Xcel readies Minn. wind and solar package

Source: Daniel Cusick, E&E reporter • Posted: Tuesday, November 24, 2015

Xcel Energy Inc. says it wants to begin delivering 100 percent renewable energy to customers in Minnesota under a pilot program that will test ratepayers’ appetite for clean power.

In a proposal filed with state regulators, Xcel said it wants to expand its portfolio of clean energy options beyond its 15-year-old Windsource program, which has more than 39,000 subscribers, according to utility officials.

Residential and commercial customers who sign up for the new program, called “Renewable*Connect,” will be able to buy wind and solar power exclusively on a monthly basis or under five- and 10-year contracts at fixed rates and with no upfront costs.

Minneapolis-based Xcel, already a national leader in wind energy, said the program should appeal to Minnesotans concerned about the role that fossil-fuel-based energy has in advancing climate change and diminishing air quality.

The program will also help Minnesota companies meet sustainability goals tied to clean energy. Renewable energy credits (RECs) associated with the wind and solar generation will be retired by Xcel on behalf of the end-user, according to Kevin Schwain, Xcel’s director of product strategy and development.

“We don’t know the full extent to which our customers are interested in paying a premium for sustainability, but we think this is a good model to try,” Schwain said in a telephone interview.

Locking in rates

If approved, Renewable*Connect would be available to all Minnesota residential and commercial customers, but no customer would be allowed to contract for more than 10 percent of the total resource allocated to the program, Schwain said.

Xcel will dedicate the output from two newly built power plants to Renewable*Connect program: the 100-megawatt North Star Solar Project in Chisago County north of the Twin Cities, and the 200-MW Odell wind farm in southwest Minnesota. The two projects are scheduled to generate first power in 2016.

Customers will pay for the renewable energy through the existing fuel surcharge that appears on their monthly bills, Schwain said.

An average residential customer buying wind and solar power under a long-term contract would see their bill increase by about $3 per month, he said. But those same customers will have the benefit of locking in rates for as long as 10 years, while nonparticipating customers will see fuel cost adjustments rise and fall with energy markets.

“Depending on the overall price of fuel for [Xcel’s] system going forward, that could add up to a lot of money saved,” he said.

Officials said the program would be marketed broadly to all of Xcel’s Minnesota customers, but it could be particularly useful for businesses that are working to meet environmental sustainability goals. Increasingly, large and small companies are implementing strategies to reduce waste, improve energy efficiency and curb their reliance on fossil fuels for energy.

Some of Minnesota’s largest firms, such as Best Buy Co., Target Corp. and Mortenson Construction, have pledged to reduce their carbon footprint through energy efficiency, on-site solar generation and direct purchases of renewable energy. Xcel says it wants to build on that progress by extending clean energy options to an even broader base of customers.

Bringing 300 MW of solar onto the grid

Michael Langley, chief executive officer of Greater MSP, an economic development arm for the Minneapolis-St. Paul region, said in a statement that increased clean energy options “are an advantage for businesses expanding in our region,” and that Xcel’s Renewable*Connect program “will be another tool for regional economic development.”

Other independent experts praised Xcel’s proposal as an innovative step in empowering consumers to choose the kind of electricity they want to power their homes and businesses.

“Xcel Energy has thought in a creative way about features like simplicity, predictable pricing, program flexibility, and shielding other rate payers,” Letha Tawney, director of utility innovation and the Polsky chair for renewable energy at the World Resources Institute, said in a statement. “We’re looking forward to sharing the details with our corporate partners and hearing what the Minnesota Public Utilities Commission and other stakeholders think of the program.”

While Xcel prides itself on being the nation’s No. 1 utility provider of wind energy, with more than 5,000 MW of capacity either directly owned or under contract with independent producers, one of the goals of Power*Connect is to draw attention to the company’s emerging solar power portfolio, Schwain said.

Within the last year, Xcel has launched a series of utility-scale solar projects that should bring nearly 300 MW of new power onto Minnesota’s grid by the end of 2016. And the company has pledged to meet 35 percent of power demand in its Upper Midwest service territory using renewable resources by 2030, in part by investing heavily in solar.

But not all of Xcel’s actions are winning praise from clean energy advocates.

For example, the utility’s slow rollout of a community solar program, authorized by state law in 2013, has become mired in controversy. Critics, including a number of independent solar power developers, accuse Xcel of foot-dragging its approval and hookup of new solar gardens because it wants to exert more control over the state’s renewable energy market.

Accusations of a power grab

At least one Minnesota-based developer who is working with SolarCity Corp. to build 100 MW of community solar gardens in the state (ClimateWire, June 17) has threatened to challenge an Xcel-backed policy that would limit the number of solar gardens that could be concentrated in one area.

In October, the Minnesota Public Utilities Commission upheld an earlier decision restricting the number of community solar gardens that can link to Xcel’s Minnesota grid to no more than five per site. Xcel argued for the policy because it said independent companies were seeking to concentrate solar panels in a few areas, effectively turning the concept of small solar gardens into utility-scale solar farms.

That kind of highly concentrated solar garden development, Xcel has argued, would overwhelm the utility’s substations and create challenges in managing the flow of power on distribution lines.

Critics, however, say Xcel is stalling to keep community solar from gaining a foothold in the state. While Xcel has received more than 1,500 applications for solar gardens since last year, it has connected only one project to date — a 36-kilowatt project near Mankato in south-central Minnesota.

John Farrell, energy program director with the Institute for Local Self-Reliance, a Minnesota-based nonprofit that has advocated for distributed and renewable energy since the 1970s, said Xcel has built its clean energy track record on programs that benefit the environment while also benefiting its bottom line. But community solar doesn’t do that.

“Maybe it’s what a lot of other people want, but it’s not what they want,” Farrell said. “It’s also the latest example of how changes in technology are challenging the paradigm of the utility that’s at the top of the heap.”