MN Orders Xcel to Continue $5M/Yr. Solar Rewards Program

Xcel wanted to phase out the program, which has provided $15 million in subsidies to roughly 560 homeowners and businesses since it began in 2010, but Minnesota regulators ordered that the company continue its support of the state’s growing solar industry.

Minnesota Commerce Commissioner Mike Rothman on Monday ordered Xcel Energy, Inc., to retain its popular Solar Rewards rebate program at the current $5 million-per-year level through 2015.
Minneapolis-based Xcel wanted to phase out the program, which offers onetime rebates to customers who install solar photovoltaic systems of up to 40 kilowatts. Solar Rewards, which began in 2010, has provided $15 million in subsidies to roughly 560 homeowners and businesses. The program is funded by Xcel ratepayers as part of a larger campaign to save energy.
“In the nearly three years that Xcel has administered Solar Rewards, significant progress has been made in building an infrastructure to support a solar industry in Minnesota,” Rothman said in a prepared statement. “Jobs have been created, financial investments have been made, and a new industry is gaining traction in Minnesota’s economy. The Department of Commerce is committed to working alongside Xcel Energy to continue this momentum and to spur growth in all renewable energy sources.”

Rothman’s decision closely follows a recommendation that the Department of Commerce staff issued in August. Although the $5 million-per-year budget for the solar incentive program remains unchanged for the next three years, Rothman did agree to drop the incentive level to $1.50 per watt of solar installed from the previous $2.25 level.
The Commerce Department said Monday that it’s already working with Xcel on other solar incentive program options for the future.
Xcel said in an e-mailed statement that it is still reviewing Rothman’s order but appreciates that it resulted from a “thorough and thoughtful process.”
“We are pleased that the department and most, if not all, of the participants in this proceeding agree with us about the need to develop a more sustainable policy and regulatory framework for distributed generation in Minnesota, including solar distributed generation,” the company said. “We are eager to work with the department and other stakeholders to develop a better designed program that would serve both state energy policy goals and our customers’ interests, now and in the future.”
Xcel announced in June that it wanted to phase out the Solar Rewards program.
“We proposed to phase out the Solar Rewards program after determining it was not the most efficient or effective way to promote solar installations or to meet the state’s energy conservation goals in the current environment,” Xcel said in its Tuesday statement. “Our expectation was that by proposing changes to Solar Rewards, we could engage stakeholders in constructive discussions about the best way to move forward.”
According to the Pioneer Press, Xcel’s announcement about wanting to phase out the Solar Rewards program concerned solar energy installers and manufacturers because they feared a drop off in orders. Environmentalists who support solar energy as a clean alternative to coal-fired power generation were also reportedly alarmed.
Although solar energy provides a small percentage of the state’s power, the industry is reportedly growing quickly thanks to government and utility support and reductions in the cost of solar panels.