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The shape of what might be called the community solar garden industry in Minnesota has begun to form.
Many of the state’s power cooperatives already have solar gardens up and running or being actively marketed. Xcel Energy’s Solar Rewards Community Program received more than 400 applications totaling 420 megawatts in the first week its program opened, about four times the most optimistic projections suggested.
Many of those proposals involve large installations that get around a 1 megawatt restriction on solar gardens by placing several of them together on one site. Xcel complained to the Minnesota Public Utilities Commission last week that developers are proposing projects 10 times the limit and using the program to skirt regulations intended for large projects.
The utility pays a premium to developers for power generated from the solar gardens. It suggested to the PUC that if all proposed projects were greenlighted the program could cost as much as $50 million and add 1.5 percent to residential customer bills and 1.8 percent to commercial clients, according to the Minneapolis Star Tribune.
That debate will continue. In the meantime, Lissa Pawlisch, statewide director of the Clean Energy Resource Teams (CERTs) and based at the University of Minnesota’s Regional Sustainable Development Partnerships and Extension, has been watching solar garden market development closely and has put together a suite of downloadable resources to help consumers understand the still unique concept.
Midwest Energy News: In Xcel’s territory where are you seeing proposed developments?
Pawlisch: Wright, Sherburne and Dakota counties [suburban/exurban areas near the Twin Cities] are dominant. It’s fascinating to me that Ramsey [a mostly urban county including St. Paul] doesn’t have any. There are not many projects in the urban core. Projects thus far tend to locate in more rural areas because there is more land available to do bigger projects. We have a list and a map of where the gardens are proposed.
How are developers getting around some of the limitations?
There’s a one megawatt limit on a community garden so what we’re seeing among some publicly announced early proposals are a series of smaller gardens connected together at one site. A 16 MW project, for example, will actually turn out to be 16 community solar gardens of one megawatt each. Some developers have already shared that they have an anchor tenant, such as a corporation or a public housing agency, that will buy 40 percent of each of the 1 megawatt gardens.
Where are you seeing community solar gardens outside of Xcel?
Where we’re seeing active projects is all in co-op territory because no Xcel projects are up and running. The co-ops are moving forward in a strong way, like Wright-Hennepin Electric Cooperative Association, which has three phases of a community solar garden developed and has seen continued interest.
Are people calling yet and asking questions?
They are and they’re asking if they can join a community solar garden even if they don’t live by one. That’s the chief question, and most of the callers get their electricity from Xcel. We tell them that as long as they live in Xcel’s territory they are likely to have the option of joining any number of community solar gardens, [regardless of where] they live.
Why would a ratepayer sign up for a solar garden?
You can lock in the electric price over a 25 year horizon. If you’re doing a 25 year subscription in a pay-as-you-go model where you sign on to pay, for example, 11 cents a kilowatt hour to your garden operator, then you know that’s the price you’re locking in for 25 years. The other advantage is you’re not having to put solar on your own roof to get involved in solar. That’s what a lot of people want — they want to be involved in solar but they live in an apartment or they don’t have enough money to put up a whole system. This allows them to also be a part of the solar generation mix.
What about businesses and governments?
You’re seeing developers trying to attract those markets, as you saw in the Ecolab deal [Ecolab announced in January it will buy nearly all its power, 16 megawatts, from community solar gardens being developed by SunEdison]. I gave a presentation to a number of counties and told the audience that local governments would be valued potential subscribers. They should be asking what their market power is.
For those entities looking to be a longer-term subscriber that’s a benefit to the operator in terms of thinking about how many times do I have to go out and find a subscriber. Governments should look at that value over time and use that power to their advantage.
What have you seen in the ratepayer marketplace?
In Xcel territory the level of engagement seems to be at a higher level than direct to consumers. It’s more at the level of community groups who are working as aggregators and conduits of information, and who are starting to get the resources they need so they can play a role in the promotion to consumers in their circle of influence. My sense is that more will be available directly to residential consumers as things progress.
Who are the aggregators?
It could be a congregation — maybe they have an environmental group of parishioners and they want to encourage other members to subscribe. They’re doing the outreach to help with customer acquisition. Nonprofits and community groups are taking a role in letting their neighbors know about the solar garden opportunities. The question is: what will the church or nonprofit receive in terms of benefits for that role? Do they get compensated at some level or a price break for doing that? After all, you’re doing the marketing on behalf of that operator.
How are developers pricing solar gardens?
There are more and more models emerging, from what we’ve seen in co-op territory. There is a pay-as-you model, where you pay a certain amount on a monthly basis. Some gardens offer the “upfront” option of paying for a subscription in full. You would have to run the numbers on which is the better deal. I think we’re going to see lots of different options for people because developers will try to find the sweet spot for making this work. That’s been exciting.
How would subscriptions work?
Developers offer a 25-year agreement. As a ratepayer — a resident, a business, or a local government — you might sign a 25-year subscription contract and have early exit and termination options. You can buy as much as 120 percent of the power you need for your home. Large consumers can only buy 40 percent of the power produced by a single community garden, but they can subscribe to multiple gardens.
How will the power your panels produce get credited?
You will see it on your bill as a dollar credit. It will be more than your subscription rate, ideally, by quite a bit.
What happens if subscribers move?
If you are a subscriber to a co-op and you move but stay in the territory you can remain a member. The same is true with Xcel — you move in the territory and you can take the subscription with you as long as you are still in the same county or in a county adjacent to the solar garden’s location. If you move to Boston you will need to get rid of your subscription or panels. The subscription or the panels will transfer back to the solar garden operator.
Any advice on how consumers should view that?
We encourage subscribers to ask, if that happens, “Do I get fair market value from the subscription? Do I get charged a penalty? Does the solar garden find the next subscriber? Or do I find one?” You need to be clear what the subscription is because for most people 25 years is a pretty long time. You’re probably going to move. But it won’t transfer to the utility in Xcel’s territory, like it does in co-op territory.
Any other emerging trends or tidbits you see?
We’re starting to see some residents who don’t like what they see in proposed solar developments and we’re assuming there will be some protest over community solar gardens and wanting them to serve the residential scale. All this is happening quickly and many towns and cities may not be ready, but now they’re ready to get ready. Our partners are working in this arena, too — Brian Ross at Great Plains Institute is working with local governments on setting up regulations for community solar and solar projects.