Large solar arrays are likely to sprout in Minnesota after
lawmakers required Xcel and other big utilities to get 1.5% of their power from
the sun by 2020.
Minnesota’s solar industry is getting a jolt of energy.
It doesn’t sound like much — a requirement that major
utilities generate 1.5 percent of their power from the sun by 2020. That’s
roughly the output of one power plant or wind farm.
Yet the state’s new solar standard, signed into law Thursday
by Gov Mark Dayton, will force four investor-owned electric utilities to generate 30
times more solar power than they do today.
Power companies had opposed the mandate, and remain wary of
solar’s cost, which they say can’t compete with low-cost wind and natural
gas-fired generation
“It doesn’t mean that we don’t support renewables, but at
least today, solar is quite a bit more expensive than other alternatives,” Ben
Fowke, CEO of Minneapolis-based Xcel Energy,
said in an interview.
The law also adds fresh incentives for homeowners and
businesses to install rooftop solar panels, expands a subsidy for solar
equipment made in Minnesota, and allows people who can’t put solar panels on
their roof to invest in a shared system, or “solar garden.” The law also
encourages building of larger solar projects and creates a new solar-friendly
reimbursement rate for rooftop systems.
Only the state’s four investor-owned utilities are subject
to the mandate, including Xcel Energy, the largest power company with 1.2
million Minnesota customers, and Duluth-based Minnesota Power, serving the Iron
Range. Municipal utilities and co-operative power companies successfully
lobbied for an exemption. Mining and paper industries also are exempt.
Large solar arrays
To meet the mandate, the largest power companies must
consider building large, utility-scale solar generators that are common in
California, the Southwest and other states, like New Jersey, that have solar
standards. A 2-megawatt array — large by solar standards, but equal to the
output of just one wind turbine — can cover nearly eight football fields, said
Rick Evans, regional government affairs director for Xcel.
In a sign of what might be coming, Edina-based
renewable power developer Geronimo Energy recently proposed 31 large solar arrays in 18 Minnesota counties on properties
adjacent to Xcel substations.
Each solar array would be as big as or bigger than the
state’s largest solar power collector — the system completed last year in
Slayton, 180 miles southwest of Minneapolis.
“We firmly believe that the way solar prices have come down,
solar is a competitive capacity resource,” said Geronimo Vice President Betsy
Engelking.
Like Geronimo, many of the companies that stand to gain from
the solar standard are in the wind power industry. They include the two largest
U.S. wind energy contractors — Mortenson Construction of Golden Valley and Blatner Energy of Avon, Minn. — and
EDF Renewable Energy, the state’s largest wind power developer whose Midwest
office is in Minneapolis.
All three have built large solar arrays in other states, and
Mortenson is constructing the world’s largest solar-photovoltaic system in
California, said Trent Mostaert, manager of the company’s solar and emerging
renewables group. He said Mortenson probably will add solar training programs
for electricians and other workers who will build solar projects in Minnesota.
Blattner Energy, which rivals Mortenson in the number of
renewable energy projects it has built, sees opportunities in solar if electric
utilities embrace big projects. Doug Fredrickson, a company vice president,
said Geronimo’s strategy to roll out a string of large projects makes sense,
and likely will save utilities money.
“You put three 2-megawatt projects together in a schedule
and you can push costs down even lower,” he said.
At EDF, a unit of Paris-based EDF Energies Nouvelles,
Shanelle Montana said the company also is looking at solar projects, including
for large rooftops.
“That could be a big-box store or a
municipality, a school or a university,” said Montana, the company’s associate
for legislative and regulatory affairs. “We are going to cast our net fairly
wide and look at who wants solar, who has actual space for solar, whether it’s
rooftop or ground mount.”
Minnesota joins other states
Minnesota is the 17th state to enact a solar energy
standard. The law is modeled after the state’s renewable energy policies that
required utilities to add wind farms. Most Minnesota utilities must get 25
percent of their electricity from renewables, mostly wind, by 2025. The 1.5
percent solar mandate by the end of 2020 is on top of that.
Lynn Hinkle, policy development director for the Minnesota
Solar Industries Association, said the state has more than 100 solar-related
businesses, including installers who work on residential and commercial
projects. He said the law requires 10 percent of solar generation to be from
such systems. He estimated that the law will create or maintain about 2,000
industry jobs
.
Under the law, Xcel also will change its Solar Rewards
program, which has offered upfront rebates to those who install solar systems.
Now, the incentive will be a long-term subsidy based on the amount of power
generated, and solar customers will be paid for their power instead of getting
a credit for watts produced. Xcel’s Evans said the latter change will avoid a
hidden subsidy that shifted utility distribution costs to nonsolar customers.
Xcel and other utilities still need to work out many details
of their solar programs. Fowke, Xcel’s CEO, said the problem with small,
rooftop solar is that it costs about 20 cents per kilowatt/hour, or roughly
twice the residential retail rate. He said the utility needs to work with
regulators and industry to “get it right” on solar policy.
“If it is done wrong, it will be expensive for our
customers,” Fowke said.
Otter Tail Power Co. of Fergus Falls, another investor-owned
utility subject to the solar mandate, predicts it will trigger a rate increase
of 3 to 5 percent.
Solar supporters say it will help build an industry.
“Our hope is that we are taking the first steps to continue
to grow solar and take advantage of opportunities,” said Minnesota Commerce
Commissioner Michael Rothman.
Rep. Melissa Hortman, DFL- St. Paul, a
sponsor of the measure, said she expects that incentives for made-in-Minnesota
solar equipment will bring new businesses to the state. “It is $15 million a
year for 10 years,” she said. “That will leverage private investment.”
Two existing solar panel makers — Silicon Energy of Mountain
Iron and TenKsolar of Bloomington —
stand to benefit from the expanded Minnesota-made subsidy. The law also creates
new rebates to encourage installation of Minnesota-made thermal solar equipment
to heat buildings or hot water without generating electricity — a sector that
had been left out of the earlier subsidy program.
“It means that solar thermal is recognized as a solar
technology that is manufactured in Minnesota,” said Randy Hagen, CEO of Solar
Skies Manufacturing, which produces solar water heaters in Alexandria.
Jason Edens, director of the Rural Renewable Energy
Alliance, a nonprofit manufacturer of solar air heating equipment in Pine
River, Minn., said the new rebates of $2,500 and up will help with the
company’s mission to bring solar to families with low incomes. “This is going
to catalyze a lot of activity,” he said.
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