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Community and Q&A

On site solar vs offsite solar contract

ethan_TFGStudio | Posted in Green Building Techniques on

A friend writes:

“Unless you’re off grid–not connected to the utility in any way–it is the exact same thing to put a solar system on your own roof as it is to buy from one in another location. There is literally no difference electrically, financially, environmentally. In both cases, you’re really buying Net Metering Credits to offset your utility bill. In neither case are you buying or necessarily receiving power directly from those solar panels.

A solar site performs best when the full arc of the sun throughout the day can reach the panels. A little shading here or there has a big impact. Unless you’re planning on way more tree removal than I believe you are, it will be difficult to site panels on your roof or property.

Whether you put panels on your house or buy from an offsite project, the financing is similar. You can pay outright up front for the equipment, or you can commit to purchase Credits from a third party company that is paying for, building, owning, and operating the project for a set period of time (often pretty long, like 10+ yrs, but this is changing to shorter terms as we speak). In the latter, you have no capital outlay, but you don’t save as much over time bc the guy who pays for everything needs to get paid back and make money.

The only thing I can see that might be important to you for siting panels on your land is the various building rating schemes seem to be remarkably short-sighted and ill-informed on energy generation. For instance, the Passive House people only credit on-site generation. This is remarkably stupid. Truly aggressively stupid. Again, the only way one can know that the solar energy produced from panels on one’s roof is if the site is completely off-grid (sorta closed-loop, if you will). If the ratings/designations are important for your purposes, then you will need to find a way to build solar on the site. If not, you can get literally the exact same benefit and make the exact same reduction in environmental footprint buying from a project located anywhere in the utility zone.”

Any thoughts?

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  1. Expert Member
    Dana Dorsett | | #1

    There's a factual error in some of his statements:

    " is the exact same thing to put a solar system on your own roof as it is to buy from one in another location. There is literally no difference electrically, financially, environmentally. "

    Buying power from a remote solar farm is absolutely NOT THE SAME electrically (and by extension, environmentally) as PV on your roof. With distributed PV all the power is all consumed within a very short range on the distribution grid, and never transported over any part of the transmission grid. Though the losses through the grid infrastructure from the remote PV array to a load is usually a mid to high single digit percentage of the total power out in the US (it's in double digits in some countries), the distribution losses are way less than 1% from the inverter to your home's loads, and less than 2% to any of the loads on the same transformer. ( See:
    and )

    By sourcing the power near the loads, it frees up transmission & distribution grid capacity, lowering wear & tear on the system, and limits or even eliminates the need for grid capacity upgrades on congested parts of the distribution grid. Grid maintenance and upgrading grid capacity has both cost and environmental consequences. Run a web search on the term "non wires alternatives", currently a hot topic in utility and electrical power regulation world.

    While I have plenty of issues with PassiveHouse source energy & grid accounting, I'd still be hard pressed to characterize their limiting solar credits to site-only PV as "Truly aggressively stupid". I'd agree it's is pretty strange stuff that misses the mark, and doesn't really acknowledge just how rapidly grid management & grid sources are evolving. They have a rationale, flawed perhaps, maybe even a bit stupid, but not "...aggressively stupid...". Inflexible, and often outright wrong in particular cases, sure.

    That's not to say buying renewable power over the grid under contract isn't a worthwhile endeavor (I do it myself) especially if you don't have the shading factors or capital to do your own grid-tied PV. But to claim that it's equivalent or "...exact same thing..." requires ignoring the grid infrastructure costs & impacts, and how distributed power sources offset or defer those costs. (Grid charges are on the order of half the power bill in my area.) It's not a trivial or merely academic distinction.

  2. ethan_TFGStudio | | #2

    Thanks for your input. I'm guessing that batteries also complicate my colleague's assessment?

  3. Expert Member
    Dana Dorsett | | #3

    Using the battery strictly for self-consumption, with zero export to the grid isn't as valuable to other ratepayers, but it further reduces the peak draw of the house from the grid, relieving some grid congestion. But it's not doing as much as it could if the regulations and rate structures allowed remuneration of the battery + PV owner for a broader range of grid services. Distributed batteries even without the solar can be a great asset to the utility or grid operator or the homeowner, given the right regulatory framework and rate structures.

    Peak grid capacity requirements are all about peak grid load, and a battery out on the distribution grid can time shift when the energy is delivered and when it's used, optimizing throughput without upgrading the capacity of the wires and transformers. This is going to be a VERY big deal by the mid 2020s as electric vehicle sales ramp up. An EV charger is a gia-normous load, and if every body on your block is charging at max rate all at the same time the local grid will melt down. But smart car chargers for timing when the energy is being delivered is dirt cheap, and also allows the load (be it a home battery or an EV battery) to provide ancillary services such as voltage & frequency control at a fraction of the cost of a fast ramping peaker plant, and with better locational precision to boot. That's even when it's a 1-way grid-to-battery flow. It's even more useful if the battery can be called on to source some power during steep ramps in the grid load.

    In Denmark this technology is already installed, and EV owners who allow 2-way power flows are earning about $1500/year for services provided (which is enough to pay for a decent fraction of the energy used for their driving.) Those EV owners/car chargers only allowing 1-way power flow also get paid, just not as much.

  4. GBA Editor
    Martin Holladay | | #4

    It's impossible to generalize about so-called off-site solar credits. Some utilities offer arrangements for homeowners to buy so-called solar electricity from a utility-owned PV site; others don't. The details for this type of electricity purchase depend on the offer from the utility. The offer may be comparable to the details for an on-site PV installation -- or they may be different.

    You have to evaluate every contract with a utility with open eyes. Some utilities offer excellent net-metering deals; others don't. So if you are comparing two approaches to purchasing electricity from a PV facility -- a roof-mounted PV system vs. electricity from a utility-owned PV facility -- and you are trying to determine which deal is better, the answer is, "It depends."

  5. Expert Member
    Dana Dorsett | | #5

    In many "deregulated" states the utilties aren't allowed to own more than a fraction of the generation assets, and the power they provide is primarily purchased from merchant generators. But in those states the electricity customer can usually opt buy their power through electricity brokers or sometimes directly from merchant generators. The details of the "100% renewables" purchased through brokers or merchant generators will vary, and often the generating assets will be 100s of miles from your house.

    Another option that's coming up is "community solar", where a medium to large sized solar farm leases or sells the output of a certain number of panels to the homeowner, sometimes to be net metered, other times not, depending on the state regulations. IIRC in Massachusetts community solar is directly net-metered just as if it were behind your meter, but to participated it has to be located on your side of the substation, not some remote location. These regulations differ from state to state and are evolving rapidly. But if the solar farm is co-located on the same substation feeder as your house it's getting pretty close to the same as having it on your house from an electrical point of view, but still not exactly the same as having it behind your meter, feeding same transformer used by you and your neighbors.

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