Why Xcel Objects To The Latest Solar Plan
SolarCity, a San Mateo-based solar energy provider, is teaming up with Minnetonka-based solar developer Sunrise Energy Ventures to construct a $200 million community solar program that, when completed, is expected to the largest in the nation.
Approximately 100 distinct solar installations, or “gardens,” will be constructed in the Twin Cities area, aimed to service apartment renters, schools, municipalities and other current Xcel Energy customers. Although SolarCity states they will begin offering Community Solar subscription plans at the end of 2015, construction in Minnesota isn’t slated to start until early 2016.
These solar gardens could be a steal for potential residential and business customers who would likely see their electric bills drop as much as 15 percent, in part because of a rebate offered by Xcel Energy. But Xcel says that could push rate hikes to non-solar customers.
Minnesota utilities customers who don’t subscribe to the solar garden service could see their own bills go up for not taking part in the service. Xcel estimates an annual $80 million cost could be divided onto their non-subscribing customers, or about $2 billion over the life of the solar gardens. Part of what Xcel is trying to advocate is the need for developers to better market the solar garden programs to all of their customers.
Aakash Chandarana, regional vice president of rates and regulatory affairs for Xcel, says customers who do not utilize Community Solar Gardens program would effectively subsidize those who enroll in the program, in part because solar garden developers can negotiate their own energy prices and are building closer to energy-company scale rather than small projects.
“When the [Public Utilities Commission] established the price for community solar gardens, they did so thinking the projects getting built would be small in nature to meet the needs of a community,” he said. “Instead, the types of projects we are seeing are close to utility scale, so it’s unfair for the customer to pay the offset.”
For businesses like Xcel, the problem comes from these individuals’ ability to access the grid without charge. Subsequently, higher rates are handed off to the customers uninvolved in these renewable energy contracts. Under current solar garden legislation, an average resident without a solar subscription could see somewhere between a 2 to 2.5 percent increase in his or her residential bill. Small businesses could experience a near 3 percent bump, Chandarana said.
Even if an Xcel customer decides to unsubscribe from SolarCity’s Community Solar Garden program, Xcel ultimately foots the compensation for their involvement.
Company officials at Xcel and solar industry executives met Tuesday to negotiate an agreement before the state Public Utilities Commission steps in next week.
“The State of Minnesota and its Public Utilities Commission have made a significant contribution to the proliferation of solar power by passing solar garden legislation,” said Jesse Jones, vice president of development and acquisitions for SolarCity. Jones was speaking in reference to a 2013 law requiring Minnesota’s public utilities to generate 1.5 percent of their electricity sales from solar energy by 2020.
“We have been the number-one wind power provider for 11 years,” said Chandarana. “So for us, there is a sophisticated and right way to do renewable technologies.”
In the case of Sunrise Energy Ventures and SolarCity—with their upcoming Community Solar Garden project—the compaction of solar gardens has been the hottest point of debate between them and Xcel.
“Each solar garden can only be 1 megawatt [or 1 million watts] in size to limit the number of subscribers. Right now the legislation has no cap on co-location, but Xcel wants to set a cap,” said CEO of Sunrise Energy Ventures, Dean Leischow. “So if I put 100 gardens on 1 property or 100 properties, it makes no difference to anybody but Xcel. By putting a cap on it, that makes it harder for developers.”
Residential solar has typically been mounted on home rooftops, whereas most solar gardens are placed on the ground. Sold or leased farmland often becomes the home to large solar garden clusters, and sites in Wright and Sherburne counties are expected to host the bulk of the Community Solar Garden installations.
“It covers Xcel’s entire territory inside of Minnesota, and so the subscribers have to be within the county or a neighboring county to sign up,” said Dean Leischow, CEO of Sunrise Energy Ventures. “But almost all areas of Minnesota have or will have an available garden, so this is really the first program for anyone and everyone to participate in.”
With the solar gardens soaking up the sun, SolarCity will then invite interested subscribers to sign a yearlong commitment to purchase solar power at a rate of 13 cents per kWh. Subscribers will remain Xcel Energy customers, however the Minneapolis-based power provider has agreed to credit those who sign up. At the same time, Xcel is attempting to structuralize the placement of solar gardens along with its savings program. According to SolarCity, making the switch could cut one’s bills by roughly 11.5 percent.
SolarCity already serves 18 states with over 217,000 customers. It will own and operate the solar gardens, opening doors to as many as 600,000 apartment dwellers in Minnesota, who are solar provider’s focus, to join their customer tally.
SolarCity said it “expects to hire local installation and operations personnel to build the projects.” Kady Cooper, spokesperson for SolarCity, said they “will open a facility in the area and hire local installers, solar technicians and O&M staff. We do not have a number of employees to release at this time, but these are full-time roles with SolarCity.”
Leischow clarified that “[the hiring process] of the project is up to SolarCity. They hire roughly 500 people per month, though, which is extraordinarily fast.”
A breakdown of Xcel’s solar gardens program, which already reports 781 garden operator applications, is available on their website.