Community solar in NYS
Will the state’s big bet on small solar pay off?
NYS may not have abundant sunlight, but it has plenty of community solar plants—it’s second only to Florida in total capacity. As of early 2025, NYS had over 2,000 MWac1 2 of community solar, with more than 2,000 MWac in the pipeline. According to the NYS Energy Research and Development Authority (NYSERDA), that’s over 1,300 installations in operation. If they were evenly spread across NYS, every county would have 21 community solar projects now, with at least 20 more in the planning stages. This is my long-promised post on the topic; I’ll look at what it is, how it works, what it costs, and what it’s doing for us.
What is community solar?
Most community solar in NYS consists of 1-5 MWac utility-scale solar projects with multiple subscribers: residential, commercial, and other electricity consumers. Most sign up to get discounts of up to 10% on their electric bills. Unlike with residential solar installations, customers typically don’t own or lease the solar panels directly. Usually, these small plants are owned by solar developers, who receive various incentives and assistance to build and operate those facilities. One of the state’s goals is to sign up customers who can’t install residential solar because they can’t manage the up-front cost, don’t have an appropriate site, or don’t own their homes. A certain percentage of a project’s subscribers must be residential users, but commercial users may also take advantage of the discounts offered.
Like residential solar, community solar is a form of distributed generation: energy produced close to where it’s used. Energy from community solar feeds into local distribution grids, not the state’s bulk electric transmission grid (as larger-scale solar projects do). Under ideal conditions, community solar can help meet the demand for electricity as it approaches its peak, late in the afternoon. Of course, the sun sets during peak demand, so it’s often paired with battery storage.
Where are community solar plants located?
Community solar installations are normally built on 10- to 100-acre sites within a specific utility’s service area. Some community solar plants are built in pairs for a total capacity of about 10 MW on a given site. These projects are reviewed and permitted by the municipalities where they are located; they go through the standard State Environmental Quality Review (SEQR) process. They receive incentive funding and assistance from a variety of sources, including federal tax credits, the NYS Green Bank, and the NY-Sun program. To receive additional incentives, community solar plants may be set up to serve designated disadvantaged communities.
NYS energy supplier service territories (source: YSGsolar.com)
When you sign up for community solar, you’re matched with a project in your utility company’s service territory. Given the name “community” solar, you might expect that project to be close to your home. Sometimes it is, but sometimes you might end up subscribing to a project on the other side of the state.
Community solar plants are small enough to site occasionally on landfills and brownfields. Almost 90% are expected to be located upstate. Some community solar projects are discreetly sited off private roads, well away from main roads and residences. But some plants are located prominently near homes, with no screening and minimal setbacks from roads and dwellings. Some of the worst examples of siting and construction that I’ve seen have been among community solar projects.
The state has created a system that determines where community solar plants would be beneficial and offers incentives for building in those locations. As I mentioned in my last post, “Seeing all the sites,” some developers seek out small, financially distressed municipalities with little experience in permitting solar projects. This speeds up permitting and helps avoid expenses for things like effective screening and more conservative setback distances. From a developer’s perspective, an ideal community solar site is one located where they will receive the most incentives and the least local government push-back.
Google Earth Street View image of a community solar project in Chautauqua County NY. The plant is located on the main street of a village but features no screening and a minimal setback from the road
Municipalities have been somewhat slow to adopt protective laws, so upstate NY has seen something of a Wild West approach to solar development. We’ve ended up with an abundance of community solar plants generating very modest amounts of electricity, some of which are industrial eyesores. Not every community solar plant has a decommissioning plan or funding.
In my experience, rural town and planning boards tend to defer to solar developers’ opinions and knowledge; they often favor developers’ views about topics such as property values and stormwater runoff issues. I’ve talked to local officials who admit, off the record, that the developer’s guidance hasn’t always served local residents well.
One of the main reasons why municipalities host these plants is for PILOT (payment in lieu of taxes) revenue. A PILOT reduces the full amount of property taxes to a smaller, predictable amount paid over a fixed period of 15-30 years. Most upstate PILOTs have been negotiated for amounts ranging from $2,000 to $8,000 per MWac. Most community solar plants are built on agricultural land, and PILOT revenues are almost always greater than property taxes on a parcel with an agricultural assessment; this makes them especially attractive to local governments.
