Xcel Energy Inc. on Tuesday launched a bidding war among renewable energy companies to propose large-scale solar power projects to help the utility comply with Minnesota’s mandate for increased electricity from the sun.
Xcel said it plans to add 100 megawatts of solar power, about seven times more than the state’s current capacity from about 730 smaller, mostly rooftop arrays. Large solar projects, often called utility scale, usually are built on the ground, each covering an area the size of several football fields.
Under a 2013 state energy law, Xcel and two other Minnesota investor-owned utilities must get 1.5 percent of their power from solar by 2020.
One developer said he wouldn’t be surprised if Xcel gets pitched 100 projects from companies around the country in response to its request for proposals (RFP). Developers must offer projects that have a combined capacity of 5 megawatts or more, the request said.
“There are not a lot of big RFPs coming out,” said Dean Leischow, managing director of Sunrise Energy Ventures, a Minnetonka-based solar developer that has built large-scale projects in other states. “When there is one, and it’s a utility that’s good to work with like Xcel in an area where there is plenty of land available, it’s pretty attractive.”
Sunrise Energy is one of at least three Minnesota-based developers known to be interested in the competition. Others include Ecos Energy of Minneapolis, which built the state’s largest solar array last year in Slayton, and Geronimo Energy of Edina, which separately has won regulatory approval to build 20 solar parks in Xcel’s Minnesota territory.
Xcel’s solar additions announced Tuesday would be on top of the 100 megawatts that Geronimo plans to build for the utility. Xcel estimated that 100 megawatts of solar would generate power equivalent to the annual needs of about 20,000 homes.
“We would be delighted to build another project in our home state,” said Brad Wilson, a project developer at Ecos Energy, whose separate 20-site Go Solar project proposed in Minnesota has been on hold after being turned down for an Xcel renewable energy grant in January.
Seeking tax credit
Xcel wants the new projects built by the end of 2016, when a 30 percent federal investment tax credit for solar projects expires. Xcel set a tight deadline for submitting and reviewing proposals, with the goal of presenting solar deals to state regulators for approval this fall.
Leischow of Sunrise Energy said his company developed three large solar arrays for Indianapolis Power & Light in its home state. He said the projects, which went on line last year, came in at 9.9 cents per kilowatt hour. That’s about 2 cents less than Xcel’s residential electricity retail price in Minnesota.
Dave Sparby, CEO of Xcel’s Minnesota regional operations, said Xcel is “committed to providing solar power to customers in the most reliable, cost-effective way possible.” In Xcel’s recent solar deals in its Colorado service region, the utility has said the solar pricing was lower than that of power generated by natural gas.
Xcel said that at the end of 2013, it had 87 megawatts of large-scale solar in Colorado, and plans to add 170 megawatts there over two years. It has 50 megawatts in its Texas-New Mexico region, and Leischow said Sunrise Energy built 50 solar projects for the utility in New Mexico.
The Minneapolis-based utility has 12 megawatts of solar capacity overall for its 1.2 million Minnesota customers. Xcel has said it expects utility-scale projects to supply about two-thirds of the 1.5 percent Minnesota solar mandate, estimated at 270 to 300 megawatts. That is equivalent to the output of a moderate-sized power plant.
Xcel said it wants to purchase the power through long-term deals, with an Xcel affiliate possibly a partner. Xcel also reserved the right to purchase less than 100 megawatts in this round, and told developers to scale their projects with that in mind.