Different organizations are theorizing what the future of subscribing for electricity will look like. The basic idea is that you subscribe for some amount of electricity ahead of time and are guaranteed that amount. The problem is then, how do you deal with issues of over subscribing or under subscribing? There are a few different ways to deal with this problem. One solution is to pay a subscription, say based off of square foot of the residence, and have access to as much electricity as you need. A model presented by Hung-po Chao is to subscribe for an amount of electricity and settle the difference in real time. If the household exceeded the subscription for the time of day, you would pay a premium for the extra electricity and if you use less than the subscription, you might receive some reward or credit.
Why is this shift significant in the energy industry? It shows there is a mindset change occurring, and it’s a big one. It signifies that people are thinking about renewables dominating the industry, and the shift is resulting because subscription models are better suited for renewable sources of electricity. Dirty sources, like natural gas and coal, require inputs to produce energy, they need something to burn. Paying based on use is essentially paying for how much gas or coal it took to power your home. With renewables, once you construct the solar panel there are no additional inputs. The sun is free. You are not paying for the amount of sun it takes to power your home, but subscribing to the use of the solar panels.
At Neighborhood Sun, we are taking some of the first steps toward a subscription economy for clean electricity. In our model, you subscribe to a block of potential solar energy supply, pay a monthly subscription fee, and are entitled to the electricity produced by your solar block. The amount produced by your block of solar capacity is then credited to your account and you only need to pay your utility for the difference between your use and what your block generated. This is a different model than how community solar has typically functioned in other states.
In Minnesota, for example, participants purchase their own panels to be installed at the community array. This requires a large upfront cost and means participants are committed to the life span of the panels. Most Minnesota companies charge over $1,000 per panel and participants are restricted to the 20-year lifespan of the panels. Shorter contracts, such as the subscription service Neighborhood Sun will offer, allows community members to join for shorter spans of time. This enables non-permanent community members such as people who rent or know they are only in the area for a few years to participate in community solar.
Neighborhood Sun is working to achieve a future powered by the sun while using a new way of doing business to get there. The renewable revolution deserves a business model that suits it instead of adapting a previous model that is ill fitted for this purpose. If you are interested in becoming a potential subscriber and taking a step toward a sunnier future, sign up here.