Minnesota's community
solar program is the first time in recent history that a state allowed such a
major type of competition into our monopoly-dominated energy system. CSG’s are
competitive because they have the potential to help the low-income subscribers save
about 5% on what they would otherwise be paying Xcel in their utility bills.
Xcel spokespeople may offer a multitude of reasons and
justifications for each delay tactic. But it does not take an expert analyst to
figure out Xcel is concerned about potential competition from their own
customers and worried about the spread of distributed energy generation which
they can't own or control.
According to a late August Star Tribune article that
quotes several Community Solar Garden Developers, it was already apparent
that Xcel Energy was running out the clock for Community Solar Gardens to get
built by the end of 2015 before the snow flies. Some developers who filed
their proposals the first day began accepting CSG applications (on
December 12th, 2014) still have yet to
hear any response on whether their project has been approved. All we really need to ask of Xcel at this point
is to comply with existing state regulations on how they are supposed to
approve the CSG projects. Xcel is supposed to approve or deny CSG project
proposals within 90 days but has already violated that multiple times. As of
early October, Xcel had only approved only 6 CSG projects out of 619 proposed
projects whose applications were deemed complete. Xcel's online announcement of
this first community solar garden reads like a typical self-congratulatory
greenwash upon awareness of their delaying hundreds of remaining project
applications.
HOW THIS YEAR'S
REGULATORY REQUIREMENT WAS REACHED
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, which turned into a regulatory filing with the Public Utilities Commission (PUC). Regardless of
whether Xcel had a valid point in their alarmed
reaction to the extensive clustering of single Megawatt CSG projects or whether
the specific details of their arguments had merit or not, it definitely caused
significant delay and injected a tremendous amount of uncertainty into the
market. It gave
many CSG developers a gold rush incentive to send in lots of applications
before the rules could change. The Public Utilities Commission's eventual
ruling gave Xcel Energy the retroactive size
limits on Community Solar Garden projects that they asked for in exchange for
requiring Xcel to provide “greater transparency and expediency” in
allowing developers to move forward with construction of their proposed
projects. Xcel was also required to more rapidly complete the interconnection
engineering studies for connecting solar gardens to their grid. Simply put, Xcel has not been holding up their end of the deal.
XCEL’S LACK OF
TRANSPARENCY CONTRIBUTED TO DELAY
Just a
month after the June 25th ruling, Xcel’s CEO Ben Fowke told the Star
Tribune that they will keep pushing to limit rooftop and
subscriber-based community solar gardens but did not explain how. Is Xcel's
slow-walking of the CSG project applications indeed their untold tactic? Has
Xcel been intentionally under-staffing the personnel they need to process CSG
applications or to interconnect the community solar gardens? Or was the
workload of processing a sheer flood of CSG applications genuinely more than
Xcel expected? Was Xcel's big mistake putting engineers in charge of processing
the applications instead of project managers? Regardless of the answers to
these questions, one thing we do know for sure is that huge workload of CSG
applications on Xcel's desk is largely a consequence of a lack of transparency
on Xcel’s part even before the June 25th ruling.
It was not until June 4th that Xcel released some key
information about their distribution system. As a result of this lack of info,
CSG developers were shooting in the dark about the best places on the grid
their projects will be located. While it’s a fair argument if Xcel’s grid
interconnections honestly could not absorb additional capacity from a
particular proposed CSG project, it is totally unfair for Xcel to not notify
project developers early on. In addition, CSG developers had to put down thousands of dollars
just to find out the information they need. 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 more transparent information. If Xcel would have
released information about the state of their grid in a timely manner, many of
these project delays could have gotten this resolved long ago. This points
toward a devious strategy to undermine the inputs then attack the outputs.
THE FEDERAL TAX CREDIT
BUILDS URGENCY
Another reason why CSG developers are rushing to get so many projects built is
because a federal tax credit for solar expires at the end of 2016. The federal tax credit will drop
from 30 percent to 10 percent for commercial solar projects and will be
completely eliminated for residential installations unless the US Congress
approves an extension. All of these
factors combined together have given CSG developers every incentive to send a
genuinely huge flood of CSG applications through the bottleneck of the apparent
lack of staff capacity Xcel management has been devoting to the task.
Xcel running out the clock on solar developers'
window of time to be able to take advantage of the federal tax credit is a move which many agree would chill the
market for distributed solar and undercut potential competition from
their own customers. Xcel officials will probably deny that is their intent,
but the behavior would
be eerily consistent with a pattern of Xcel’s attempting to slow other solar
incentives in the recent past, such as the Solar Rewards program and the
Made-in-Minnesota Solar Panel Incentive Program.
BUT ISN'T XCEL A CLEAN
ENERGY LEADER?
To
revisit the double narrative about Xcel, how could the same company that prides
themselves in being a national renewable energy leader among investor-owned
utilities conceivably be doing such a stonewalling effort against Community
Solar? How can this possibly be consistent with Xcel Energy’s impressive
renewable energy targets they set this year in their 15 business plan? Xcel’s CEO offered an explanation in the same late July Star Tribune Article, vowing to pursue utility
scale solar to the effective exclusion of residential and community solar. That
announcement came after a June 1st filing when Xcel
stated that it will not build any additional utility solar until 2025
or later. To cut through all the red herrings, Xcel only prefers to do
renewable energy that can
own and control, charge
their customers for and build into their rate
base.
