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Delaware’s Community Solar Policy Guide for Asset Owners & Developers

Everything you need to know about Delaware’s current community solar legislation, eligibility rules, crediting mechanism and other important market details, created by Perch’s internal policy team. We help asset owners navigate the growth of community solar in markets across the country, and as new laws are considered and passed, Perch will provide updates and perspective on how it impacts your business.

4 min read • Last updated: Sep 24, 2024

Topics covered

Delaware’s Community Solar Program
Project Specifications & Low-Income Requirements
Project Selection Criteria
Credit Mechanism & Incentives
Market Analysis
Appendix

If you're a Delaware resident or business owner looking to save money with community solar, visit our "Community solar in Delaware" page.

1. Delaware’s Community Solar Program

Delaware’s community solar legislation has been on the books since 2010 but has remained stagnant with less than 10 megawatts (MW) installed. However, in 2021, the state set a new Renewable Portfolio Standard of 40% by 2035, with a 10% carveout for photovoltaic solar. Later that year, SB 2 was signed into law doubling the maximum project size and mandating a modest low-income (LI) customer carveout, amongst other changes to make the program more attractive to investment.

A notable difference for Delaware’s community solar program is the conspicuous lack of program length. Where most states have a program length of two decades or so, Delaware projects will earn credits for as long as it remains in compliance with regulations, is subscribed to, and the statute permitting community solar facilities remains in effect.

The updated program officially opened in April of 2022 and saw 60 projects submissions accounting for about 250 MW. The program functions on a “first come, first serve” basis and has no capacity cap, which in part has led to a significant interconnection queue. While a queue remains, community solar farms, or community energy facilities (CEF) as they are called in Delaware may still apply to the program on a rolling basis.

The process of approving CEFs for interconnection has also slowed in no small part due to necessary cluster studies. The Independent System Operator (ISO) PJM, has the largest backlog of interconnection requests of any ISO in the country, further complicating the timeline for CEFs to enter operation.

Despite the interconnection issues, Delaware’s dense population and relatively simple program structure makes the state an attractive market for community solar. (Learn more about Delaware's full-scope renewable energy initiatives here).

2. Project Specifications & Low-Income Requirements

Project Specifications

Maximum capacity of 4 MW
40% of total capacity must be for subscriptions 200 kW or less
60% of total capacity may be used for subscriptions larger than 200 kW
Projects must be installed within the Delmarva service territory
Subscriptions are portable within Delmarva service territory
A customer may not receive credit for more than 110% of their expected aggregate electrical consumption calculated as an average of the past 24 months of electrical usage
Customers may have multiple subscriptions as long as those subscriptions do not surpass 110% of their expected aggregate electrical consumption

LI Requirements and Verification Rules

Each project must assign at least 15% of its subscriptions to LI customers, this is based on the total number of customers, not the project’s capacity. LI eligibility is defined as a household with a gross annual income below 200% of federal poverty guidelines or 60% of the state median household income, whichever is greater.

LI status can be determined by:

Proof of income
Participation in Medicaid, SSI, TANG, WIC, LIHEAP, SNAP
Residence in in a LI census block
Written attestation of LI status
For owners or operators of master-metered buildings, a written attestation that their tenants meet the income eligibility requirements for LI Customers

Every 3 years, the CEFs must certify to the Public Service Commission in writing that they meet the LI eligibility criteria provided.

3. Project Selection Criteria

Community solar projects in Delaware are accepted on a “first come, first serve” basis. When Delmarva started accepting applications In November 2021, over 60 applications were submitted totaling about 250 MWs. Projects may still apply to participate in the program as there is no capacity cap, but there is a queue of projects meeting program requirements awaiting connection.

Delaware’s Public Service Commission requires that a CEF owner apply and obtain a Certificate to Operate from the Commission, with an application fee of $750. To obtain a Certificate to Operate, a CEF must provide:

A completed interconnection study, or signed interconnection agreement from the utility
Proof of site control
Evidence that it possesses the financial, operational, and managerial capacity to comply with all state and federal regulations

The PSC has a dedicated Community Energy Facility page for instructions on how to register before obtaining a Certificate to Operate. For an estimated timeframe and overview of the interconnection process, refer to slide 3 from this presentation.

4. Credit Mechanism & Incentives

Credit Mechanism and Incentives

Community solar credits are valued at the sum of the volumetric distribution service charges and supply service charges for both residential and nonresidential customers according to each participating customer account’s rate schedule.

Aside from the substantial tax credits made available in the Inflation Reduction Act, Delaware has few incentives for solar. Delaware does have an open Solar Renewable Energy Credit (SREC) market through which Delmarva Power and Light (DPL) achieves progress towards the state’s RPS. The Annual SREC Procurement Program, operated by Delaware’s Sustainable Energy Utility (DESEU) provides 20-year contracts to SREC sellers on a competitive basis. Procurements occur in three tiers, though one (Alpha tier) is for customer-owned systems only.

Tier	Nameplate Rating	SREC Price for 2022
Beta	350 kW to 2MW	$26.89
Gamma	2MW to 5MW	High of $44.94 and a low of $20.00

Additional bonus multipliers exist for SRECs generated by CEFs:

An additional 10% credit for solar installations that use at least 50% equipment or components manufactured in Delaware
An additional 10% credit for solar facilities installed with at least 75% of in-state workforce

Other credit considerations:

SRECs have a lifetime of 3 years
CEFs own all SRECs unless it relinquishes ownership by contractual agreement with a third party or its customers
Billing credits apply against the full amount due on a customer's bill
Any unsubscribed energy at 10% or less will be compensated at the average annual locational marginal price of energy in the DPL zone based on the prior calendar year
Unsubscribed energy that is greater than 10% of the CEF will not be compensated for by DPL
Excess credits shall be credited to subsequent billing periods to offset the customers’ charges and are displayed as a negative "balance forward" on a customer's monthly utility bill

5. Market Analysis

Delaware is home to about 1 million people across three counties making it one of the least populated states in the country, but also one of the most densely populated. There is only one major investor-owned utility in the state, DPL. The other utility, Delaware Electric Cooperative, services about 100,000 customers in the mostly rural parts of the state and does not participate in the state’s community solar program.

Delmarva Power and Light (DPL)–324,000 customers

Serves the densely populated areas of the state including its largest city, Wilmington, and the capital city, Dover
It has pockets of coverage mostly along transportation corridors in the southern two-thirds of the state

Delaware has a relatively small LI population, naturally, as one of the smallest states by population size and geography. This is partially reflected in the relatively low (compared to other states’ community solar programs) LI requirement in SB 2. Considering the expanded Investment Tax Credit’s (ITC) 50% low- to moderate-income (LMI) requirement, competition for both low-income and moderate-income customers is likely to be fierce.