
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Environmental Protection Agency: 

Community Solar: An Opportunity to Enhance Sustainable Development on Landfills and Other 

Contaminated Sites.

Co-op Power 

Offers Community Solar, Solar Subscriptions, Solar Power Purchasing Agreements and more in

Massachusetts and New York. 

Amicus Solar Cooperative 

A Network of Solar Installers 

Energy Sage

Offers a lot of Resources on Solar and Community Solar

NRECA (National Rural Electric Cooperative Association) 

Outlines Electric Cooperatives involved in Community Solar Across the Country