Investor owned utilities seek to put renewable energy into their
base of assets because then they are guaranteed profits by the Public Utilities
Commission about a 10% rate of return on those investments. In doing so, they
seek to prevent others from developing our own clean energy in other ways. Xcel
fights against small-scale and locally owned wind for exactly the same reasons.
THE KEY
DILLEMMA CSG DEVELOPERS FACE WITH XCEL
If Xcel’s intent they won't admit to is indeed to run out the clock on solar developers being able to capture the benefits of the federal tax credit, then slow-walking the CSG application process is a "heads Xcel wins / tails the CSG Developers lose" type of a situation. That is the key dilemma of having monopolies in control of energy. It is also the consequence of a situation where Xcel has key information and assets Community Solar Developers need but not vice versa. If CSG developers issue a regulatory filing or lawsuit against Xcel for not holding up their end of the deal in the PUC ruling, then such a move will kick up enough uncertainty into the market to lead to even further delay. That is a vicious cycle which threatens the hard work and capital CSG developers have already invested into projects, particularly among the smaller developers who only have CSG projects in Minnesota. If Xcel continues their slow-walking behavior, then it means Xcel would rather pay the million dollars in legal fees defending themselves in court from CSG developers as long as it shrinks those 900 megawatts of proposed Community Solar down into an 80 megawatt program.
I would love for Xcel to disprove that hypothesis about their slow-walking and follow up on a promise to expedite the installing the great back log community solar projects next year before the tax credits expire. Aakash Chandarana, Xcel regional vice president for rates and regulatory affairs, has said the delays in approving the CSG's was a dilemma of trying "to feed large amounts of electricity onto the undersized rural power grid, creating a queue of projects competing for limited connections". But we will soon find out whether they will drag their feet on the smaller, urban grid system in Minneapolis. Community Solar development for Minneapolis residents and businesses already been approved as a priority by both parties in the Clean Energy Partnership between the City of Minneapolis and Xcel. We invite Xcel to explain to developers of Community Solar projects in Minneapolis how they will meet deadlines and release all of the grid data the developers need in a timely manner. Otherwise they are being inconsistent not only with the Minneapolis Clean Energy Partnership goals they agreed to when they signed the partnership agreement but also with the PUC’s order.
IF XCEL HAS BIG PROMISES
TO DO SOLAR ENERGY ON THEIR OWN, THEN WHAT IS THE PROLEM?
At this point, isn’t any renewable energy good and necessary
regardless of how it is done? What exactly is wrong with the way Xcel prefers
to do renewable energy? Large
utilities in general prefer renewable energy to mimic their familiar central
station power plant model as opposed to distributed generation. Otherwise, we,
the energy users, not Xcel shareholders, reap the economic benefits of being
power producers.
If Xcel's
preference to get renewable energy fit their familiar central station model manifests
as setting up utility owned solar and wind generation very distant from
population centers, then Xcel customers will have to pay for the great big new
transmission line infrastructure. If that is the model which Xcel intends belie
its big clean energy promises, then likely fights over new transmission lines
and who is going to pay for what raises the risk that Xcel will fall short of
the impressive clean energy targets they promise. Other studies show how such
delivery costs can cancel out the modestly better economies of scale
utility-scale solar has at the point of generation.
LOCAL RENEWABLE ENERGY IS NEEDED
We are much more likely to get renewable energy deployed quickly enough
to make a difference in environmental impacts if we simply strategically size
and locate renewable energy projects to fit within the existing grid. There are
huge opportunities for thousands of megawatts of renewable energy that could be
sited in the existing infrastructure in Minnesota right now that would not need
any new transmission because it will be much closer to the load where people
are using it. Local renewable is the model which so many CSG developers are
trying to manifest if they are given a chance to succeed. But it is not a model
that allows the cartel energy monopoly interests to simply extract the
resources and take the money.
Under the local
renewable power model, people in the local community will be investing in the
infrastructure and making a return on that infrastructure, thus producing local
wealth. Local and community-owned renewable energy increases reliability, is
cheaper in terms of infrastructure, and the communities who use it are bought into
the project. Whenever the body politic is bought into renewable energy, we are
much more likely to get enough of it in time to reverse some of these terrible
environmental trends.
In addition, the more geographic diversity in the locations of
solar panels, the more reliable solar energy becomes, allowing renewable energy
to thrive with less need for expensive natural gas power plants that Xcel has announced plans to build in their latest IRP.
COMMUNITY SOLAR IS ECONOMIC JUSTICE
Community Solar has value far beyond that which is reducible strictly
to finance because it provides is a powerful tool for an overall democratization of energy. Community solar allows individuals and organizations
to mutually benefit from the advantages of solar energy — no fuel cost, no
moving parts, no emissions — without having the solar built on their own
property. The power from CSG’s go onto goes onto Xcel’s distribution
grid, and CSG subscribers are
credited at a solar-friendly rate that results in savings of 5 percent or more on their utility bills. When
community solar uses innovative and flexible financial tools such as on-bill
repayment, pay-as-you-go, and revolving loan funding, solar energy dramatically
more affordable and accessible to a greater number of people.
