Power surge in Minnesota's solar industry

Minnesota's solar power industry is in a growth spurt that's about to accelerate.

The industry, once focused largely on installing solar photovoltaic panels for homes, businesses and government, now is seeing a surge in investment by electric utilities.

Cooperative power companies, especially Great River Energy in Maple Grove, are building more than 20 solar projects this year and next, including the state's largest community solar garden in Ramsey, Minn.

Xcel Energy, the state's largest utility, also is increasing solar investment, likely spurring statewide growth in new solar capacity that far outpaces last year's 55 percent gain.

"The potential for growth is many multiples higher," said Paul Spencer, founder and CEO of Clean Energy Collective, a Boulder, Colo.-based for-profit company that is the largest U.S. developer of community solar projects, including the first one in Minnesota.

Sparking the surge is a 2013 state law requiring investor-owned utilities to get 1.5 percent of their electricity from solar by 2020.

At TruNorth Solar, Marty Morud said his business expanded fivefold in the past year, thanks largely to co-op projects. He now has two crews installing solar panels.

Solar arrays also are getting bigger.

The year-old solar array in Slayton, Minn., the size of eight football fields, could soon lose its mantle as Minnesota's largest. Its output is 2 megawatts, or 2 million watts.

Now, projects five times that size are planned. One project proposed by Geronimo Energy in Chisago County is rated at 50 megawatts, enough to power about 6,000 homes and an output equivalent to a small natural gas power plant.

Minneapolis-based Xcel is considering several "utility-scale" projects whose size offers economies of scale.

"The prices appear to be competitive," said Dave Sparby, Xcel's chief executive for the Minnesota region.

Betsy Engelking, vice president for development at Edina-based Geronimo, said Minnesota also changed how it rewards large commercial and industrial customers for rooftop solar arrays.

"You are going to see an explosion of corporate and industrial customers," she said in an interview.

Electric co-ops are part of the solar expansion, often because customers want it.

At least three Minnesota cooperatives are offering solar options to customers who want rooftop solar, but can't install it because of too much shade, condo restrictions or other reasons. Customers like Dave Willard of Forest Lake have been eager to invest in large, centrally located projects called community solar gardens, whose output is credited to their bills.

"What I like about it is that they are not hanging any hardware on my house," said Willard, one the first 50 customers to buy a panel on Connexus Energy's football field-sized solar array at its headquarters in Ramsey, Minn.

"Community solar fits the cooperative model," said Ken Bradley, a Twin Cities solar business consultant. "It's a cooperative structure, and its voluntary."

Great River Energy, a wholesale power cooperative based in Maple Grove, added a large solar array this year at its headquarters and is building 18 smaller ones across the state, the most recent in Farmington. Three cooperatives recently completed a large solar array in Oronoco, Minn.

At TenKsolar, a solar panel manufacturer in Bloomington, CEO Joel Cannon said the company expects a threefold increase in sales this year, including orders for 15 arrays from co-ops. "Electric co-ops have been very aggressively putting in solar," Cannon said in an interview.

The next surge in solar will happen at Xcel, which has 1.2 million Minnesota customers.

Sparby, the chief executive for the Minnesota division, said he expects to see about 5 to 15 megawatts of generation from solar gardens added in 2015. A megawatt is 1 million watts. By comparison, the state's total solar additions in 2013 were 6.2 megawatts, bringing total solar generation in Minnesota to 15 megawatts, according to the Solar Energy Industries Association.

"It has been kind of a slow crawl on the regulatory side," said Eric Pasi, vice president of business development for Innovative Power Systems, a St. Paul-based solar developer whose plans include a community solar garden at Eichten's, a cheese and bison meat producer in Center City, Minn.

Another 16 solar projects also are delayed. Those projects, proposed in St. Paul, Minneapolis and other locations, won grants from Xcel's ratepayer-funded Renewable Development Fund. But an unsuccessful applicant challenged the selection process, leaving it unclear when $17 million in grants will be handed out.

Xcel this month relaunched its Solar Rewards program, which awards $5 million annually for rooftop solar at homes and businesses. The Minnesota Commerce Department used a lottery to select $15 million in ratepayer-funded grants to solar projects using Minnesota-made panels.

Industry officials expect Minnesota's solar surge to last through 2016, after which a federal investment tax credit falls from 30 percent to 10 percent. That will force the solar industry to adapt to lower subsidies.

"You will see a slight contraction for a year, and then things will be business as usual," said Spencer of Clean Energy Collective. "The reason is that the cost of solar keeps coming down."