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Community solar coming to Xcel Energy customers

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An array of solar panels
The community solar garden is just one model of solar energy project developing around the state; the electrical cooperative is another. This array of panels in Pelican Rapids, Minn. was built by Lake Region Electric Cooperative workers last year.
Ann Arbor Miller | MPR News file

Galen Naber wants the electricity for his home to come from the sun. But he doesn't think solar panels would look good on his small home and nearby trees likely would cover the panels in shade before long.

Yet Naber can still achieve his solar-energy goal thanks to a community solar garden that likely will be miles from his Roseville, Minn., home. He and other Xcel Energy customers soon will be able to receive power from community solar gardens. After a concerted effort by the utility to limit them, they will come online in Minnesota by the end of the year.

Naber will still get his power electricity from Xcel Energy. But he'll sign a long-term contract for electricity generated by the solar garden. The contract commits him to buy enough power for his home and electric-powered Chevy Volt. Xcel Energy will add the solar power to its distribution network, and give Naber a credit towards his bill.

For every $100 he spends on solar energy, his electric bill could be cut about $10. Naber figures it's a way to connect to a key power source of the future early.

"Basically, I look at the traditional fossil-based fuels and you just got to realize it's finite," he said. "But you look at the sun ... it's infinite, basically for as long as it lasts."

Under DFL control, the state Legislature authorized community solar gardens in 2013 and mandated that Xcel Energy buy the power the gardens generate, as part of a plan to increase the electricity Minnesotans get from renewable resources. 

Xcel Energy, the state's largest electric company, must produce 31.5 percent of its power from renewable sources by 2020, with 1.5 percent coming from solar energy.   Some developers wanted to build solar gardens that could each power several thousand homes. But Xcel Energy balked at the scope of such proposals, lamenting that they were not what the power company or the Legislature envisioned. State utility regulators last month approved a compromise that caps a garden's capacity at the scale needed to power 1,000 or so homes.

Naber plans to obtain his solar power from Able Energy, one of the firms planning to build community solar gardens.

"We've got a lot of interest from all sorts of parties," said Mike Harvey, the company's president. "We're talking to customers who have a need for up to 40 megawatts, all the way down to your residential customer."

Harvey said customers will be saving green as they go green.

"Our rate of electricity cost is about 10 percent less for residential homeowners," he said.

Harvey said businesses could save 12 percent or more. He said the savings should grow over time, assuming Xcel Energy's electric rates rise as they have in the past.

Community solar gardens can require some serious money and land. A 1-megawatt solar garden requires about five acres of land and a $2 million in investment, Harvey said.

Investors backing solar gardens want to get the projects built soon. The federal government is offering a 30 percent tax credit for projects completed by the end of 2016.

Xcel Energy has received more than 1,000 requests from community garden developers to connect their proposed projects to the company's power grid. Combined, those projects could generate enough energy to meet the needs of maybe 200,000 homes.

The company fought the biggest projects, leading to the capacity limits that solar gardens will now have to live within.

"Developers were proposing 10, 20 even as high as 50 megawatts, taking the program well beyond the scope of what was intended," said Laura McCarten, an Xcel senior vice president.

McCarten said the utility supports community solar but the savings going to people buying solar power will add to the bills of other Xcel Energy customers.

"They're the ones who pay for the cost of that power," she said.

Community solar advocates don't buy that argument. They say traditional power consumers should pay more than solar customers because of the environmental costs of generating power from fossil fuels.

"None of us are paying the full cost of our fossil fuel energy in terms of health and environmental impacts," said Erica Zweifel, a Northfield City Council member trying to develop community solar there.   But McCarten, of Xcel Energy, also said the solar gardens' power is more expensive than the solar energy that the company can get from large-scale industrial solar farms.

"The price of the solar that comes from those types of projects is about half the price of what the current fixed price is we have to pay for energy out of community solar gardens," she said.

McCarten said Xcel Energy expects solar projects to provide up to 10 percent of its electricity in Minnesota by 2030. Overall, the power company plans to obtain 36 percent of its electricity for Minnesota from renewable sources by 2020.

But Rob Davis of Fresh Energy, a clean energy advocacy organization, said people shouldn't have to wait for Xcel Energy to boost its solar output.

"I want to go solar more quickly," he said. "And that's where community solar comes in. You can go 50 or 100 percent solar. It's your choice."

But there are several factors likely to constrain the growth of community solar. Consumers and organizations generally have to commit to 20- to 30-year contracts.

There also are regulatory limits on how much power businesses and other big customers can get from a garden and technical constraints on how much power Xcel can add to its distribution network at certain points.