With Community Solar, we finally have an opportunity to put an end
to this alienating perception of solar energy as a niche market for a few. Having a successful example of a community
solar garden will tell a new story of renewable energy as a pathway out of
energy poverty and prosperity circulating through the local economy.
THE SAINT PAUL PUBLIC HOUSING AGENCY
The Saint Paul Public Housing Agency has signed on to
become an anchor tenant of nearby community solar gardens to provide cost
stability for their tenants.
At the June 23rd hearing on community solar, Louise Seeba told the PUC "This program is literally the only way that
public housing can go solar. Our tenants should not be shut out of being part
of green energy."
The Saint Paul
Public Housing Agency has 2500 residents in 16 high-rise
housing units. So far, it is the only public housing to go solar. Seeba
explained how they had to jump through lots of hoops and then the U.S. Department of Housing and Urban Development approved their community
solar involvement.
Solar energy is attractive because it has no fuel costs and is a
hedge against fuel price spikes. When natural gas or fuel prices inevitably
spike again, utilities pass through the costs directly onto their customer
base. This will leave the low-income very vulnerable once the fracking boom
goes bust unless there is an alternative source of power such as CSGs ready to
snap over to.
Jon Gutzmann, executive director of Saint
Paul Public Housing Agency stated “With
two-to-four percent increases every other year, our utility costs have been
increasing at a faster rate than our revenue. Community solar provides us with
cost stability and certainty for 25 years — without having to find space or
capital for on-site solar.”
WHAT IS AT STAKE? IT’S MORE
THAN A FEW SOLAR PROJECTS
Fossil fuel interests and energy monopoly groups like the
Edison Electric Institute have been using divide
and conquer tactics to try to pit low-income and minority communities
against advocates for solar energy options. Their most common line of attack is
to unfairly and inaccurately accuse solar households of raising
electricity rates for non-solar households, chiefly those struggling to
pay their energy bills. They fight for a restrictive policy outcome where only
people who have access to solar energy are those who can install
their own solar panels on their own property so that they can paint
an alienating story of solar energy as an exclusive party that only the
well-to-do are invited to. The easier policies make it for low-income
residents to participate in solar energy, the greater our ability to fend
off these alienating divide and conquer techniques and the more powerful tools
we have for the democratization of energy. We don’t want the story
of Community Solar to be one of "Out of State big money interests setting up large
corporate solar farm projects to take advantage of a law they wanted passed to make money".
FEAR OF RATE HIKES ARE XCEL’s BIG TALKING POINT
The big
talking point that Xcel uses to shrink or slow the community solar program is
that it will lead to rate increases with the potential of a cost shift of more than $100
million onto non-solar customers. Xcel’s Regional Vice President asked for
a 1 MW aggregate size limits on CSGs in order to minimize extra costs that
would be passed on as a 1% to 1.5%
rate hike paid entirely by Xcel customers who choose not to participate. The estimations I heard during the June 23rd hearing were a .5% estimated residential rate increase due to 100-200 MW of
community solar, a 2% estimated residential rate increase for 500-600 MW total
and a 2.8% estimated residential rate increase from 800 MW total. To start with, Fresh Energy has done some rate and
cap impact calculations that suggested Xcel was overestimating
the rate impact of the community solar program onto non-solar customers.
It is important to note how
the same utility which recently requested a near 10% rate hike largely to cover the cost
overruns of their Monticello nuclear plant is suddenly
becoming so sensitive about the supposed rate impact from residential and
community solar onto non-solar customers. The Star Tribune reported back on
March 6th that Xcel was wanted their customers (rather than
shareholders) to not only pay for the entire $400 million in cost overruns,
but also a profit margin to
Xcel on those cost overruns. Why is Xcel suddenly so concerned with the
impact on energy users where solar is concerned, but has so little
consideration for the much larger impacts on utility customers when their own
nuclear plants are at fault?
INTERESTING ADDENDUM: XCEL CHANGED THEIR WEBSITE:
It must have sent a shock to Xcel when large customers like
Ecolab, Inc. and Macalester College announced plans to offset their entire
energy consumption through solar gardens. Close to the same time Xcel Energy
made quite significant changes to the language its solar garden website. It was
interesting how their website in February read:
“There is no limit to the number of solar gardens which can be placed on a property, but no single garden can exceed the 1 megawatt PV system cap. While there is no program restriction on multiple gardens in one area, there could be technical limitations that could require expensive distribution system upgrades.”
Then, they vastly simplified the corresponding language in the latter version of the same website in order to make room for their pursuit of a 1 MW aggregate size limit:
“The maximum solar garden system size is 1MW AC. The system size is based on the sum of the inverter(s) maximum AC output.”
Why this change in language? Xcel claimed the original intention of the Minnesota Legislature was to have a more gradual phase-in of community solar that would be much less than the 420 megawatts in CSG applications they received the first week of their program.