Legal battles
Not all municipalities want community solar plants. Increasingly, community solar developers are suing any municipalities who deny them permits, with judges usually deciding in favor of the developers. Small, economically struggling rural communities find lawsuits particularly burdensome and avoid them whenever possible, so they are under pressure to approve plants.
Several developers in NYS have tried a creative approach to permitting that involves declaring themselves public utilities. Public utility status gives them preferential treatment in siting projects. Thus far, one developer has succeeded in arguing the point after having its permit rejected by a town; the town was forced to reverse its decision and issue a permit.3 It remains to be seen how many other developers take this approach, now that a precedent has been established. If they do, siting community solar projects may become as perfunctory as state siting for projects over 25 MW.
The success story
On 18 May 2023, NYS distributed solar resources (including community solar) achieved a record capacity of 3,200 MW, addressing about 20% of the state’s electricity demand at that time. Because community solar is generated close to where it’s used (if not necessarily close to the subscriber), it has the potential to provide energy more cheaply and efficiently than bulk electricity purchases from NYS’s wholesale market. It’s subject to less in the way of line losses, and it may help utility companies delay some of their transmission upgrade costs.
The requirement that community solar plants be located in the service territory where the subscriber resides means that relatively few downstate customers can subscribe. As you can see from the service territory map, Con Edison, the major supplier of NYC’s electricity, has no territory in the upstate region. Downstate consumers are limited largely to fossil fuel generation. Cross-territory billing has been suggested—for instance, so a Con Edison customer could subscribe to a community solar project in National Grid’s service territory—but little progress seems to have been made.
You might find it odd that NYS has built so much community solar, considering that it’s one of the worst states for solar, from a performance perspective.4 But NYS has created an attractive, relatively predictable environment for the development of community solar. It has the stated target of 10,000 MWdc of distributed solar capacity by 2030, provides multiple incentives as well as assistance with aspects of financing such as construction loans, and uses an alternative to the “net metering” model that was typically used for early distributed solar projects.
In place of net metering, NYS uses a special mechanism called VDER to compensate developers for community solar generation:
New York’s Value of Distributed Energy Resources (VDER) compensation mechanism serves as a valuable alternative to the New York Independent System Operator (NYISO) wholesale market. By compensating distributed energy resources such as solar or batteries based on when and where they provide electricity to the grid, VDER’s unique ‘Value Stack’ structure provides higher returns and lower uncertainty for energy project developers. VDER also helps reduce energy costs for consumers who subscribe to distributed generation projects.5
By providing generous assistance and favorable, predictable conditions for developing and selling electricity from community solar, the state has made itself an appealing choice for companies wanting to build small solar projects.
I’ve talked before about renewable energy certificates (RECs), which are created when solar energy is generated. RECs work a little differently for community solar than for grid-scale solar. Instead of selling RECs for revenue, the developer receives payments based on where and when the energy is generated (through VDER), and savings are passed along to subscribers as monthly bill credits. Utilities own the RECs and use them to comply with NYS’s Clean Energy Standard. This means that as a community solar customer, you can’t generally make the legal claim that you are using “renewable” generation because you don’t own the RECs. For most residential customers, this claim doesn’t matter.
Project performance
Because the deployment of community solar appears to be a major success story in NYS, it seems reasonable to wonder how productive these projects are. We don’t have a particularly clear picture of community solar electric generation benefits. NYSERDA provides generation data for many DER projects6 but does not define community solar projects as a group. They’re lumped together under offsite utility-scale solar (>1 MW) with a few municipal and commercial projects. Not all distributed generation projects are listed.
These projects typically have capacity factors well below those of upstate grid-scale solar plants.7 Grid-scale solar capacity factors average about 18% in NYS, while community solar manages only 12.1%, with some areas of the state averaging less than 12%.8
These don’t appear to be NYS’s most productive solar projects. During the winter months, capacity factors often drop precipitously. I recently compared January 2026 capacity factors for distributed utility-scale solar projects in my NYISO zone; they averaged 2.9%.
