Frequently Asked Questions

Tribal community solar and private community solar share the core concept of shared access and benefits of a solar project, but there can be some key differences:

Ownership and Governance:
Tribal: Owned and governed by the Tribal Nation itself, potentially with participation from individual Tribal members. Decisions regarding the project’s purpose, profit sharing, and land use prioritize Tribal needs and cultural considerations.

Private: Owned and managed by a private developer or company. Profits are distributed according to the ownership structure, which might not directly benefit the tribal community as a whole.

Funding and Incentives:
Tribal: May qualify for additional federal grants and tax credits specifically designated for renewable energy projects on tribal lands. These incentives can help offset upfront costs and make the project more financially viable.
Private: Relies on traditional financing methods and competes for general community solar incentives offered by the state or federal government.

Focus and Goals:
Tribal: Often driven by a desire for energy sovereignty, reducing reliance on external utilities, and creating economic opportunities within the tribal community. May prioritize environmental sustainability and cultural values alongside cost savings.
Private: Primarily focused on providing cost-effective renewable energy options to subscribers. Environmental benefits might be a selling point, but the primary goal is economic return for the developers.

Land Use:
Tribal: Installed on Tribal reservation land, ensuring self-determination and potentially offering cultural significance in terms of land use.
Private: May be located on private land within or near tribal territory, requiring agreements with landowners and potentially less tribal control over the project’s location

Community solar programs are typically enabled through state legislation. A total of 41 states plus Washington DC have statewide programs, and in 2021, the New Mexico Community Solar Act created the policy foundation to support community solar in New Mexico. The Act has unique provisions for “Native community solar projects” in recognition of the sovereign status of Tribal Nations. Projects off Tribal land are subject to the limitations outlined in the state program, but projects on Tribal land are not.

Tribal Community Solar Projects remain exempt from:
Facility, subscriber, and subscription size limitations
Anchor tenant limitations
Annual capacity cap
Transferring Renewable Energy Credits (RECs) to the utilities—Tribes and Tribal entities are able to keep the RECs generated from their community solar facilities

Tribal community solar offers Tribes the potential for self-sufficiency, community development, and alignment with Tribal values.

Step 1: Gather all relevant data to make a first pass at a potential project, and understand Tribal role options.

Step 2: Estimate value to Tribe, consider ownership approach, begin to identify off-takers, partners, and vendors, and begin planning permitting and site use.

Step 3: Finalize economic assumptions and Tribal roles, finalize permitting, interconnection, and off-take agreements, and determine financial partnerships and ownership structure.

Step 4: Finalize agreements (incl. vendor contracting); Financial close and construction; project commissioning, begin operation.

Step 5: Maintenance plan implementation (conduct or ensure ongoing O&M, R&R).

Community solar arrays are significantly larger than residential solar systems but smaller than utility-scale solar farms. Here’s a breakdown of the typical size range:

Community Solar: Typically ranges from under 1 megawatt (MW) to less than 5 MW in capacity. 1 MW typically expands 5 acres of land. 

For comparison: Residential Solar: Average around 6 kilowatts (kW).

Utility-Scale Solar Farms: Can be hundreds of MW or even over 1 gigawatt (GW).

This means a community solar array can generate enough electricity to power hundreds of homes, while remaining smaller than massive solar farms that supply entire cities.

The New Mexico Public Regulation Commission (NMPRC) plays an important role in enabling Tribal communities to participate in the state’s community solar program through various actions:

• Rulemaking and Oversight:  The NMPRC establishes the rules and regulations governing the community solar program. This includes outlining the process for developing and operating community solar facilities, ensuring consumer protection for participants, and overseeing the program’s overall implementation.
• Project Selection:  The NMPRC works with program administrators to select proposals for community solar facilities. However, due to the Tribal provisions in the legislation, Tribal projects do not need to be approved and selected by the NMPRC.  
• Low-Income Customer Support: The NMPRC is committed to ensuring low-income residents benefit from the program. At least 30% of the power generated by each community solar facility must be allocated to qualified low-income customers and organizations, including those within tribal communities.

