Xcel must retain solar subsidy

Minnesota regulators on Monday ordered Xcel Energy to retain a popular program that subsidizes the small-scale solar-power projects of its customers.

State Commerce Commissioner Mike Rothman decided that the Minneapolis-based utility must fund the Solar Rewards program at the current $5 million-a-year level for the next three years.

The state's small-but-growing solar industry, especially installers, had feared a drop in orders if the program ended. So far, it has helped 560 homeowners and businesses afford solar panel systems since 2010.

Xcel wanted to drop Solar Rewards from its broader conservation program after 2013, saying it was not a good deal for the ratepayers, who foot the bill. The utility also argued that solar generation doesn't belong in a conservation program that aims to reduce electricity use by 1.5 percent each year.

Rothman on Monday approved Xcel's $260 million in proposed spending on conservation through 2015, but exercised his authority to reject Xcel's wishes on the solar incentives.

"In the nearly three years that Xcel has administered Solar Rewards, significant progress has been made in building an infrastructure to support a solar industry in Minnesota," Rothman said in a statement. "Jobs have been created, financial investments have been made, and a new industry is gaining traction in Minnesota's economy."

The Commerce Department already is working with Xcel on replacing Solar Rewards after 2015. Xcel said it appreciated the "thorough and thoughtful process," which prompted dozens of people to write letters of support for Solar Rewards.

Rothman's decision closely follows the recommendation of the Commerce Department's energy resources division in August. One recommendation that he accepted is to reduce the amount of subsidy per project from $2.25 per kilowatt to $1.50 per kilowatt.

Lynn Hinkle, director of policy development for the Minnesota Solar Energy Industries Association, said the trade group had unanimously supported Solar Rewards at the lower subsidy.

"It is a significant boost to our installers and contractors to have a budget for 2014 and 2015," Hinkle said.

He said the state's solar industry includes about 100 companies. He said about 35 companies are manufacturers, some of them established in other industries, that now produce glass for solar panels, ovens for solar cell production, solar-related electronics and sensors as well as sheet-metal enclosures for solar components.