Utility regulators planted the seeds Thursday to sprout community solar gardens across the service territory of Minnesota’s largest electric utility.
At least a dozen renewable energy companies are gearing up to develop solar gardens for Xcel Energy customers. Under rules that won preliminary approval from the state Public Utilities Commission, the companies soon can begin promoting clean energy under a business model that has been popular in Colorado and other states.
Solar gardens are large, centralized solar-electric arrays whose output is shared by people who invest in each project and receive a credit on their power bills. The concept can appeal to renters, people who own homes that are too shady or residents of condominiums that don’t allow solar panels.
“It is a great day for Minnesota and a move toward more sustainability,” said Marty Morud, president of TruNorth Solar, a Minneapolis company that plans to develop solar gardens.
Under the rules, solar gardens would sell power to Xcel under agreements lasting 25 years. Customers who buy a stake in a solar garden would be able to sell it to another Xcel customer if, for example, the original investor moves out of the Minneapolis-based utility’s service area. Xcel serves 1.2 million electric customers in Minnesota.
One solar garden atop a Lake Street commercial building already has sold out its subscriptions. Other developers have been waiting for the commission to approve the rules before marketing their projects.
Lynn Hinkle, policy director of the Minnesota Solar Energy Industries Association, said he has heard of companies planning to build large solar arrays using the solar garden business model. He said up to 100 megawatts of electrical output potentially could be developed in Minnesota using the concept. That’s roughly the size of a small power plant.
Regulators decided that Xcel must pay retail rates for power purchased from solar garden subscribers. The residential rate could be as high as 15 cents per kilowatt hour if renewable energy credits also are sold to Xcel. The solar industry had sought even higher rates.
Regulators also approved protections for consumers who invest in solar gardens to assure the costs, projected output, penalties and other matters are disclosed.
Even after the rules get final approval, likely next week, Xcel still expects it will take several months to set up billing and other procedures to tie solar gardens into the utility’s system.
Morud said his solar company has a project in the planning stage, but hasn’t started marketing it yet because the financial terms hinged on what the PUC decided. He and other developers hope to launch solar gardens during the 2014 construction season.
The commission was required to establish solar garden regulations under a 2013 state law that also requires investor-owned utilities to get 1.5 percent of their power from the sun by 2020. The solar garden rules only apply to Xcel, which already allows such projects in its Colorado service territory.
Other Minnesota utilities have been interested in the concept, including Wright-Hennepin Cooperative Electric Association, which built the state’s first solar garden last year next to its headquarters in Rockford.
Xcel wanted to put an initial limit on how many projects could be proposed each quarter. In Colorado, such limits have meant that solar garden opportunities became highly competitive and were snapped up immediately. But Minnesota regulators rejected such a cap.