Overall, the NMPRC provides the framework and facilitates the continuation of the community solar program

Community-scale projects allow for the following: Offset electricity costs for the community (primary use is on-site), minimize environmental impact, diversify energy supply with local and renewable sources, no other power off-taker is interested, not enough capital for a large-scale project, job development (construction and maintenance), and energy sovereignty.

Tribes are sovereign nations and are not subject to state or local jurisdiction. However, most Tribes are serviced by electric utilities which are subject to state oversight, including state-directed policies and regulations. The Community Solar Act directs investor-owned utilities (IOUs) to partake in the community solar program, including PNM, Xcel Energy, and El Paso Electric. 

Energy storage systems can be added to community solar arrays to provide electricity when the sun isn’t shining. Combining solar and storage can increase resilience by providing backup power during an electrical disruption.

There are a few possibilities for your Tribe to pursue a community solar project even if your rural cooperative hasn’t opted into a formal program:

Limited Self-Generation: Check with your rural electric cooperative about their policies on self-generation. Many cooperatives allow members to generate a portion (often around 5%) of their own electricity needs independent of the grid. This might allow your Tribe to install a smaller community solar project to offset some electricity usage.

Alternative Ownership Models: Explore alternative ownership models for the community solar project. Here are two options:

Subscriber Ownership: The Tribe could partner with a community solar developer to build a project on Tribal land. Tribe members would then subscribe to the project and receive credits on their electricity bills for their share of the power generated.

Non-Profit Ownership: The Tribe could form a non-profit organization to own and operate the community solar project. This would allow more control over the project and could potentially qualify for grant funding.

The Tribe should first identify its goals for solar development by engaging with Tribal leadership, community members, and other involved stakeholders. The Tribe should also have initial discussions with its utility to determine if there are any policies or regulations that may prevent the feasibility of solar projects. The Tribe should also determine their desired role in the project, which can range from acting as the owner/operator of a facility or leasing the land to a third-party developer.

1. Feasibility – this is the potential analysis
2. Preconstruction – permitting, environmental, financial model 
3. Construction – engineering, procurement of equipment, and actual construction of plant

The scale of solar development a Tribe chooses to pursue depends on a number of factors, including:
– Goals of the project
– Project cost and economics
– Land availability
– Jurisdiction and utility regulations, including net metering and interconnection rules
– Available infrastructure (transmission, distribution lines, substations, feeders)

Third-party financing and ownership of community solar is typically structured through a lease or power purchase agreement (PPA). A community solar developer will install a solar array with little to no upfront cost for the Tribe. The company also manages system upkeep. 

• In a lease, the community solar developer leases the land from the Tribe and maintains ownership of the system. 
• With a PPA, the customer pays a set rate for the electricity generated by the community solar array. 

Third-party ownership and financing can be attractive to Tribes to help overcome the upfront costs of installing solar systems, especially for Tribes who do not have or do not want to borrow the amount of money needed to cover upfront costs. 

Issues of land ownership are scaled based on the size of the project. Small-scale projects on trust land are more straightforward because only one type of land status is involved, requiring fewer approvals.

Advantages: No up-front costs, no O&M, benefits from tax incentives, locked-in energy price, path to ownership.

Disadvantages: May not beat current electricity rates, tough economics for small projects, higher transaction costs, renewable energy credit (REC) and project ownership requirements

It’s important to understand that the ROI (Return on Investment) for a community solar array can vary depending on several factors and dependent upon the revenue appetite of the involved business partners. The average ROI for a solar farm is often falls somewhere between 10% and 20%, and we can speculate that community solar would provide the same ROI. While community solar projects function differently than traditional solar farms, both involve generating solar energy. This suggests similar potential returns, though it’s important to consider factors that might affect community solar specifically.

Key factors affecting ROI: Location (sunlight hours), electricity prices, project size, system efficiency, and available incentives all play a role.

Here’s why the range exists:

Different companies have different ROIs that must be met to draw their interest to a project. Tribes also have their own ROIs that must be met to fulfill the Tribe’s goals and objectives. 

The location of the community solar project also makes a difference. A project in a sunny region with high electricity costs might see a higher ROI (closer to 20%). Conversely, a less sunny area with lower electricity rates might have a lower ROI (closer to 10%). Overall, community solar offers financial benefits through electricity cost savings, but the specific ROI will depend on your location and project details.

