Calculator helps Minnesotans make financial sense of community solar

Minnesota consumers have new web-based tools to determine the potential financial benefits of enrolling in community solar gardens and to find developers selling subscriptions in their towns and cities.

Hosted by the Clean Energy Resource Teams, the “Community Solar Garden Subscriber Decision Tool” is the brainchild of Doug Tiffany, a research fellow with the Department of Bioproducts and Biosystems Engineering at the University of Minnesota.

The other addition to the CERTs site is a new version of its Clean Energy Project Builder that connects consumers with solar installers, solar garden developers, project planning tools and funds and financing.

A search engine featuring a zip code and categories to choose from can help people locate solar garden developers and installers working within their general vicinity.

Community solar legislation passed in 2013 limits solar garden subscriptions within Xcel Energy’s territory to customers’ home county or immediately adjacent counties.

“The site helps consumers find community solar developers based on where they live,” said CERTs communications manager Dan Thiede. “It’s a new and exciting feature.”

CERTs includes electric cooperatives and municipal power providers which have community gardens. Xcel has been slow to approve many solar gardens, despite hundreds of megawatts of applications from developers. Ironically, co-ops have more community solar projects in their territories than does Xcel – for now.

A community solar crystal ball

The calculator offers a “decision making tool” that allow consumers to “play around with the crystal ball” to determine if a solar garden subscription will be financially beneficial, noted Thiede.

Tiffany’s research showed that from 2001 to 2014 Xcel Energy’s average residential charges – the applicable retail rate – increased an average of 3.7 percent annually. Taking 25 years into account, the annual increase is 2.4 percent for residential customers of Xcel.

The difference between the 10- and 25-year periods is substantial because of global uncertainty, more stringent emission standards, and retirement of coal plants among other factors, he said in comments on the calculator site.

Solar garden subscriptions have an escalator clause that locks in an annual percent increase over the life of the 25 year contract, Tiffany said. He uses a 2.75 percent escalator as the baseline, which is a figure around what many CSGs are using.

The conundrum for consumers who care more about the price of energy than supporting renewable energy is whether Xcel’s costs will grow higher than their adjusted subscription amount.

The calculator allows consumers or businesses to simply plug in numbers in six categories, Tiffany noted, and then to view the savings in five year increments.

On the CERTs website Tiffany showcases a home using 800 kWh a month of electricity, close to the Minnesota state average. The example uses the current community solar applicable retail rate of 12.7 cents per kWh, with a 2 cent renewable energy credit (REC).

That means consumers who offsets some or all of their electricity through community garden subscriptions will receive bill credits of 14.7 cents per kWh.

Assuming a 3.25 percent annual increase in electric rates, a consumer with this contract could expect to save $2.23 a month in the fifth year. By the 25th year that savings grow to $24.16 a month.

The way the contract works means the real cost savings happen much later on, a potential turnoff for some consumers, he noted.

If electricity rates skyrocket the savings grow even higher, and earlier in the contract. A four percent growth rate leads to a savings of $14.96 a month by the tenth year of the contract, Tiffany pointed out.

Does that make community solar a slam dunk? A consumer assuming electricity rates higher than the escalation rate “will probably be right but there’s a certain amount of uncertainty,” Tiffany conceded.

One of his scenarios points to a 2.5 percent average annual increase over 25 years, which would give consumers a slight loss by the end of their contracts. History suggests energy costs will rise but how much is anyone’s guess.

This isn’t the first time Tiffany has devised a calculator. A few years ago he created a spreadsheet to help consumers considering the purchase of alternative vehicles such as hybrids and electric cars.

CSGs offer consumers at least a couple of advantages they have never had before. One is that they will know the have offset their electricity use with renewable energy, Tiffany said. The other is predictable pricing.

“They will have the power over the price they will pay for electricity in the future, an ability they didn’t have in the past,” he said.

Comments are closed.