Community Solar
Creates Buzz

When the window went up for Xcel Energy’s Solar*Rewards Community program on Dec. 12, 2014, it didn’t take long for the applications to come flooding in. Less than a month later, the utility had received over 400 applications representing over 430 MW from developers seeking to build solar gardens under the program.

According to a document filed with the Minnesota Public Utilities Commission (PUC), most projects propose a series of adjacently sited gardens clustered into 75 separate sites. The largest project proposes 40 MW of adjacently sited gardens.

The community solar gardens program is an outgrowth of the so-called Solar Energy Jobs Act signed into law by Gov. Mark Dayton in 2013. The act was intended to enable customers who could not or did not care to host photovoltaic energy systems to still benefit from solar-generated electricity.

The program is attracting interest from developers and engineering, procurement and construction (EPC) firms throughout North America, in addition to sparking a new business in the region.

Colorado-based SunShare and Minnesota-based construction firm Mortenson have formed a partnership to develop and build solar gardens in Minnesota. The deal comes in the wake of Xcel Energy’s announcement to more than double its renewable energy by 2030, including adding 2.4 GW of new solar capacity.

“More and more of our customers are looking for affordable solar solutions, and the partnership with SunShare to build community solar gardens fits this growing need exceptionally well,” says Trent Mostaert, vice president and general manager for Mortenson’s solar and emerging renewables groups.

Mortenson will serve as the EPC contractor, while SunShare will develop, finance and own the solar gardens. The latter will also sign up energy users for the program. Such customers may purchase a community solar garden subscription from SunShare and will then receive credits on their Xcel Energy bills during the contract term.

Dana Hallstrom, subscription manager for MN Community Solar LLC, says her company’s business model was developed to take advantage of the opportunities the law offered.

“Our staff and ownership played a role in getting the legislation written for the act that allows for community solar in Minnesota,” Hallstrom says. “We also put many of our resources into submitting written comments and providing testimony during the PUC’s hearings throughout 2014. We also have projects fully reserved and ready to be constructed this spring, as soon as the weather permits.”

Jon Miller, utility program manager for San Luis Obispo, Calif.-based REC Solar, says that although commercial solar is his company’s core competency and will remain so, community solar programs dovetail nicely with that competency because of their scale and economics.

“I keep an eye on all of the utility-type programs that are looking at smaller projects like these community solar programs,” Miller says. “It was natural for me to go up and check out Minnesota’s program to see what is going on up there. And it’s a good program.”

According to Miller, community solar programs are attractive to REC Solar because they are almost always bite-sized systems that are easier to develop. In terms of the permitting progress, the sites are generally 20 to 30 acres rather than the 150 to 500 acres of large-scale utility PV plants. Moreover, community solar projects tend to fit into the distribution system rather than the transmission lines.

“You are fitting these projects into the communities they serve, so they are more meaningful to the communities,” Miller says. “Customers know that when they are buying a piece of one of these arrays that they can drive by and see it if they want to.”

Ultimately, Miller expects the community solar approach to form an ever-expanding market between the venerable residential and utility-scale segments. Importantly, the economics of such projects fit with utilities’ business models and experience base, meaning that community solar should evolve rapidly, particularly if Xcel Energy is successful with its program.

“This is something that a utility can look at and they understand how to deal with subscribers - long-term subscribers,” Miller says. “They deal with that every day. That’s their business.”

Like all new businesses, Xcel Energy’s Solar*Rewards Community still has some hurdles to overcome. Some concerns have been raised over the process the utility uses to process the applications it receives. In particular, certain existing programs that had been filed with Xcel Energy under a Section 10 interconnection tariff have been recast as proposed community solar garden projects, giving them a leg up on the competition in the interconnection study queue.

 

Regulators Boost N.C.’s Solar Status

On Dec. 31, 2014, the North Carolina Utilities Commission (NCUC) issued a decision that supporters say will bolster the position of solar power in the state.

The order, pertaining to Docket E-100 Sub 140 - a.k.a., the Avoided Cost Docket - confirmed existing parameters for creating standard-offer power purchase agreements (PPAs) for qualifying facilities (QF) and provided direction for public utilities in calculating their proposed avoided cost rates.

According to Ivan Urlaub, executive director of the North Carolina Sustainable Energy Association (NCSEA), the NCUC’s order on both issues represents a victory for solar.

“In this docket, the NCSEA was the most engaged intervenor from the clean energy side,” Urlaub says. “We coordinated with a coalition of interests that felt impacted by the decision. We brought a number of industry representatives as expert witnesses to explain to the commission how the standard offer was working and what should go into the avoided costs rate calculation.”