Tribes often use a variety of business structures to develop and own renewable energy projects. 

The business structure should consider a number of factors, including a Tribe’s risk tolerance, economic goals, internal staffing capacity, asset protection, and careful consideration of how to uphold Trial sovereignty. 

With new federal tax incentives, it is now more economically viable for Tribes to own community solar arrays. 

Yes, tribes can now take advantage of federal solar tax credits thanks to the Inflation Reduction Act (IRA) of 2022. Previously, their tax-exempt status prevented them from directly claiming these credits. The options include:

Direct Pay Option: The IRA introduced a “direct pay” option for tribes. This allows them to receive a cash payment from the IRS equivalent to the amount of the tax credit they would have otherwise received.

Increased Accessibility: The IRA also expanded the two main solar tax credits, the Investment Tax Credit (ITC) and the Production Tax Credit (PTC), making them more accessible to tribes. These credits can significantly reduce the upfront costs of installing solar panels.

Bonus Credits: Tribes may also be eligible for additional bonus credits depending on factors like project location and community served.

Tribes have a couple of options to receive technical assistance for assessing a community solar project’s viability:

• Department of Energy’s START Program: The U.S. Department of Energy’s Office of Indian Energy offers the Strategic Technical Assistance Response Team (START) program.  This program provides on-site technical expertise from the National Renewable Energy Laboratory (NREL) to federally recognized tribes for renewable energy projects, including community solar.
• Tribal Energy Organizations:  Several tribal energy organizations offer technical assistance programs specifically focused on renewable energy development on tribal lands. These organizations can help tribes assess technical feasibility, conduct feasibility studies, and navigate permitting processes 

The Community Solar Act created net-metering rules so that utilities, consumers, and companies have a structure in which to operate and a stable set of financial conditions to use in calculating the project’s economic impact and reducing potential risk. Net metering is a billing mechanism that credits utility customers who are generating electricity to be exported to the grid. Compensation levels vary by location depending on the utility provider and the rules and regulations. 

Net-metering rules offer an incentive to build community solar, and the effective price utilities compensate for net-metered energy is higher compared to the price of utility-owned facilities. 

The community solar program guarantees that projects will be paid for the energy they create for 25 years. The warranty life of projects typically extends all 25 years but can differ depending on the manufacturer and performance warranties offered by the solar installers. Beyond 25-30 years, the power output of solar panels decreases. However, with proper maintenance, projects can continue to generate power for up to 40 years.

The community solar program guarantees that projects will be paid for the energy they create for 25 years. The warranty life of projects typically extends all 25 years but can differ depending on the manufacturer and performance warranties offered by the solar installers. Beyond 25-30 years, the power output of solar panels decreases. However, with proper maintenance, projects can continue to generate power for up to 40 years.

After a community solar project reaches the end of its operational life, the land undergoes a process called decommissioning. Here’s what happens to the land during this stage:

Equipment Removal: Solar panels, mounting structures, electrical wiring, and inverters are carefully dismantled and removed from the site.

Land Restoration: The land is then prepped for its return to its original state or another designated use. This may involve:

Soil de-compaction: The soil that was potentially compacted during construction is loosened to improve drainage and air circulation.

Backfilling: Any trenches dug for electrical lines or mounting systems are filled back in.

Revegetation: Native plants and grasses are reintroduced to the site to restore the original ecosystem or establish a new one if desired.

Decommissioning Plan:  The decommissioning process typically follows a plan that’s established during the initial project proposal stage. This plan ensures the land is restored responsibly and in accordance with environmental regulations.

Here are some additional points to consider:

Land Use After Decommissioning: The land can be returned to its original use, such as agriculture or grazing, or converted to another purpose, like a community garden or recreational area, depending on the plan and community needs.

Sustainability Efforts: Decommissioning can be done sustainably by recycling or repurposing some of the removed materials, like the aluminum frames of the solar panels.

Landowner Responsibilities: The decommissioning process is usually the responsibility of the solar project owner, which could be the community solar developer or the Tribe itself, depending on the ownership model.

Overall, the goal of decommissioning is to ensure the land used for the community solar project returns to a productive and ecologically sound state after the project’s lifespan.