Friday, June 26, 2015

Community Solar developers in MN show Diversity of Opinions on Xcel's program size limit

On the Monday evening right before the June 23rd hearing in front of the PUC, Xcel and several but not all of the solar developers struck an eleventh-hour partial settlement agreeing to a 5 MW CSG aggregate size limit. Xcel would have liked the cap to have been lower than 5 MW but considered 5 MW a settlement. The parties in the agreement include Innovative Power Systems, Minnesota Community Solar LLC, Novel Energy Solutions, Renewable Energy Partners, SolarStone Partners LLC and TruNorth Solar LLC. The terms of this partial settlement were adopted by the PUC.

Those who struck the settlement did so as a tactic to get the company to stop taking such an oppositional stance. Joe Devito of SolarStone Partners said "It's a trade-off. We're willing to make a trade for certainty." These CSG developers want to get the process moving more quickly so that they could be ahead of the looming 2017 step-down of the federal investment tax credit. And in exchange for that certainty they were willing to scale back the size of some proposed projects.
Those who spoke in favor of the partial settlement said 5 MW strikes a balance that is both financeable while still enabling economies of scale. Larger CSG projects should be closer to a substation so therefore having 5 MW distributes the solar resources more equitably.

However, there was a coalition of some of the larger solar development companies such as SolarCity, Sun­Edison and SunShare that rejected the partial settlement. Having to abide by an arbitrary limit of five clustered CSGs will be force the larger developers to revise their business plans and possibly find other sites, likely undoing a lot of work they had already devoted time and effort toward. The solar developers who rejected Monday night’s partial settlement thought that having a 5 MW cap would unnecessarily pit members of the CSG developer industry against each other thus resulting in some projects blowing up. Their explanation is that Xcel is using this co-location issue as a convenient red herring to strategically using to drive a wedge into the solar coalition. The group's attorney Andrew Moratzka, stated with insight "I think the issue of co-location is a red herring. The issue is program size; it's not co-location."  

What Xcel is actually concerned about is program size though of course they’d prefer not to directly admit that was the motivating issue. There is no denial that Xcel was quite concerned about the sheer size of the CSG program and the premium it would pay to purchase power generated by community solar. 
Any big establishment utility company that wants to slow the growth of the solar market will want to devise a strategy of trying to pit members of the solar community against each other. It’s the old tactic of playing the game of divide and conquer to increase the amount of win – lose situations and decrease the amount of win-win situations. Here is how that strategy applies to community solar from the perspective of the larger developers. Placing limits on co-location means dispersing sites and raising costs when there are only so many applicable sites for the taking. There are a limited number of places to get into Xcel’s distribution system. When the number of CSG applications are forced down to 200 MW to 300 MW of viable projects, then it becomes all about picking winners and losers. The overall size limits Xcel wants thus removes the space that would allow everyone from becoming a winner.  

There were at least two other differing opinions that CSG community told the PUC on 6-23. Sundial solar and John Kramer rejected the partial settlement but for different reasons than the big developers. He supported Xcel in its 1 MW aggregate limit in favor of a more community-scaled solar garden project instead of using co-location as backdoor way for utility scale solar. Then I heard another solar developer said placing a 1 MW limit will have a chill effect on the market. Meanwhile Lynn Hinkle of the Minnesota Solar Industry Association said that the aggregate size limits CSGs should be set according to grid and substation capacity and let distribution be the program cap rather than some arbitrary number. 

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