By Marina Minic, CUB Solar Programs Administrator
As we hold hundreds of events across the state, consumers sometimes ask us: What’s the difference between an alternative supplier offer and a relatively new option called Community Solar? The offers can sound deceptively similar, but there are big differences–and you should know them so you can make the choice that’s right for you. Read our Q&A:
What are alternative retail electric suppliers (ARES)?
Most power bills are split up into supply, delivery and taxes and fees. Traditionally, a utility will charge you for the power you use (the supply) and the cost of delivering it to you (delivery).
Investor-owned utilities like ComEd, Ameren, and MidAmerican are not allowed to profit off of the supply section. If you are a customer of one of those companies, you are able to choose who your electric supplier is. You can either stick with ComEd/Ameren/MidAmerican, or you can go with an alternative supplier. These suppliers, called alternative retail electric suppliers (ARES), are authorized by the Illinois Commerce Commission (ICC) to offer various pricing plans. They market these offers over the phone and via mail, but also door-to-door and even at grocery stores and movie theaters.
Warning: Consumers calling about deals peddled by these suppliers–often bad deals–are one of CUB’s top complaints/inquiries. In fact, since 2015, Illinois consumers have lost more than $1 billion to alternative electricity suppliers. ComEd/Ameren’s supply price is often the lowest option because it is illegal for them to make a profit off of what they charge you for supply. Alternative suppliers, on the other hand, can charge whatever they want. If you are considering an electricity offer, make sure to ask good questions and read the fine print before signing up. To learn more about electric competition, read our fact sheets for ComEd customers and Ameren customers.
What is a green plan offered by an alternative supplier?
Sometimes, alternative suppliers offer something called a “green plan.” They claim such plans supply you with renewable energy. So, customers looking to get their electricity from renewable sources may be tempted to sign up for a green plan.
Warning: Signing up for a green plan does NOT mean renewable energy will be powering your home. In reality, these companies are purchasing renewable energy certificates (RECs) from renewable generation facilities, like solar or wind farms. There are a few potential concerns with green plans.
- Lack of transparency: Most ARES will not disclose information about the renewable generation facilities that they are purchasing RECs from. You may be told the generation type (like wind or solar), but they will often withhold information on where the facility is located, and how long ago it was built. This way, you have no way of knowing if your money is going to support a new renewable project, which is preferable, or if it is going to a facility that was built a long time ago and has already been paid off.
- High electric rates: Green plan customers often pay a relatively high rate, compared with the utility supply price. There is very little oversight of how these companies are spending your money. ARES plans are able to profit off the supply, unlike ComEd or Ameren. For more information, read our fact sheet on green plans.
Note about Municipal aggregation: Despite the cautions above, there is a form of electric competition that could be a good fit for a lot of consumers: “municipal aggregation” (also known as community power deals). Illinois law allows municipalities and counties to purchase electricity on behalf of residential and small-business utility customers living within their borders. These are called municipal aggregation deals. In theory, aggregation allows communities to use the collective bargaining power of their residents to negotiate for lower power prices from suppliers. Often these offers are green, meaning they are used to help communities reach clean energy goals. Savings aren’t guaranteed, but your community may have secured a reasonable supply rate. (Check out a list of community power deals maintained by the state of Illinois to see if your community has one.)
What is Community Solar?
Community solar is a program for people who can’t put solar panels on their own property. It allows consumers to subscribe to a portion of a large, offsite solar farm, which is located somewhere in their utility territory. A subscription to a community solar project allows you to receive credit on your electric bill for the energy produced by that project. Thanks to net metering, you will receive a credit on your electric bill that is proportional to the community solar project’s energy production. You then also pay a subscription fee back to the community solar company which goes toward funding and maintaining the project. Learn more on our Solar in the Community webpage.
Remember: Some community solar companies are better than others. Be sure to do your research before subscribing to a project. You can find CUB’s review of offers on our Solar in the Community webpage. Each offer is a bit different in terms of savings, how the company bills, what the contract term is, etc. Although these companies are currently working to enroll new customers, many consumers are experiencing serious waitlists that are ranging from 3-12 months. Also, if your community has negotiated a municipal aggregation deal, it’s possible that will save you more money right now than community solar. Get more information at SolarInTheCommunity.com.
How is community solar different from an ARES plan?
Community solar may sound a lot like an ARES green plan–and in a way they are similar. With both programs, renewable energy is NOT being routed directly to consumers’ homes. Rather, the consumers are offsetting their own carbon usage with renewable energy that’s being added somewhere else on a power grid.
But in many more ways, these two programs are different.
- All community solar projects are new projects, built in Illinois. ARES green plans, on the other hand, can buy RECs from old renewable generation facilities from outside of the state.
- With community solar, you know that you are purchasing electricity that is being sent to the same grid from which you receive electricity. Why does this matter? More renewably sourced electricity on our grid equals less electricity from fossil fuels. Community solar makes it possible to directly support the transition away from fossil fuels in Illinois. On the other hand, with an ARES green plan, there’s no guarantee that the clean energy is from our grid or even from our state.
- Community solar is designed to save consumers money, while with green plans customers often overpay.
- Community solar is more transparent than green plans. With community solar, you know exactly where your solar farm is located, you could even drive to the location to see it with your own eyes. With an ARES green plan, you may have no idea where your wind or solar farm is located.
If you are looking to offset your electricity usage with renewables, or you are looking for small savings on your bill each month, community solar is the way to go.
Community solar vs. ARES green plan–what’s the difference?