Friday, June 26, 2015

How the MN PUC ruled on the Community Solar Size limits

On the night before the June 23rd PUC hearing, Xcel and several (but not all of the solar developers) struck an eleventh-hour partial settlement agreeing to what is basically a 5 MW CSG size limit. Xcel would have liked the cap to have gone lower than 5 MW but considered 5 MW a settlement. It was only a partial settlement because Xcel pleaded to commission to make the size limits retroactive while the CSG developer community were in agreement that imposing a size cap retroactively would be horrible policy. On June 25th, the PUC ruled in agreement to the terms within the partial settlement while giving Xcel what they wanted by retroactively clarifying the rules. As a result, developers who had proposed co-located CSG projects of over 5 MW had to scale down their plans to fit under the size limit. 

At first impression, allowing developers to do clusters of 5-single megawatt CSGs sounds big enough to allow CSG’s to make a major market impact. However, the PUC ruling gave Community Solar Developers only until September 25 to propose co-located CSG projects that may be as large as the 5 megawatt limit. Beginning on September 26th, Xcel had its wish in limiting CSG projects to 1 megawatt at a single interconnection point. The cap has dropped to 1 MW for a period of one year in order to allow time for the commission to once again study and revisit the issue of putting limits to CSG co-location. 

The rules could be revised more favorably at that point in the future. However there is a real danger CSG development could be effectively snuffed out by Xcel getting the regulatory/ bureaucratic red tape they asked for. Changing the rules of the game sends a damaging signal to the solar market and hurts the perception on MN as an unreliable place to do solar business. From that standpoint of that risk, merely having a decision from the PUC removes a major barrier of regulatory certainty for CSG developers. But now, we can't even count regulatory certainty as a benefit because Xcel has actually not been holding up their end of the bargain. 

In exchange for giving Xcel what they wanted in the co-location size limits, the PUC ruling required Xcel to more rapidly complete the interconnection engineering studies for connecting solar gardens to the grid and to provide for “greater transparency and expediency” in allowing developers to move forward with construction of their proposed projects. In other words, they PUC tried to tell Xcel they will not be able to use a foot-dragging tactic as a way to run out the clock on the federal tax credit. But in the following months, Xcel was still slow-walking their processing of CSG applications. Xcel not holding up their end of the deal, basically confirming allegations they have an agenda to chill the market for solar.

What have we seen when Xcel does Community Solar voluntarily without any state mandate as they have in Wisconsin? it ended up being a maximum of 3 megawatts of solar power through three or four arrays in their Wisconsin Service territory.

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