Xcel Energy must fully fund a solar energy incentive program through 2015, according to a decision Monday by the state.
The decision by Department of Commerce Commissioner Mike Rothman means the utility company must fund its Solar Rewards Program at $5 million per year through 2015. Xcel wanted to reduce funding next year and phase out the program by the end of 2013.
The decision largely upholds a staff recommendation issued by the Department of Commerce staff in August. While the funding for the program remains the same, the incentive will drop from $2.25 to $1.50 per watt of solar installed.
In a statement, Commissioner Rothman said his agency was interested in finding additional and longer-term solutions beyond Solar Rewards that would support Minnesota's solar industry.
"In the nearly three years that Xcel has administered Solar Rewards, significant progress has been made in building an infrastructure to support a solar industry in Minnesota," Rothman said in a statement. "Jobs have been created, financial investments have been made, and a new industry is gaining traction in Minnesota's economy. The Department of Commerce is committed to working alongside Xcel Energy to continue this momentum and to spur growth in all renewable energy sources."
Keeping the program in place will create an opportunity for even more solar installations in the state, said Lynn Hinkle, policy director for the Minnesota Solar Industry Association. Beyond that, he said, it starts a discussion about better ways — beyond the SolarRewards program — to support the state's solar industry.
"What it does, probably more importantly, is set the stage for what the alternative could be... and decide what the next phase is, the next stage is, for solar energy in Minnesota," Hinkle said. "It's setting the foundation for the kind of discussion that is going to unfold in Minnesota and is already unfolding in Minnesota; to evaluate the benefits, the true value of solar not just as an energy source, but as an economic development engine."
Some in the solar business say the program is the main driver of growth for the state's solar industry. Their concern was that if Xcel was allowed to end the program it would kill off many of the industry's gains over the last few years.
Gary Shaver, president of Silicon Energy Minnesota, a company that manufactures solar panels in Mountain Iron, about an hour north of Duluth said Commissioner Rothman's decision gives his company certainty going into next year.
"This allows manufactures time to develop and succeed instead of cutting them off at the knees," he said. "Solar works in Minnesota, people want it, and there's an industry developing."
In a statement, Xcel Energy's regional vice president Laura McCarten said the company is reviewing the decision, and that the process behind the Department's decision to keep Solar Rewards program in place was thorough and thoughtful.
"We proposed to phase out the Solar Rewards program after determining it was not the most efficient or effective way to promote solar installations or to meet the state's energy conservation goals in the current environment," McCarten's statement read, explaining the company's reasons for wanting to end the program. "We are pleased that the department and most, if not all, of the participants in this proceeding agree with us about the need to develop a more sustainable policy and regulatory framework for distributed generation in Minnesota, including solar distributed generation."