Xcel will offer an opportunity to invest in a community solar project, but two energy developers say the utility isn’t paying enough for the power.
Xcel Energy said Monday that it intends to double the amount of solar power on its Minnesota system by giving customers the option of purchasing part of a central solar-generating array — a concept known as a solar garden.
The Minneapolis-based utility, which already offers this option in Colorado, filed plans with state regulators for a Minnesota solar garden program. Such projects, also known as community solar, are authorized under a 2013 state law mandating that large utilities get 1.5 percent of their power from the sun by 2020.
“This is going to provide broader opportunities for customers who want to participate in solar,” Deb Sundin, who directs Xcel’s renewable strategy, said in an interview.
She estimated that only 20 to 25 percent of customers’ residences are suitable for solar. Many properties have too much shade, for example, and many customers are renters. “This program allows for the garden to be built in a really good place for solar,” Sundin added
Xcel would first select energy developers to undertake the projects, then customers would sign up with a developer to purchase a share of an array, with the power output credited to their bills. Sundin estimated that applications will probably begin in the second quarter of 2014 after the state Public Utilities Commission approves the plan.
The first solar garden in Minnesota went online last month in Rockford, Minn. The 40-kilowatt system was developed by Colorado-based Clean Energy Collective for the Wright Hennepin Cooperative Electric Association, which says 25 customers signed up to buy a share.
But Xcel envisions considerably larger solar projects, up to 1 megawatt. For the large solar gardens, the utility proposes to credit bills at retail electric rates — 10 cents per kilowatt hour for residential solar customers and 6 cents per kilowatt hour for commercial solar customers.
Doubts about credits
Two solar energy developers said they don’t think they could finance projects at those reimbursement levels, which are several cents lower than what some Colorado projects are getting from utilities, including Xcel.
“You don’t want to build bankrupt projects,” said David Amster-Olszewski, CEO of SunShare, a Colorado Springs-based energy developer that is creating 12 solar gardens.
“There is no way you can make it work at 10 cents,” added Ken Bradley, CEO of MN Community Solar, based in Minneapolis. That company has proposed a small solar garden on Lake Street, and wants to build larger projects on commercial buildings elsewhere in the Twin Cities.
Large solar projects are not eligible for the Xcel Solar Rewards or a separate incentive for made-in-Minnesota solar panels. They are eligible for federal tax credits.
Thomas Sweeney, chief operating officer for Clean Energy Collective, said the company will look closely at the details of the Minnesota program. Besides the Wright-Hennepin project, the company is developing 11 solar gardens in Colorado.
Minnesota’s solar rates will be set by the PUC, where energy developers can make their case that Xcel’s proposed payments are too low.
In Colorado, when Xcel opened applications for solar gardens, developers took just one day to sign up for rights to build all of the capacity. In Minnesota, Xcel said it will seek up to 2.5 megawatts of solar garden projects per quarter during the next two years, for a total of up to 20 megawatts. The utility now has 14 megawatts of solar power on its system in Minnesota.
Under Minnesota’s solar law, Xcel estimates it must have about 300 megawatts of solar on its system by 2020. That’s roughly the output of a medium-sized power plant. Currently, the largest solar generator in Minnesota is a 2-megawatt system in Slayton.
Solar gardens are not expected to supply all of the state-mandated solar power. Laura McCarten, a regional vice president for Xcel, said the utility also will need to add utility-scale projects like the one in Slayton. She said plans for such projects will be submitted later to regulators.
In a separate announcement Monday, Slumberland Furniture, based in Little Canada, said it is putting solar panels atop eight stores and two offices in the Twin Cities.