Minnesota utility regulators have decided not to further limit the size of community solar gardens — at least for now.
Xcel Energy Inc., which is rolling out the customer-driven solar power program, had complained that many proposed gardens resemble giant, utility-scale solar projects, which normally would be put out for competitive bid, reducing the cost to ratepayers.
In a letter to Xcel, the Minnesota Public Utilities Commission said regulators will not address the size and cost issues "at this time." The letter, sent Tuesday, told the Minneapolis-based utility to proceed with the state-mandated program under present rules.
It's a win for the solar industry, which had expressed concern about changing the rules before the first solar garden got off the ground.
"It gives the industry certainty," said David Amster-Olszewski, CEO of SunShare, a Denver solar garden developer that has expanded into Minnesota with more than a dozen projects in the pipeline.
Aakash Chandarana, Xcel regional vice president of rates and regulatory affairs, said Xcel still is reviewing more than 500 projects proposed by renewable energy developers since December. None has been approved yet, but solar companies aim to begin constructing projects this year. Chandarana said Xcel still hopes regulators and the industry will consider the size and cost issue in the future.
The solar garden program, authorized under a 2013 state law, allows Xcel's 1.2 million electricity customers in Minnesota to invest in solar without installing panels on their properties. Customers can sign up for a share in an off-site solar array built by an energy developer, paying upfront or monthly fees for 25 years of solar output.
Solar gardens are expected to be a good deal for many customers, including businesses. St. Paul-based Ecolab Inc. has said it will invest in solar gardens to offset virtually all of its Minnesota electricity use. But Xcel has expressed concern that some solar developers are focused on big solar projects marketed primarily to businesses.
State rules cap the size of each solar garden at 1 million watts (or 1 megawatt), but developers have proposed multiple solar gardens side by side, totaling up to 100 megawatts. Each 1-megawatt solar array takes up seven or eight acres.
Solar industry officials have defended the multi-garden approach, saying it saves money. But Xcel asked regulators last week to enforce a 1-megawatt cap at each solar garden location, arguing that competitive bidding has proved to be more cost effective for big solar projects.
Daniel Wolf, executive secretary of the PUC, told Xcel that regulators will review the program in a few months. "Potential adjustments, if any, to the program will be fully evaluated at that time," he wrote.
Electricity from solar gardens is sold at a state-regulated price that exceeds retail rates. All Xcel ratepayers share that higher cost, which Xcel has said could raise electricity rates by more than 1 percent.
Amster-Olszewski of SunShare said his company has solar gardens of up to 4 megawatts in Xcel's Colorado service area, and plans projects of up to 10 megawatts in Minnesota. He said the company is marketing solar to a range of Minnesota customers, including homeowners.