Community solar projects are typically built on the ground and Clean Energy sells stakes to individuals who use the power to offset their monthly utility bills. Less than a quarter of U.S. households are suitable for rooftop solar, and the community model offers them a way to invest in renewable energy, First Solar Chief Executive Officer Jim Hughes said.

“I believe community solar will be bigger than rooftop,” Hughes said in an interview, without saying when that could happen. “It’s better for the utility and costs less to build.”

Many homes aren’t well-suited for solar power, said Hannah Masterjohn, director of new markets at Vote Solar, an industry group. Their roofs may face the wrong direction, or may be shaded by trees, or the owners may not be willing or able to take on the effort.

“The potential market size for rooftop maxes-out at 20 percent,” said Hannah Masterjohn, director of new markets at Vote Solar, an industry group. “We’re seeing a lot of forward- looking utilities embrace it. I expect most of the major utilities to get involved in shared solar within a couple years.”

Clean Energy, based in Carbondale, Colorado, sells solar panels in its projects for about $800 to $1,100 each, depending on the project, said CEO Paul Spencer. The investment pays off in eight to 12 years, he said. Utilities agree in advance to the price they’ll pay for the electricity, typically about 9 cents to 11 cents a kilowatt-hour.

Copyright 2014 Bloomberg

Lead image: Solar panels via Shutterstock