Xcel's plan to drop Solar Rewards draws heat

  • Article by: DAVID SHAFFER , Star Tribune
  • Updated: July 20, 2012 - 9:05 PM

The Xcel Energy program offers rebates for solar arrays, but the utility wants it gone after 2013.

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Solar panels atop the Minneapolis Convention Center, part of the city’s efforts to expand solar power.

Photo: Richard Sennott, Star Tribune file

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Solar energy supporters from across Minnesota have turned up the heat on Xcel Energy Inc. over a plan to drop its rebate program for rooftop arrays.

Xcel's Solar Rewards program helped put solar-power arrays on 560 homes and businesses in the state since 2010. But the Minneapolis-based utility proposed in June to eliminate it after 2013 and spend the current $5 million in annual subsidies on energy conservation efforts instead.

As the Minnesota Commerce Department weighs whether to approve Xcel's plans, dozens of letters have poured into the agency, urging it to retain Solar Rewards, which is funded by Xcel ratepayers.

Xcel's plan to drop the program is opposed by two state economic development agencies, seven Iron Range legislators, city leaders in Minneapolis and St. Paul, solar manufacturers, engineers, electricians and various other solar industry and clean-technology advocates.

"Manufacturers and installers have invested and created jobs in Minnesota based on their trust that the state would continue to support these initiatives until the industries become well established," wrote Tony Sertich, commissioner of the Iron Range Resources and Rehabilitation Board, an economic development agency that loaned $3.6 million to solar panel maker Silicon Energy to build a plant in Mountain Iron, Minn.

State Economic Development Commissioner Mark Phillips, whose agency loaned an additional $1.5 million to Silicon Energy, also opposed Xcel's plan. The Iron Range legislative delegation, in a joint letter, said dropping the program puts the government loans "at substantial risk and sends a chilling message" to the solar industry.

Similarly, Minneapolis City Coordinator Paul Aasen said ending the rewards would "hobble" the city's efforts to expand solar power and threaten "to undermine the success of the recent past."

Xcel has proposed to scale back the rewards program in 2013, and drop it entirely after that. The solar subsidy has been part of Xcel's Conservation Improvement Program, a broader effort to help customers install efficient lighting and other energy-saving technology.

For the next three years, Xcel proposed boosting its energy-conservation spending by 9 percent, to $260 million, while eliminating Solar Rewards. The current solar subsidy is $2.25 per watt of installed power. Xcel officials say that while the cost of solar power has dropped significantly, it remains more expensive than other kinds of generation.

"In an economy where our customers' demand for energy is not growing, we feel it is not appropriate to add more of this expensive energy resource," Lee Gabler, Xcel's director of demand side management and renewable operations, said Friday in an e-mail. "Increased costs, including new infrastructure, are placing upward pressure on our customers' bills, so it's appropriate to control customer costs by ending a program that doesn't provide sufficient value."

Another state-mandated solar subsidy funded by Xcel ratepayers remains in place, but applies only to Minnesota-made solar panels. Federal tax credits for solar also remain available.

Lynn Hinkle, director of policy development for the Minnesota Solar Energy Industries Association, said he was gratified by the support for solar power. "People are excited about the economic development potential of solar," he said.

Hinkle said the solar industry wants to discuss with Xcel ideas for linking solar power and energy conservation, and ways that electric rates could recognize the benefits of "distributed" generation, like solar, which rarely requires new transmission lines because the power gets used where it's produced.

Xcel's Gabler said the company is working on a strategy related to distributed solar generation.

Commerce Commissioner Mike Rothman, whose department will decide whether to approve Xcel's plan, said in a statement that the agency will "issue a proposed decision in August, which will be open for further comment by Xcel and all interested parties." A final decision will likely be made by early October, he said.

David Shaffer • 612-673-7090

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