Xcel ratepayers underwrite major solar push in Minnesota

Solar power is getting another big boost in Minnesota.

State utility regulators have approved $42 million in Xcel Energy Inc. grants for renewable energy generation and research projects. The largest share of the money, 42 percent, is slated for 16 solar-electric generating projects across the state.

The grants will subsidize a solar array atop Target's St. Paul Midway store — the first for Target in Minnesota. Project grants also were approved for the new St. Paul Saints stadium, Edison High School, a wastewater treatment plant in Shakopee and several Minneapolis city parks.

Five project are planned in St. Paul, the biggest ­winner. Other projects that won grants are in Collegeville, Coon Rapids, Dodge Center, Hutchinson and Mankato. More than half were to nonprofits or municipal units.

"There is going to be a lot more solar for sure," said Laura Burrington, managing director of the Minnesota Renewable Energy Society, a membership organization that was awarded $2.6 million to build two community solar projects. "There are some ­exciting projects in there."

The awards, approved Thursday by the Minnesota Public Utilities Commission, come less than a month after a state administrative judge endorsed a separate $250 million project by Edina-based Geronimo Energy to build about 20 other large solar arrays across the state. That project awaits final regulatory approval, and faces opposition that could derail it.

Xcel, the state's largest ­utility with 1.2 million electric customers, recommended the grant winners, which also include two power-generating projects to be fueled by waste-derived biogas, a small-scale wind farm in central Minnesota and research grants to the University of Minnesota.

The grants are funded by Xcel ratepayers under a ­program mandated by a state law enacted 20 years ago to ­settle a controversy over nuclear waste storage. For each cask of spent fuel rods Xcel stores at its two Minnesota nuclear plants, it must contribute money annually to a Renewable Development Fund (RDF). This year, the payments add up to about $26 million.

No other state has a ­comparable program. "It was pretty innovative 20 years ago, and it is pretty innovative now," said Linda Taylor, a former state energy official who served on an advisory group for the grant program.

Paul Lehman, who manages the program for Xcel, said this round of grants represents the fund's biggest outlay ever. There have been three earlier grant cycles since 2002. The RDF also funds other solar incentives, including a subsidy for panels made in Minnesota.

Xcel still must negotiate final project details with RDF grant winners, and it could be several years before projects are completed. In past grant awards, there typically have been one or two projects that didn't get off the ground.

"Solar is the hot technology that people are interested in," Lehman said of the tilt toward solar photovoltaic projects in this round of grants.

If all the generating projects are built, it would represent $64 million in investment, with the 20 grants covering about 43 percent of the projected costs. Altogether, about 13 megawatts of electrical output would be added to Xcel's system, including three solar arrays of about 1 megawatt each. That's the size of the project atop the Ikea store in Bloomington.

"It is a great opportunity for us," said Joel Cannon, CEO of TenKsolar, a Bloomington solar panel maker whose technology would be used on six of the grant-winning projects.

Cannon said TenKsolar has sold out its production capacity in the first quarter, and is expanding operations. He said the company workforce, now more than 80 employees, should exceed 100 by midyear.

Target said it has more than 25 solar arrays atop stores in other states, and installed its first system in California in 2003. Among U.S. retailers, Wal-Mart is the leader, with more than 200 solar arrays.

Not every Minnesota applicant got grant money, and some energy developers complained that their projects deserved to be on the winners' list. Xcel's Lehman also said the company is still negotiating with the U over royalties for inventions that might emerge from grant-funded research.

"It is paramount to be fair to the ratepayer," said utility Commissioner Betsy Wergin, who urged Xcel to insist on royalties. "They are putting a lot of money into these projects and they deserve to get some of that back out."

The solar grants underscore one of the technology's chief criticisms — despite lower costs, solar still relies on subsidies to compete. Lynn Hinkle, policy director for the Minnesota Solar Energy Industries Association, said he recognizes that is a concern, but sees a shift coming. "We see this as a transition to where you will see a tapering off to no incentives and ­market-driven solar."

David Shaffer • 612-673-7090