In a July 31st Star Tribune article, Xcel’s CEO revealed they will push to limit the growth of residential and community solar upon a claim that it would be almost twice as expensive as Xcel pursuing utility scale solar instead. The Star Tribune could have at least done some more work to research this claim.
The recent study Xcel’s CEO was probably referring to was funded by the Edison Electric Institute and was prepared for a Walmart-family supported solar developer, both of which have a financial interest in reducing competition from distributed solar.
While Utility Scale Solar may produce electricity a little cheaper, its electricity is worth a lot less. This is because residential/ community solar is able to deliver power straight to the point of use while utility scale solar often requires the construction of expensive new high-voltage transmission infrastructure that is often controversial for communities they are built through. Other studies show how such delivery costs can cancel out the modestly better economies of scale utility-scale solar has at the point of generation.
In addition, the more geographic diversity in the locations of solar panels, the more reliable solar energy becomes, allowing renewable energy to thrive with less need for expensive natural gas power plants to back it up. These benefits are why we need distributed solar to provide a more rapid transition to clean energy.
Distributed solar also has substantial economic benefits - benefits that flow to electricity customers and recirculate within the local economy rather than going into the coffers of monopoly utilities.
It is important to note how the same utility which recently requested a near 10% rate hike largely to cover the cost overruns of their Monticello nuclear plant is suddenly becoming so sensitive about the supposed rate impact from residential and community solar onto non-solar customers. The Star Tribune reported back on March 6th that Xcel was wanted their customers (rather than shareholders) to not only pay for the entire $400 million in cost overruns, but also a profit margin to Xcel on those cost overruns. Why is Xcel suddenly so concerned with the impact on energy users where solar is concerned, but has so little consideration for the much larger impacts on utility customers when their own nuclear plants are at fault?
In addition, Fresh Energy has done some rate and cap impact calculations that suggested Xcel was overestimating the rate impact of the community solar program onto non-solar customers. What could be Xcel’s motivation?
Large utilities in general prefer renewable energy to mimic their familiar central station power plant model, because it is something they can own and control and charge us for. Otherwise, we, the energy users, not Xcel shareholders, reap the economic benefits of being power producers. It is the same reason why Xcel is making laudable commitments on doing utility-scale solar of their own while fighting so hard to stop community solar installations from reaching utility scale. Xcel fights against small-scale and locally owned wind for exactly the same reasons. Investor owned utilities seek to put renewable energy into their base of assets because then they are guaranteed profits by the Public Utilities Commission about a 10% rate of return on those investments. In doing so, they seek to prevent others from developing our own clean energy in other ways.
The Star Tribune Article did not specify what Xcel exactly plans to do to discriminate against residential and community solar. The usual strategy incumbent utilities use to undermine competition from customer owned distributed solar is to try make it less cost-effective by changing the rules, adding fees and ending incentives. But now utilities are starting to co-opt rather than fight distributed solar by offering to own solar arrays on customer’s roofs, thus confirming ownership as the core motivation.
Community Solar development for Minneapolis residents and businesses is an important part of the Clean Energy Partnership between the City of Minneapolis and Xcel, and has already been approved as a priority by both parties. Xcel's statement that they will seek to impose barriers on the residential solar market or delaying the interconnection of solar gardens is inconsistent with the Minneapolis Clean Energy Partnership goals they agreed to when they signed the partnership agreement.