Friday, June 26, 2015

The Basic Background of Xcel's filing for size capping MN Community Solar

 On Tuesday, April 28th Xcel Energy announced they would take unilateral action to disallow co-located Community Solar Garden (CSG) projects over 1 megawatt (MW) in size. Regardless of whether their specific arguments had merit or were justified, this move served as a particularly big flashpoint in Xcel's delay of their Community Solar Garden program.
Xcel’s complaint is that they did not expect 80% plus of solar garden proposals from 15 developers to be co-located clusters of up to 40 adjacent 1 MW solar gardens on single sites given that the State Legislature set a 1 MW limit on the size CSGs could be. Although the 2013 state statute does set a size limit of 1 megawatt or less onto individual community solar gardens, the PUC issued an order in 2014 that allowed the co-location of multiple 1 MW CSGs on a single site. The PUC ruling specifically states: “multiple community solar garden sites may be situated in close proximity to one another in order to share in distribution infrastructure.” Overall, in their April 28th announcement, Xcel acted in defiance of many CSG developer’s interpretation of that PUC ruling as allowing for unlimited co-location. 

It is clear Xcel intended to have a more gradual phase-in of community solar than the 420 megawatts in CSG applications they received in just the first week of their program. Xcel said in their April 28 filing: “If all current gardens in the queue were developed, the company would add nearly all of its planned distributed solar resources, not over 15 years, but in a single year.” 

The size of solar projects that Xcel does not own or control are arguably a far bigger concern to them than the issue of co-location itself. Co-locating CSG’s gives the overall CSG projects the same shared infrastructure benefits, cost efficiencies and economies of scale aspects that Xcel frequently uses to justify their preference of doing utility scale solar projects over residential solar projects. Why would Xcel be against co-location when it takes advantage of shared infrastructure and drive down prices for customers? When it comes to community solar which Xcel can’t own, control or sell, then they are willing to forfeit those economies of scale they say they value in order to prevent community solar from infringing upon their market share. 

Imposing this aggregate size limit of 1 MW as Xcel had originally asked would have put in jeopardy 80% of the MW from solar gardens planned for this year. Perhaps Xcel intended this particular filing as a delay move to block most solar developers from being able to capture the benefit of the 30% federal tax credit before it expires at the end of the year. Perhaps Xcel figured that if they just find creative ways of running out the clock through 2016, a great number of these CSG projects might never be built unless Congress renews the important solar investment tax credit that has helped grow the industry. 
A few days after Xcel issued the regulatory filing to the PUC, four developers submitted a letter sent to the Minnesota Public Utilities Commission asking the PUC to affirm Xcel’s move to be in violation of the pre-existing PUC order. The letter warned that Xcel's move would cost the solar developers “tens of millions of dollars in damages” even though Xcel vows to refund deposits and fees for multiple garden applications. On Friday May 1stthe PUC ordered all parties a May 18th deadline to submit comments on the Xcel’s aggregate size limit proposal. On June 23rd, the PUC held a hearing for stakeholders to give commentary on this matter. 

The main legal issue Xcel brought forth to the PUC are interpretations on what the state legislators meant in their 1 MW limit within the statute. Xcel used that to make a case that the PUC's 2014 order could not and did not explicitly call for unlimited co-location in CSG projects. Xcel thus forced the PUC to revisit what it meant in their earlier ruling. They argued that no developer at the time of the earlier 2014 ruling had asked the PUC to do unlimited co-location. A side issue for Xcel is that the PUC set a solar-friendly rate for community solar during the same time no party was expecting unlimited co-location. Xcel’s lawyer's closing argument at the June 23rd hearing was that no solar stakeholder speaking gave a good reason to disregard the 1 MW limit. Yes, the statute is silent on co-location. But the mere fact there was a 1 MW limit implies there had to be a policy reason for setting the 1 MW limit and the way the developers were doing co-location had thus rendered the 1 MW cap set by the legislature as meaningless. 

In 2013 the MN state legislature passed the community solar program (CSG) with the intention of providing a solar option for renters, for property owners whose building isn’t suitable for its own solar array or for the average income who lack the up-front capital to own an entire solar installation. While all investor-owned utilities are required to get 1.5 percent of their electricity from the sun by 2020, Xcel is the only utility that is required to offer the CSG program under the same 2013 state law.

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