Solar installation
This 2016 photo shows construction at a community solar garden in Red Wing, Minn. Credit: Elizabeth Nida Obert/The Rochester Post-Bulletin via AP

The process for connecting solar arrays to Xcel Energy’s grid continues to frustrate installers in Minnesota despite recent changes meant to reduce delays.

“I’m still hearing about it from our members a lot,” Logan O’Grady, executive director of the Minnesota Solar Energy Industries Association, said of the wait times companies face before interconnection approvals. “It’s still bad.”

An Xcel Energy official speaking at a recent solar energy conference said the utility was making progress on clearing its interconnection backlog, and that it connected more than 1,900 solar projects to its grid over the past year. It’s also implementing a new cost-share program to spread grid upgrade expenses.

‘More issues are always coming’

The utility’s interconnection process has been the subject of complaints from solar companies for several years. Each project must be studied to make sure it won’t strain local grid capacity, and in some cases customers are asked to pay for upgrades to substations or distribution lines before they can connect.

In January, Minnesota utility regulators ordered Xcel Energy to expedite that process by studying multiple solar projects at once for a particular substation. Solar developers said the process is working better now, but too many projects are still being delayed or derailed by surprise costs for grid upgrades.

Bobby King, Solar United Neighbors Minnesota state director, works with installers to create solar co-op buying programs. Most interconnection applications go through without a hitch, he said, but a handful of clients have had to wait as long as a year. He worries about the potential for even more congestion as new incentives from the federal Inflation Reduction Act kick in.

“It’s all solvable if the [Minnesota Public Utilities Commission] and/or Xcel would say they were going to prioritize this and make it happen,” King said.

David Shaffer, director of policy and government solutions at Novel Energy Solutions, said he shares many frustrations with other solar developers. As one of the state’s bigger community solar companies, Novel has repeatedly run into roadblocks in Xcel’s territory, he said. “Even if things are speeding up, more issues are always coming,” Shaffer said.

Xcel’s move to studying more projects at one time has helped, he said, but the backlog still includes more than 250 projects. If everything goes right, a project will take around a year to get through the approval process, a length of time much longer than in other states, Shaffer said.

“It’s getting to the point where it’s hard to justify focusing on Minnesota,” he said, pointing to opportunities in Michigan, Illinois and other states. “It’s not like you can’t do a community solar garden here. It’s just a lot easier to do it somewhere else.”

Cost-sharing for customers

All Energy Solar’s director of permissions and design, Danielle DeMarre, said Xcel’s interconnection process has “improved significantly,” but too many of its projects are still being held up for additional review, a setback that can delay them six months or more, she said.

Unexpected costs are also emerging as a bigger problem, DeMarre said. Under the rules, any project that triggers the need for grid upgrades must pay for the cost of those improvements, even if others will benefit from them. 

That cost can leave homeowners with no option other than to forego solar. Xcel told at least six All Energy Solar customers in areas where the grid is congested that they would have to pay at least $15,000 for a study just to determine if capacity exists for their systems, DeMarre said. All six homeowners withdrew their applications.

Scandia, a small city north of St. Paul, is located at one of the more congested interconnection points because it hosts multiple community solar arrays. The city council recently wrote a letter to Xcel and the Public Utilities Commission asking the utility to “clear up the backlog of projects” preventing local residents and businesses from installing new solar projects.

State Commerce Department data shows last year developers installed roughly 124 megawatts of solar, down from 146 MW in 2020, and developers say Xcel’s interconnection backlog is a factor. The numbers, which include residential, community solar and commercial/industrial, were the lowest total for new solar output in Minnesota since 2015. 

Xcel’s DER integration manager Dean Schiro said at a recent solar conference that the number of projects on hold had dropped from 319 through September of last year to 288 this year. The company is following regulators’ order to conduct cluster and parallel studies to shorten the interconnection process. Xcel often has been assessing applications one at a time but has moved toward reviewing several at once.

This has moved more projects through the queue quicker but after seeing the results of the studies some developers have pulled projects, he said.

The popularity of community solar has constrained interconnection spots in counties near the Twin Cities yet developers continue to file applications to connect to those feeders, Schiro added. Those applications are put on hold so the utility can take more time to determine their impact on the grid.

The Public Utilities Commission this month approved a cost-sharing approach meant to address the cost issue. Solar customers will pay a $200 fee when they connect to the grid, and that pool of money will provide financial assistance of up to $15,000 to customers who need grid upgrades.  

Most solar projects for now do not require upgrades except at the most congested substations. The average interconnection upgrade cost for smaller systems is about $4,000, according to data from Xcel. The cost share program was developed by All Energy Solar, TruNorth Solar and Fresh Energy, which also publishes the Energy News Network.

Frank is an independent journalist and consultant based in St. Paul and a longtime contributor to Midwest Energy News. His articles have appeared in more than 50 publications, including Minnesota Monthly, Wired, the Los Angeles Times, the Minneapolis Star Tribune, Minnesota Technology, Finance & Commerce and others. Frank has also been a Humphrey policy fellow at the University of Minnesota, a Fulbright journalism teacher in Pakistan and Albania, and a program director of the World Press Institute at Macalester College. Frank covers the state of Minnesota.