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Minnesota’s community solar garden program will be one of the largest two in the country even if the regulators this week decide to reduce its scope.
That’s the takeaway of a new report on the state of community solar in the United States by GTM Research, which predicts that only California could surpass Minnesota in the number of projects.
Today, June 25, the Minnesota Public Utilities Commission may issue a decision on whether community solar developers can co-locate more than one 1MW at individual sites.
“Even in a worst case scenario in which no co-located solar gardens are allowed, the market is still well-positioned to be the second largest community solar opportunity over the next 24 months,” said Cory Honeyman, GTM senior solar analyst.
The report shows Minnesota having 18 MW in 2015 and 63 MW in 2016, a far cry from the 914 MW worth of community solar project proposals that have been submitted to Xcel Energy. It’s still significant, however, in the national context.
“Minnesota has significant upside and minimal downside in our market outlook,” Honeyman said. “It’s the major swing state making community solar relevant.”
A national leader
A more liberal ruling on the part of the PUC in Minnesota could double the community solar output for the entire country.
“Minnesota is the biggest leader in community solar’s growth trajectory over the next 24 months,” Honeyman said. “That’s definitely a highlight in the report.”
California remains in the largest community solar market but uncertainty there may slow growth, he said. The majority of subscribers in California will have to pay a premium to subscribe in contrast to Minnesota, where ratepayers will save on their bill through a community solar contract.
The report suggests 37 MW of community solar in California this year and 112 MW next year. But Minnesota’s total could easily dwarf that.
Xcel Energy’s regional vice president Laura McCarten told Midwest Energy News that an agreement reached this week with some solar developers on a 5 MW cap would still produce “hundreds” of megawatts of community solar, far in excess of GTM Research’s prediction for the California market.
The report said the other two leading states are Massachusetts and Colorado. The nation had 66 MW of community solar installed in 2014, a number jumping to 181 MW this year and 465 MW by 2020.
Other bright spots in the Midwest
There are signs of community solar growth in the Midwest outside of Minnesota, with some projects moving forward in Illinois and even Wisconsin, despite policies hostile to solar implemented in that state. Minnesota’s community solar growth came from legislation but it’s more likely that other states in the region see it emerge from utilities seeking a new market.
“The emerging opportunity is for what we call ‘utility lead community solar,’” Honeyman said. “I think the Midwest is one of the hotspots for this to unfold as utilities try to maintain a relationship with their customers through a solar product offering.”
Utility-led community solar will command only a small share of the market over the next two years, at 10 to 15 percent, but that number will grow to more than half of annual installations by 2020, according to Honeyman.
An example is Vernon Electric Cooperative. The coop partnered with Wisconsin Clean Energy Collective to offer a 305 kW community solar project in Westby that has sold out.
Other coops in Wisconsin, Minnesota and Iowa have also launched successful solar gardens.
Looking to the future
Honeyman also noted that the community solar market is pegged currently to states with community solar legislation, with 90 percent of projects this year and next in those markets. The four leading states will account for 80 percent of the projects coming online in the next two years.
Market demand for community solar will be “starkly different” in three to five years, the report notes. Residential and commercial solar companies will play a leading role in community solar projects in states including Minnesota, Colorado and Massachusetts. They will likely have customer acquisition strategies developed from the residential market that can be translated to community solar.
And the winners over the next five years will be developers and utilities that “can be more than just a traditional project developer,” as Honeyman said. The idea is that community solar could solidify a utility’s relationship with customers and open the door to the sale of more products.