The city of Cologne on the western edge of the Twin Cities area on Thursday signed a deal that would make it the first local government in the state to entirely offset its municipal electricity with solar power.

The city of 1,500 people in Carver County will go all solar by subscribing to a community solar garden planned by energy developer SunShare at the nearby Bongards cheese plant, which also would be solar subscriber.

Under the deal, the city’s share of the solar garden — the output of about 2,700 panels — will generate during sunny times more power than the city needs for its City Hall, water pumps and other uses. The extra solar power goes on the grid, offsetting electricity the city draws at other times from Xcel Energy Inc., which remains the city’s power supplier.

Cologne, which expects to save $1.1 million on the deal over 25 years, is one of many local governments interested in Xcel’s Solar Rewards Community program. It allows any customer to subscribe to centralized solar projects, or “gardens,” whose output is sold at solar-friendly rates to Xcel, offsetting all or part of the customer’s monthly bills.

More than a dozen Minnesota cities, including St. Paul and Minneapolis, have installed modest-sized solar projects, usually with grant money. Now, many more local governments are considering deals for far-larger solar projects as renewable energy developers offer subscriptions with no upfront costs and immediate savings.

“It definitely makes sense economically,” said Brian Millberg, Minneapolis’ energy manager, who has been studying the city’s solar options.

The city of St. Cloud and the Metropolitan Council recently solicited bids from energy companies for multiple, large solar garden projects on government properties. The Metro Council intends to solicit another round of bids, and open the door for counties and cities to participate. Those solar gardens would be built on sites chosen by developers, most likely on the urban fringe.

Jessie Dickson, city administrator for Cologne, said its City Council, which approved the project 5-0, liked the idea that solar power will be generated nearby. SunShare hopes to complete that and other solar gardens by the end of 2016 to capture an expiring 30 percent federal solar tax credit.

“It is a pretty healthy chunk of change,” Dickson said of the approximately $40,000 a year in electricity bill savings the city could spend on roads, parks or other city needs.

Cologne didn’t solicit bids for the project, unlike other local governments, which hope that pitting energy developers against each other will lead to better prices and terms. Mayor Scott Williams said bidding didn’t come up, and didn’t seem necessary. “We looked at it as an opportunity to save money,” Williams said.

The opportunity for solar-related savings already has attracted other big energy users, including Ecolab Inc., a Fortune 500 company in St. Paul, and institutions like Macalester College in St. Paul and St. Olaf College in Northfield. All three have announced deals this year to offset all of their electricity with power from other solar garden developers.

With the new program growing so popular — more than 600 solar garden applications since early December — Xcel has complained about its scope. Some solar developers propose large clusters of gardens at single sites, resembling the large-scale solar arrays that utilities build at lower cost to ratepayers. Warning that if all 600 solar gardens are built, customers’ rates could rise by 2 percent or more, Xcel has asked state regulators for limits on the program.

Several cooperative utilities in Minnesota also offer solar gardens. Only Xcel’s program, which is mandated by a 2013 state law, allows independent energy developers to build solar projects, freely market them to Xcel customers and sell the power to Xcel at regulated rates that exceed the retail price of electricity.

Despite the uncertainty over Xcel’s program, energy developers like SunShare are still signing deals with subscribers, hoping that issue will be resolved. So far Xcel has not given engineering approval for any solar garden to begin construction, however.

The idea of a city going all-solar “is something we couldn’t even have imagined talking about four or five years ago,” said Ken Bradley, a SunShare executive who negotiated the deal and lobbied for the law that made it possible.

Businesses and residents of Cologne won’t get any of the solar power, but they have the option of signing up for solar gardens themselves. Bradley said many other cities are considering similar deals.

“In the last six weeks, I have met with 25 cities,” the SunShare executive said. “I am driving all over the state.”

Some local governments may prefer that solar power be generated in their communities. In St. Paul, where a large solar array generates power from atop the RiverCentre parking ramp, the city is interested in other rooftop or ground locations, but that’s not always possible because of structural issues, lack of open space or higher cost, said Anne Hunt, the city’s environmental policy director.

Metro Council, which operates wastewater treatment plants and Metro Transit, is reviewing bids from energy developers for a mix of rooftop and ground-based solar projects. The locations include transit rooftops and land at the Empire wastewater treatment plant near Farmington. That solar project is similar to one underway at the Blue Lake plant in Shakopee.

“It is a good opportunity for government and others to make a difference,” said Jason Willett, director of finance and energy for the Metro Council environmental services.

For the next round of Metro Council’s solar garden bidding, energy developers will be asked to pitch projects for metro cities and counties that want to participate, Willett said. Minneapolis and St. Paul have not yet decided whether to participate. One drawback is that solar developers likely would choose sites on less-expensive land at the urban fringe.

“Politicians are very aware that ribbon cuttings are an important part of the political process,” said John Farrell, who researches solar policy for the nonprofit Institute for Local Self-Reliance. “It is not so meaningful when you are out in Chisago County doing the ribbon cutting for a Minneapolis solar array.”