Utility regulators set to decide scope of Minnesota community solar garden program

Has Xcel Energy's community solar garden program gotten too big — even before the first project has been built?

State utility regulators who are considering that question heard from a divided solar power industry ­Tuesday about what needs to be done, or if it's really a problem at all.

"The company believes the program is seriously off track," said Andy Brown, an attorney for Xcel Energy, which began accepting applications for the shared-solar concept last December.

Xcel said energy developers have proposed more than 900 solar ­gardens whose output would be shared among Xcel customers who voluntarily sign up to be subscribers. The solar power would offset their home and business power use at substantial savings on their monthly bills.

The program, authorized by a 2013 state law and offered only to Xcel's 1.2 million Minnesota customers, was designed to allow people and businesses to choose solar even if they can't put solar panels on their properties. The law didn't limit how many solar gardens could be built, but set a maximum size at 1 million watts, or 1 megawatt.

Several leading solar companies, including SunEdison and SolarCity, have proposed under existing state rules to build 10 or more gardens side by side and connect them to Xcel's power grid in one link. In April, Xcel objected to that practice and sought to scale back the program.

The matter now is before the state Public Utilities Commission, which set up the rules. On Thursday, the five-member regulatory body is scheduled to decide whether to revise them retroactively, a decision that could affect hundreds of millions of dollars in solar investment.

"We are trying to take advantage of economies of scale," said Andrew Moratzka, an attorney for several large solar energy developers who have proposed to cluster multiple solar gardens at single ­locations.

Moratzka said scaling down the program as Xcel wants could upend plans by major solar companies to build hundreds of solar gardens. Some major power users, including Ecolab Inc., a Fortune 500 company in St. Paul, St. Olaf College in Northfield and the city of Cologne, have signed deals to subscribe to multiple clustered gardens to offset all of their electricity use with solar.

"We don't want the state to send a message that Minnesota is an unreliable place to do business," Moratzka said of the prospect of a retroactive rule change.

Yet some solar companies partly or totally agree with Xcel, saying the big projects to be built on farmland on the outskirts of the metro area don't fit with their idea of community solar. Six smaller locally based solar energy companies signed a proposed settlement with Xcel that calls for limiting the first crop of solar gardens to clusters of no more than five, eventually scaling back to just one per company per location.

But the big solar players like SunShare and SolarCity don't support that deal. Other interests, including the state Commerce Department, urged regulators to consider a limit of 10 co-located ­gardens. The Minnesota attorney general's office proposed setting an annual cap on gardens.

One concern raised by the attorney general, Xcel and others is that building vast solar gardens would drive up the electric rates of nonsubscribers because of the regulated rate structure. But the amount of solar-related increase is in dispute.

Large solar interests also had supporters, including the St. Paul Public Housing Authority and a Unitarian church group who say they are planning to subscribe to multiple clustered solar projects to reduce electricity costs with cleaner energy.

Solar gardens won't be owned by Xcel. Subscribers will pay a monthly bill to an independent energy company for a share of the solar garden output. The savings come on their Xcel bill. These customers still get their power from Xcel, but the sale of their solar power at above-retail rates results in savings.

Xcel said that if the commission limited solar gardens to clusters of five projects — or 5 megawatts at one site per company — about 500 to 600 of the 900 pending projects likely would be eligible. Many of the projects might not go ahead for other ­reasons.

The utility now has 24 megawatts of solar, but recently contracted for 187 megawatts to be built at three sites.

Solar companies want to build solar gardens this year and next to qualify for a federal tax benefit. So far, only one project has been approved by Xcel.

David Shaffer • 612-673-7090 • @ShafferStrib