Minnesota developers want faster pace for community solar

This story has been updated to include comment from Xcel Energy.

Community solar garden developers in Minnesota are concerned with what they see as slow rate of approvals by Xcel Energy that could leave many potential subscribers on the sidelines.

David Shaffer, development director for the Minnesota Solar Energy Industries Association (MnSEIA), said six of the organization’s most active community solar developers allege 306 “tariff” violations, many of them regarding missed deadlines by Xcel.

Under an agreement forged by developers and Xcel, the utility has to approve or deny a project within a certain period of time. The utility agreed to a 90 day process that has been violated many times, he contended.

“Some developers are sympathetic while others see this as Xcel being malicious and untrustworthy and wanting to drive this program into the ground,” Shaffer said. “For us it’s hard to know what the truth is.”

Xcel, for its part, says it is working on the issue.

“We want this solar gardens program to work for everyone – it’s one of the ways Xcel Energy is driving to deliver 35% renewable energy by 2030,” said Lee Gabler, Xcel’s director of customer strategy and solutions, in an emailed statement. “Within the first week, this program grew to be many times larger than anyone ever anticipated and there’s been a learning curve for both our project managers and the solar developers.

“We’ve worked collaboratively to address issues and develop a streamlined process to complete the engineering and other analysis that’s needed to connect large solar projects to the grid safely while ensuring all of our customers continue to enjoy reliable service.”

Some of these issues will surface when the Minnesota Public Utilities Commission holds a hearing to reconsider some aspects of its rulings on community solar gardens.

Larger developers have asked the commission to consider raising its cap on co-located community solar above the previously agreed upon five megawatt (MW) limit. The Department of Commerce wants clarification on several technical matters, he said.

The delays wouldn’t be much of a problem if developers didn’t have their own deadline – the end of 2016, when a federal tax credit drops from 30 percent to 10 percent for commercial projects and zero for residential installations unless Congress votes an extension.

Some developers who filed paperwork and paid their fees on the first day Xcel began accepting applications – December of 2014 – have still not received word whether their projects have met with approval.

Developers have complained of being told one thing by one Xcel engineer and the exact opposite by another one, Shaffer said. Others complain that Xcel could have told them much earlier in the process that the grid interconnections they proposed to use could not absorb additional capacity, he said.

In addition, the recent settlement agreement between Xcel and smaller developers called for a $1 million cap on interconnection upgrades. Some solar companies find the limit too restrictive, resulting in fewer projects going forward, Shaffer said.

The rollout of community solar has hit more than a few roadblocks in its first year. Developers filed to build more than 900 MW of solar electric energy, far in excess of what Xcel or other experts anticipated.

Though the legislation limited community solar projects to 1 MW each, developers proposed co-locating as many as 10 to dozens at some sites. Xcel successfully requested that the PUC cap co-located sites at 5 MW after reaching a prior agreement earlier this year mainly with smaller, Minnesota-based solar developers.

Xcel has suggested the first year community solar could top 70 or 80 MW, making the state’s program one of the largest in the country. Although the utility has a relatively large program in Colorado, Shaffer agreed that the slow process could be “indicative of a utility being overwhelmed.”

On the other hand, MnSEIA president Dustin Denison argues that Xcel has attempted to slow other solar programs in the past, among them Solar Rewards, which offers incentives for businesses and residences, and the Made-in-Minnesota Solar Panel Incentive Program. The latter program gives buyers of solar panels made in the state a higher rate of return for the energy produce.

Both of those programs are fully subscribed this year. With the limitations put on community solar the program is likely to have more than a few waitlisted applicants.

“Xcel is doing everything it can to scale this program back and what that is going to mean is you’re going to have an overabundance of subscribers,” he said.

Developers are telling customers “sitting on the fence” to subscribe now because the program could stall if the federal tax credits drop or disappear.

“Our fear is all developers will have a backlog of subscribers who want to be in their gardens,” Denison said. “Without the tax credit this could be a one-year thing.”

A split in the solar community?

One other challenge is the solar community itself. As Denison sees it, MnSEIA’s membership consists of local companies that support the 5 MW co-location cap and generally larger, national renewable firms that advocate a higher limit.

If those companies, which are represented by their own law firm, decide to sue the PUC over the 5 MW co-location restriction, the whole program could be brought to a standstill. Among the larger firms are Sunshare, SunEdison, Inc., SoCore Energy and Geronimo Energy.

The risk of bringing litigation is smaller to national players because they have investments in several states, Denison said.

“If they want to push the PUC to litigation and drag this program out so no one gets a project they’re still diversified enough that if they lose 50 MW in Minnesota they’re still doing 500 MW in their portfolio,” said Denison,  also president of Minnesota Community Solar. “We can’t take that kind of hit.”

So far, however, there is no indication of a lawsuit being filed, he added.

Recent successes

While issues may remain over community solar, two recent businesses signed up because they liked what they saw. Sunshare signed on Bongards Premium Cheese, a dairy cooperative in an unincorporated Carver County town by the same name.

The co-op will offset 100 percent of its energy use and lease part of its land to Sunshare for a community solar garden. Brent Jewett, vice president of operations, said the co-op saw the community garden both as a marketing tool to showcase its green initiatives to customers and as a way to reduce energy costs.

The community solar garden, Jewett said, also offers predictable energy costs over a 25 year contract.

Sunshare’s Ken Bradley said Bongards will be the anchor tenant of a 5 MW co-located CSG which will be built on its property and include as another anchor tenant the nearby city of Cologne. Sunshare particularly liked signing a co-op because in a sense it reflects how community solar gardens operate.

“It’s the right thing to do for cooperative members, for their cooperative itself and for their customers,” he said.

At Becketwood Cooperative, a senior housing community in Minneapolis, the appeal was largely the same. The 211 unit community operates as a cooperative in somewhat the same manner as a community solar garden, according to Mark Dickinson, manager of Becketwood.

“Becketwood has a very strong sustainability ethos,” he said. “We see this as the right thing and as a way to encourage the production of green energy.”

The co-op will buy 1 MW from SunEdison, which declined comment for this article. Becketwood will continue to focus on efficiency and if energy use declines potentially below 1 MW it will still be subscribed for that amount, he said. The savings is significant.

“What’s exciting to use about this program is we are projected to save $1.2 million over the course of the 25 year contract,” he said. “That makes it a wonderful opportunity.”

Editor’s note: An earlier version of this story stated that Xcel Energy did not respond to requests for comment. While a reporter attempted to reach two contacts at Xcel via email, he was unaware they were no longer with the company. Midwest Energy News failed to make further efforts to reach representatives at Xcel; a comment from the company was added after initial publication.

2 thoughts on “Minnesota developers want faster pace for community solar

  1. OF course XCEL is fighting any change from the norm. They are not your friend and will do anything to slow things up as time is on their side not yours. Being a monopoly is great.

  2. If Xcel’s intent is to run out the clock on the federal tax credit, then them slow-walking the CSG application process is a heads Xcel wins, tails the CSG Developers lose type of a situation. Any lawsuits brought against Xcel for nor holding up their end of the deal will probably kick up uncertainty that leads to even further delay. That indicates they would rather pay the million dollars in legal fees as long as it shrinks those 900 megawatts down into an 80 megawat program. Would love them to prove otherwise though