Community solar 101: how it actually works
You've probably heard about community solar, but what is it exactly? Let's break it down without the jargon.
The basic concept
Community solar lets you benefit from solar power even if you can't install panels on your own roof. Instead of putting panels on your home, you buy a share in a larger solar installation on someone else's building - like a local business, community centre, or dedicated solar farm.
Think of it like a community garden. You don't need your own backyard to grow vegetables - you just need a plot in the shared garden. Community solar works the same way, but with electricity instead of tomatoes.
Two models: Direct benefits and dividends
There are two main ways community solar can work for you:
Direct bill credits: The solar panels you've invested in generate electricity, and you receive credits on your electricity bill based on your share of the power generated. This is also called a Solar Garden and replicates how a feed-in-tariff might work (but better rates).
Dividend payments: In projects like our Young Henry’s brewery installations, the business needs solar but are unable to meet the upfront cost. Community members provide that upfront capital by becoming members in the Pingala Co-operative. The Co-op then pays for the installation of the panels and leases them to the business. The business uses the electricity generated as savings on their bills, and the lease payments become dividends to Co-op members - typically 5-8% annually. This model helps small businesses go solar while providing the community with a way to get involved in solar with steady returns.
The challenge small businesses face
Traditional solar installation requires significant upfront capital - often tens of thousands of dollars. For small businesses operating on tight margins, that's money that could be going into staff, inventory, or growth. Yet without solar, energy bills keep climbing year after year. Plus - it's not their core business- with many people not knowing how many panels to install, or how to convince their landlord its worth considering.
How community investment works with Pingala
Pingala offers an alternative: we bring community together to fund solar installations for small businesses. Customers, employees, and local supporters buy shares in our funding partner, Pingala Co-operative. Pingala’s engineers determine what system is best for the business and the Co-operative then pays for the equipment and installation —providing a turnkey renewable system at no upfront cost to the business.
The business then leases or loans the renewable installation from Pingala Co-operative for an agreed term (typically 5-10 years), which significantly reduces their grid electricity bill. Rather than repaying a loan to a bank, profit from payments flow back to the community members as dividends, historically 5% annually.
At the end of the agreed term:
the Pingala Co-operative is repaid;
community members are invested in a local sustainability journey - and have received a financial return;
renters and apartment dwellers who can't install their own panels have had access to solar investment opportunities;
businesses own the renewable system and the free solar power for the remaining life of the panels (another 15+ years); and
business only have to pay ongoing low electricity bills.
Who it's perfect for
Community solar opens up solar access to people who've been locked out: renters, apartment dwellers, people with unsuitable roofs, and anyone who wants solar benefits without installation hassle. It also helps small businesses that want to go green and realise the savings of solar, but can't afford the upfront costs.
This is a social enterprise model, where everyone is a part of the Project and everyone benefits, including the environment.
Interested in Pingala's community solar projects?
We're always working on new installations. Join our mailing list to hear about opportunities as they arise by clicking on the “Get Involved” button at the top of this page.
