An idea being considered in Colorado that would allow for the establishment of ‘community solar gardens‘ — solar arrays owned by a group of investors who cannot benefit from a rooftop solar installation — has now caught the eye of U.S. Senator from Colorado, Mark Udall. Udall yesterday announced a bill that would extend the tax credit available to homeowners who put solar panels on their roofs, to those homeowners who collectively own small solar arrays located somewhere other than their own property.

The Solar Uniting Neighborhoods (SUN) Act of 2010 updates the tax code regarding solar energy, giving investors of community solar projects a 30 percent tax credit just like individuals who install PV cells on their houses.

“By eliminating the requirement that the solar panel be on one individual’s property, it frees Americans to work together on community projects where each individual can claim a tax credit on part of a shared project,” said Udall on a conference call with reporters.

The concept behind the SUN Act is that it would open up solar ownership to people who would like to invest in solar, but because they live in an apartment, have a poor solar resource, or simply cannot afford the substantial up-front investment, have not.

“By grouping these solar panels, you can reduce the cost by 30 percent compared to installing a panel or a set of panels on every roof in the neighborhood,” Udall added.

The big difference between the Community Solar Gardens bill introduced in Colorado and the one Udall announced yesterday, however, has to do with who can take advantage of the tax benefit: the Colorado bill covers not only homeowners but also renters.

The way the Colorado bill is worded, anyone may take advantage of the law who is a customer of a qualifying retail utility and who has “identified one or more physical locations located in the same county or municipality as the Community Solar Garden.” The Colorado bill also allows subscribers to change the premises to which a subscription is attributed, and also to sell them to other qualifying subscribers, should the subscriber move out of the state or country.

The tax credits would be available for the next next five years at a cost of about $117 million. Udall says his measure will likely be included in an energy and climate package, or as part of a larger tax bill.

Reprinted with permission from Cleantechnica