Xcel Energy Inc. CEO Ben Fowke said Thursday that the Minneapolis-based utility supports development of large, attractively priced solar power projects, but will keep pushing to limit more costly rooftop and subscriber-based community solar gardens.
“Xcel Energy continues to be a major advocate of solar,” Fowke told analysts on a conference call about the utility’s second-quarter profits. “We view it as important growing component of our resource mix, however we want to make sure that it’s done at the most attractive price point for our customers.”
Fowke said recent studies have confirmed that large solar development — known as utility-scale solar — “is far more cost-effective for consumers than smaller applications.” He said solar policy needs to be based on “sound economics.”
In March, Xcel won approval from Minnesota regulators to develop its first three utility-scale projects in Minnesota, the largest of which, near North Branch, Minn., will generate 100 million watts from solar panels covering an area twice the size of Lake Calhoun. Xcel has said the electricity per kilowatt-hour for those projects will range from 7.5 to 8.5 cents.
That’s more expensive than electricity from wind farms and natural gas plants, but cheaper than rooftop solar and solar gardens, whose state-mandated pricing equals or exceeds the retail price of electricity, topping out at 15 cents per kilowatt-hour. Nonsolar customers end up paying slightly higher rates to subsidize homeowner and community solar projects, though the amount is in dispute.
“While solar gardens and rooftop solar have a place in our portfolio as an option for consumers, because they require heavy, heavy subsidization of non-participants, you’ll continue to see us advocate that the primary focus be utility-scale solar so that we can keep energy costs affordable for consumers,” Fowke said.
Xcel recently won regulatory approval for a cap on the size of Minnesota solar gardens, which independent energy companies are authorized under a 2013 state law to develop at central locations. Xcel customers who don’t want or can’t have rooftop solar panels will be allowed to subscribe to solar gardens, with a promise of savings on their electric bills. No solar gardens have been built yet in Xcel’s service area, however.
Meanwhile, Xcel reported flat profits in the second quarter. Its electric and gas earnings of $197 million, or 39 cents per share for three months ending in June, compared with $195 million, or 39 cents, for the period last year. The company missed analysts estimates by 1 cent per share, but reaffirmed that it expects 2015 profits to be $2 to $2.15 per share.
One major reason for the flat profits, Xcel said, was weather conditions, which affect heating and cooling costs for customers. Another emerging trend, executives said, is that many new housing units are apartments and condos, rather than stand-alone homes. CFO Teresa Madden said such multiunit projects result in half the energy use per unit of a house, limiting the gain to the utility.
Xcel shares closed at $34.21 Thursday, up 42 cents, or 1.4 percent, for the day.
Xcel Energy serves 3.5 million electric customers and 2 million natural gas customers, and operates in Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas and Wisconsin.