Environmental organizations have been trying to figure out how to encourage more private investment in solar power for some years now. So has the federal government, which has provisions in place that allow and encourage both residents and small solar operators to sell power to utility companies without a fee or penalty.
Oftentimes these two federal laws are viewed as contentious issues by utility companies — which are required by law to buy the solar-generated surplus from operators, often at a lower rate than the commercial price set for the power.
One of the more innovative ideas that has come up to address this need is Minnesota’s solar energy legislation, Statute 216B.164. The statute was enacted in 2013 to help the state meet its self-mandated clean energy goal of 31 percent by 2020. (The EPA suggested goal for Minnesota for 2030 is 15 percent.) Provisions in the statute call on local power companies to ensure that at least 1.5 percent of their power is produced from solar by 2020. Minnesota Statute 216B.164 also lays out provisions for creating “solar gardens” that are supported by private investment, calling for these projects to begin coming online in 2014.
In December, Xcel Energy, which provides about 50 percent of the state’s utility sales, launched its Solar *Rewards Community program in Minnesota. The program encourages businesses and residents to invest in solar gardens that are run independently by a single anchor operator and can be supported by other investors. It allows five or more investors to join together, and the resulting solar garden can be built anywhere in the investors’ county or an adjacent one. According to the Minnesota nonprofit Fresh Energy, the array can be up to 1 megawatt (about 4 acres), and credit is reimbursed on the investors’ utility bills.
Fresh Energy’s Executive Director Michael Noble said the program not only has the potential to boost the state’s renewable energy portfolio, but it also promotes commercial investments in the state.
“This is in the very early stages,” said Noble, who pointed out that potential solar operators still have a bit of legwork to do in order to demonstrate that their projects would be viable.
“[Every] single one of these projects is going to need four things in order to get built,” said Noble. “They are going to need customers. They are going to need financial [funding]; they are going to need to have land, or a building or a place to put it; and they are going to need to have an interconnection.” In other words, said Noble, “They are going to need to be well connected to the electric grid and to have the power flow into the system.”
Still, it’s encouraging that Xcel received more than 400 proposals to build solar gardens within a week of launching the program on Dec. 12.
Even though the state has limited each individual solar garden to a maximum of 1 megawatt, said Noble, investors have the ability to build more than one array. The gardens can also be built back to back, encouraging larger corporations with sufficient capital to construct multiple solar gardens — or to act as anchor tenants for a network of smaller companies or single investors.
Noble pointed out that this structure also makes it easier for small investors. These include residents who want to be able to supplement their electrical energy to invest in part of an installation but don’t necessarily have the credit or the capital to assume the cost of a garden or a series of adjacent gardens.
“The homeowner part of this is more difficult because you have the credit-worthiness problem,” explained Noble. “If you have a credit score of 650, can you get the best financing you need to build a $35 million solar farm?” He said large business deals like this — what he referred to as “mall developments” — often require an anchor tenant that can oversee the larger portion of the costs, thereby making it possible for individuals, families or small companies to chip in and increase the community investments in solar power.
And that’s the best part about Xcel’s program, said Noble.
“I love the idea that everyone is eligible to participate: Anyone who has an electric meter, whether [it is] an organization or a nonprofit, or a business or a homeowner; whether your house faces south, or your house is in the shade.”
The conventional worry that homeowners have about whether their property receives enough sun to support solar power doesn’t apply here, since investors don’t have to limit their solar garden to their own property. They can build it on the next block or in the next county, as land and opportunities permit. “Now everybody has a good location for solar power,” said Noble.
Image credit: Mike Weston