The standard-offer PPA was conceived in 2010 to support the development of photovoltaic power in North Carolina in the 2 MW to 5 MW range, which Urlaub describes as the industry’s financial sweet spot in terms of cost-effectiveness for developers. Furthermore, the contracts supported terms up to 15 years. The 5 MW threshold and 15-year PPA enabled developers to secure cost-effective financing for their projects, which utilities sought to meet renewable portfolio standards.

At the time, natural gas was expensive, solar renewable energy credits were valuable and the level of solar penetration in the state was low enough that utilities did not consider it to be unduly disruptive to their operations or burdensome to ratepayers. However, the cost of solar plummeted and soon became the least expensive renewable energy resource in the state - with the exception of landfill gas, where sites are essentially all spoken for.

The cost-effectiveness of solar as a renewable resource has boosted North Carolina to the No. 4 spot in installed PV capacity over the last few years. As a result of this rapid expansion, the public utilities sought to redesign the standard-offer PPA so that they would be capped at 100 kW with terms reduced to 10 years, making projects more expensive. The utilities argue, in a nutshell, that solar developers were getting too sweet a deal on the backs of ratepayers.

“The regulator hurdle there is, ‘Are ratepayers being harmed by this rapid expansion in solar development?’” Urlaub says. “And the commission’s statement is, ‘No, they are not.’”

On page 56 of the order, a passage reads, “The commission determines that there has been widespread QF development under the existing framework without adverse impacts to utility ratepayers.”

On the other key point in the order, methodologies for calculating the avoided cost rate, Urlaub says the NCUC also came down squarely on the side of solar, although the practical effects will not be apparent until the utilities file their rates in March.

“Overall, the arc we’re following is that we want and need a more diverse electricity portfolio that’s affordable for all ratepayers,” he says. “And we want it to be clean. Things like the standard-offer PPA and a fairly transparent, effective avoided cost methodology and rate are critical to keeping us on that path to scalability and driving the cost down.”

 

California Aims
For 50% RPS

California Gov. Jerry Brown has pledged to expand his state’s commitment to clean energy, setting forth a goal to generate 50% of electricity from renewable sources by 2030.

Brown was sworn in for a fourth term as governor. He used the occasion of his state of the state speech to outline ambitious clean energy priorities for the future, including significant expansion of rooftop solar.

“I envision a wide range of initiatives: more distributed power, expanded rooftop solar, microgrids, an energy imbalance market, battery storage, the full integration of information technology and electrical distribution, and millions of electric and low-carbon vehicles,” Brown said during his address.

California currently has a requirement to generate 33% of its electricity from renewable sources in the next 15 years. The new proposal is part of a three-point plan to reduce carbon emissions. The other components are a goal to cut petroleum use by 50% and double the efficiency of existing buildings.

Some industry observers caution that a 50% renewable portfolio standard (RPS) could pose challenges for grid operators and have unforseen consequences for solar power generators, notably involving possible curtailment. However, many solar advocates welcomed Brown’s overall goals.

“With the help of increased storage, the evolution of advanced inverters and smart grid technologies, and the increased investment in solar water-heating technologies, solar power can play a significant role in building the carbon-free California envisioned by the governor,” says Bernadette Del Chiaro, executive director of the California Solar Energy Industries Association.

 

Washington Proposes Cap-And-Trade System

Washington Gov. Jay Inslee has proposed a carbon cap-and-trade mechanism for the state.

Building on an executive order Inslee issued in April, the Carbon Pollution Accountability Act (CPAA) would create a new, market-based program that limits carbon pollution and requires major polluters to pay for their emissions. The limit will decrease gradually over time, allowing emitters time to transition to cleaner technology and improved operations.

The CPAA received input from the governor’s Carbon Emissions Reduction Taskforce, which included representatives from business, labor, health care, utilities, at-risk communities, governments and others. Inslee says the program would generate about $1 billion in the first year and more thereafter.

Regulatory and market-based schemes to increase the cost of carbon-emissions systems are seen as valuable tools for states to reach their commitments under the U.S. Environmental Protection Agency’s Clean Power Plan.

In a related announcement, Inslee has asked the Department of Ecology to draft a clean fuel standard rule and to solicit review and comments from legislators, stakeholders and the public.

The governor also says the Washington State University Energy Office is drafting legislation to expand the state’s solar incentives program.

Policy Watch

Community Solar Creates Buzz

 

 

 

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