Midwest Energy News, April 28, 2015
After talks with solar developers reached an impasse, Xcel Energy announced plans Tuesday to strictly limit the size of community solar projects in Minnesota.
In a letter to the Minnesota Public Utilities Commission, the state’s largest utility said it will prohibit developers from co-locating 1 megawatt (MW) gardens together at a site.
Within the next 31 days Xcel will scale all co-located solar garden proposals with aggregated capacity of greater than 1 MW down to just 1 MW.
Different developers can co-locate gardens at the same site but they must total 1 MW or less and any attempts at large-scale community projects will be rejected, Xcel said.
“What’s driving us is we’re seeing a small number of developers really aggregating a lot of one-megawatt projects together and creating what is a utility-scale solar sized project rather than something that is more suitable for a community-based program,” said Aakash Chandarana, regional vice president of rates and regulatory affairs.
Of the 560 MW of community solar applications, around 80 percent involved co-located projects, he said. Although state statute restricts solar gardens to 1 MW or less the PUC has indicated support for co-located gardens in the past.
The problem of co-located sites
Xcel argues utility-scale community solar is too costly. Xcel pays roughly twice as much for power generated by community solar gardens as compared with typical utility-scale projects, said Laura McCarten, regional vice president.
“Those costs are paid completely by our customers,” she said, and could potentially increase ratepayers’ bills by 1 or 1.5 percent.
John Farrell, one of the architects of the community solar law and a policy expert at the Institute for Local Self-Reliance, said Xcel may have a point.
“Is the compensation price right?” he asked. “The compensation level might not be right but their solution is a hammer blow to community solar.”
Xcel chose not to use the Value of Solar, which may have potentially offered a more fair price, he said.
“I don’t understand why they are not using the solution we have provided them,” he said. “But I don’t think they have a lot of statutory basis for this argument…it’s an argument over potential revenue loss.”
Farrell adds the conversation should be whether Xcel is overpaying to community solar developers. The solution should not be reducing the program by more than 80 percent, he said.
Xcel’s move comes after announcements by solar developers that large customers such as Ecolab, Inc. and Macalester College would be offsetting their entire energy consumption through solar gardens.
The utility promised to refund money spent by developers on additional costs incurred during the submission of applications that are no longer valid under the 1 MW mandate.
Under its plan, a developer’s first eligible project could advance and other submissions at the same site would be rejected. All fees for additional co-located submissions would be refunded.
Developers have applauded Xcel’s record on solar energy in general. Chandarana pointed out the utility plans to add 2,400 MW of solar in the future, including 700 MW of distributed solar on rooftops and community gardens.
The Institute for Local Self-Reliance is a member of RE-AMP, which publishes Midwest Energy News.