Community solar costs
The NY-Sun program (administered by NYSERDA) has over $3 billion in funding and has leveraged additional investment from private sources. State agencies have not published clean figures that isolate the cost of community solar buildout in NYS.
I gave Perplexity AI the job of calculating a levelized cost of energy (LCOE) and construction costs per watt for community solar to compare it with other types of solar projects. Whereas grid-scale solar in NYS was assumed to have a LCOE of at least $100/MWh, community solar’s lower capacity factor and higher construction costs (e.g., due to fewer economies of scale) result in higher costs. Community solar was estimated at $148/MWh,9 putting it slightly below the cost of residential solar.
My impression is that actual construction costs may be lower than Perplexity’s estimates due in part to somewhat lower standards than are common in grid-scale construction. Consequently, the cost per watt might be less than $3, but without the economies of scale that come with grid-scale construction, it would likely still be well over $2.
Conclusions
It’s hard not to like the idea of distributed solar generation, but it’s also hard to tell how much it’s benefiting us. As seems typical with state energy transition goals, we’ve invested an awful lot of money without demanding much accountability. It’s possible that community solar is contributing to resilience and reducing bills, but we don’t actually know it.
NYS’s 2030 goal of 10,000 MWdc of distributed solar may be one of the few we will meet on time. The state deserves bragging rights over building a large amount of community solar in a short time. It has created a favorable environment for developers, in which they can earn steady revenue despite mediocre performance. But buildout has sometimes taken place at the expense of rural communities, who may lack the knowledge and resources to evaluate these projects effectively and ensure compliance during and after construction.
What will community solar end up costing? How much will it really save subscribers? Will utilities benefit? Will the communities benefit where these facilities are sited? It would seem worthwhile for a state agency—such as the Office of the Comptroller—to review our investment in community solar and verify that it provides the claimed benefits for ratepayers, subscribers, and communities. Surely someone at the state level is curious.
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Photos by Kris Martin.
While the New York Independent System Operator (NYISO), the National Renewable Energy Laboratory (NREL), and most utilities in their interconnection queues normally list capacity in MWac, NYSERDA uses MWdc (direct current) to list distributed solar capacity. For community solar, 1 MWac = about 1.3 MWdc. This difference causse a certain amount of confusion, so in this post, I specify MWac or MWdc.
NYSERDA, New York’s Two Gigawatts of Community Solar Provides Equitable Access to Renewable Energy, https://www.nyserda.ny.gov/Featured-Stories/New-York-Leads-on-Community-Solar, accessed 29 January 2026.
Barclay Damon, Community Solar Is a Public Utility: Third Department Orders Town Zoning Board to Approve Solar Array Under the Public Utility Standard, 30 December 2024, https://www.barclaydamon.com/alerts/community-solar-is-a-public-utility-third-department-orders-town-zoning-board-to-approve-solar-array-under-the-public-utility-standard.
See my post The reality factor for more on this.
Ascend Analytics, VDER: New York’s Unique Community Solar Program, 4 August 2025, https://www.ascendanalytics.com/blog/new-york-vder-program-value-of-distributed-energy-resources.
NYSERDA, Distributed Energy Resources NYS Data, https://der.nyserda.ny.gov/, accessed 26 January 2026.
For more on this topic, see my posts Solar capacity and capacity factors and The reality factor.
NYSERDA does not provide separate data for community solar and other offsite utility-scale solar projects, so this data includes some non-community solar projects. A brief comparison of community solar projects with other small offsite plants showed no appreciable difference in capacity factors.
Assuming a capacity factor of 14%.
Brilliant breakdown of the community solar economics. The 12.1% capacity factor vs 18% for grid scale is brutal and that $148/MWh LCOE estimate really exposes the inefficiency. What gets me is how the VDER mech anisim basically socializes those performance gaps across ratepayers while developers still get predicatble returns. Classic misaligned incentives.
More good information to share with our local groups, here in VA.
The developers were pushing "community solar" in my county, until I pointed out that we don't have (or are part of a local grid)... opps... that sort of took the wind out of their sails.
I'm hoping the loss of federal incentives will dramatically slow the growth progress of these vermin. Even here (considerably further south), we only average 5.5 hours a day average, of usable sunlight for solar.