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Community solar - a concept that allows homeowners, renters and businesses to participate in solar power without having to install solar equipment on their property - has rapidly gained traction as new shared solar generation programs have been adopted across the country. Meanwhile, community solar program rules have been revisited in light of unprecedented interest in a Midwest solar laboratory: Minnesota.

Moving beyond the limitations of physically hosting solar panels on one’s property more than quadruples the potential solar market and has many related benefits. It also provides a platform for larger projects that serve multiple people and businesses, thereby taking advantage of economies of scale and enabling lower associated costs.

The siting of generating equipment can be more carefully planned or even target low-value land that has little other use, such as closed landfills or brownfields. A project can also be tailored to meet local load without burdening the electricity transmission system.

If the new programs and proofs of concept continue apace, community solar has an opportunity to help chart the way forward, even as tax benefits for solar are reduced.

Although many community solar projects have emerged as a result of voluntary arrangements with local utilities, a dozen or more states have now adopted state policies designed to foster community solar programs and ratepayer participation. California and other leading solar states have encouraged this through virtual net-metering programs that enable residents of multifamily building complexes to share in the benefits of a solar installation. California’s vast solar portfolio, however, remains dominated by utility-scale projects and the substantial penetration of traditional on-site distributed solar.

In the East, by contrast, Massachusetts’ significant solar deployment has largely been built as mid-scale, virtually net-metered projects. Massachusetts allows the allocation of net-metering credits to other customers, thereby facilitating sharing broadly under its net-metering program.

Colorado has paved the way in the middle of the country for the community solar market in 2010 through its introduction of a bill-credit model that allows utility customers to receive credits on their electric bills in exchange for participation in a solar garden. More recently, Minnesota has built on the Colorado community solar garden model. Earlier this year, Maryland and Connecticut in the East and Hawaii in the West have established new community or shared renewables programs by statute.

The current trend in community and shared solar is facilitating solar development in the 2 MW to 10 MW range. Many state programs, however, face caps in the form of an aggregate megawatt cutoff, while others are limited by net-metering caps generally set at a percentage of a utility’s peak load. In Massachusetts, for example, the cap is set at 6%. The cap has nearly been reached and is far short of the state’s separate 1,600 MW target for solar, leaving policymakers trying to obtain a legislative fix. Vermont’s program, as another example, is similarly restricted by net-metering caps but at a substantially higher 15% threshold.

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Community solar laboratory

In Minnesota, the state required utility Xcel Energy to launch a community solar garden program and also required that the program remain unlimited. The program is open to all retail customers of the utility, who may subscribe up to 120% of their load to any number of 1 MW community solar gardens. Because the statute was silent on whether multiple 1 MW gardens could be located near one another, the Minnesota Public Utilities Commission (PUC) has allowed it so that multiple gardens can share distribution infrastructure.

When the program launched in December of last year, developers rapidly submitted over 400 MW worth of applications. About 95% of those were applications for co-located projects, with roughly 80% proposing to co-locate five or more 1 MW solar gardens. Even though the program was uncapped, the co-location ruling has imposed very real functional limitations on the program in the form of land availability in the largely urban and suburban utility-service territory, as well as constraints on Xcel’s distribution system.

An engineering firm has estimated that the aggregate buildable capacity on Xcel substations affected by these initial projects ranges from 77 MW to 270 MW. Without a detailed plan of Xcel’s distribution system, it appears developers have over-applied for capacity in the expectation that they might downsize their projects to fit the appropriate local load and capacity, as revealed through the interconnection study process.

Even without an upper program limit set by statute - as is the case in many states - this functional barrier was widely anticipated. A developer’s relative place in line for limited distribution capacity became vital to its projects’ likelihood of success.

Queueing in Minnesota, however, does not come easily. The state PUC was first forced to address this issue hardly more than a month into the program, when the interplay between the program and related interconnection procedures appeared to be creating the potential for two separate queues, with some developers jumping in one or both as early as they thought possible.

Realizing there was stiff competition for places in line, the PUC clarified that the first applicant ready under Xcel’s community solar garden program would be the first to proceed. In this case, being ready required a relatively simple application to the program but a large cash deposit ($100/kW) and a final determination from the utility within 30 days that the application was, in fact, complete.

Approximately five months later, the majority of initial applications with fully paid deposits were deemed complete and had their places in line reserved. By this time, however, there were two additional complications. First, Xcel announced its intentions to unilaterally scale back projects located near each other to 1 MW total, asserting the program had run afoul of legislative intent and would be too costly to non-participating ratepayers. Second, the application pool grew to over 1 GW worth of potential projects, further fueling competition for limited distribution system capacity and ratepayer concerns.

The PUC intervened with hearings at the end of June to resolve the dispute. This time, the commission reshuffled the queue by retroactively revising the program rules to limit co-located projects to five 1 MW community solar gardens, impacting half or more of the first-ready projects. Additionally, the PUC added new readiness demonstrations (e.g., site control, permit completeness and subscribership thresholds) and further constrained interconnection by putting a cap on the amount of money a developer could spend to fund the system upgrades.

 

Pushing forward

The turmoil in Minnesota suggests that there is a lot of work to do in developing sustainable rules for large-scale deployment of community solar. However, the overwhelming interest in the program from both developers and subscribers - and the proliferation of community solar programs across the country - serves as proof of the concept.

In Minnesota, parties are committed to refining what the right mix of rules and rate design should look like for community solar garden projects going forward. Stakeholders will also plan for the post-2016 world without the federal investment tax credit. These efforts could lead to further queue reform, and, possibly, to the long-awaited implementation of a value of solar rate. The latter is intended to more fairly account for all of distributed solar’s costs and benefits so that non-participating ratepayers are not unfairly burdened.

With the right rules for interconnection and fair rates, community solar may be a sustainable path forward for mid-scale solar development that is compatible with efficient land use, ratepayer protection, renewable energy goals and access to solar for everyone.

 

Sara E. Bergan is an energy law attorney in the Minneapolis office of Stoel Rives, where she works primarily with renewable energy and cleantech clients on project development, project finance and regulatory matters. She may be reached at sara.bergan@stoel.com. Andrew P. Moratzka is a partner in the Minneapolis-based energy development group of Stoel Rives, where he focuses on litigation of various utility- and energy-related issues. He may be reached at andrew.moratzka@stoel.com.

Community Solar

Proof Of Concept: Community Solar Is Ready To Soar Despite Complications

By Sara E. Bergan & Andrew P. Moratzka

Minnesota’s turmoil over solar gardens provides a laboratory for handling similar efforts across the U.S.

 

 

 

 

 

 

 

 

 

 

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