Monday, July 6, 2015

Xcel's lack of transparency about the grid hurts Community Solar Garden developers

The first person who spoke during the June 23rd daylong community solar hearing at the MN PUC was Andy Brown who was a lawyer representing Xcel. He stated "The Company believes the program is seriously off-track".  He said Xcel was talking about having 15- 30 MW of CSG next year and then maybe 100 MW of CSG in 5 years but they have received to date applications for 912 MW.

Brown told the PUC in reference to the 912 MW figure "You might find that number to be staggering. It certainly is to the company."

However, the 912 MW figure should be no cause for alarm, even by Xcel’s standards. Yes 912 MW in applications is a huge, but almost none of those megawatts to anyone’s knowledge had been approved yet. Seven months after they first started taking applications for community solar, Xcel is sitting on the huge stack of CSG applications totaling almost a gigawatt. Developers intend all of these projects to be completed by the end of 2016 so that developers can capture the federal investment tax credit before it expires. No applications have made it through in 7 months! This looks like a sign of a delay tactic but there is more to the story at play.

Xcel has sent a one-two punch of uncertainty to CSG developers by being slow to offer transparency about the capabilities of its distribution system as well as injecting another cloud of uncertainty for community solar developers by filing these objections about the program itself. This double uncertainly led to a gold rush mentality for developers to get their applications in before the rules might change. Xcel received 420 MW of CSG proposals the first week they started accepting applications in December of 2014. The day that Xcel made its regulatory filing back on April 28th, there were a total of 560 MW Xcel received for CSG project applications. Then that figure almost doubled in less than 2 months because of CSG developers regulatory uncertainly. Given this, they should have had no justification to complain about how staggering the number of MW was they received in CSG applications.

In addition, so many of the megawatts in these proposals won't be built because of limitations in the utility's
distribution grid. There isn’t even capacity for 500 MW of CSG in Xcel’s interconnection queue. 
The upgrades needed to the distribution system could prohibit close to half of the proposed CSGs. Plus even if certain projects are wholly feasible on the technical side, the developers may be unable to get financing to build them.

An interesting part about the whole ordeal is that the CSG developers themselves are on the hook for paying for the grid system upgrades. I heard there is an up-front cash deposit of about $100,000 per MW. Pay to play is required and that limits a lot of people. In that case, developers are doing a generous deed for Xcel volunteering to invest in the distribution system rather than as merely a nuisance to their market share. It is only fair to compensate CSG developers for displacing a utility's need for peaking capacity. 

Solar developers that have already invested a lot of time in Minnesota were inspired by their interpretation of rules the PUC approved in 2014. As a result, they already have millions of dollars committed to those projects.


 The flood of applications Xcel has received is also a product of a lack of transparency on their part. Solar developers tried to be as transparent with the utility as possible. Many CSG developers had no other option to submit what they had because Xcel was not releasing some key information about their grid. The developers did not know the best spots to have CSG’s in Xcel’s distribution system due to this lack of info. Before June 4th, developers were shooting in the dark about where their site will be because only the most rudimentary info about CSG was recently made available by Xcel. CSG developers had to put 12 K or 100 K money down just to find that information out. The solar developers were not trying to hoodwink anyone and tried to be transparent. If Xcel would have released information about the state of theirs
 grid, we all could have gotten this resolved long ago.  
This points to a devious strategy and unfair tactic to undermine the inputs for CSGs then attack the outputs. Xcel giving limited insight into their distribution system hurts market certainty. Xcel also injected tremendous amount of uncertainty into the market by making these regulatory filings. Lots of hard work could be lost if more uncertainty is injected.
For example developers should not have to start over and shift their site 20 yards just because of a change in permitting that could have been foreseen with transparent info.
CSG developers need sufficient timeframe and directives or they won’t have any program at all. It is a vicious cycle that has started. Developers had a gold rush incentive to apply before the rules changed and are faced with an expiring federal tax credit. In turn, the process of application tracking is delayed by the sheer number of applications Xcel has to process.

Hopefully with the partial settlement that the PUC approved, there will be some more accountability for an application tracking process to move through in a timely way.

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