MANKATO — By the end of this year, Blue Earth County alone may have more solar power capacity than the entire state does now.
This in a county that may not even crack the top five solar producers. And in a state, for that matter, that’s hardly known for sunshine.
A solar boom is on in Minnesota, fueled by tax credits, a renewable energy mandate and a new way to sell solar power to the masses. Xcel Energy predicts construction of these “solar gardens” to ramp up massively in 2016, generating by themselves more than 10 times the state’s current solar load.
South-central Minnesota is sharing in that growth.
Three large solar projects are pending in Mankato and another three big arrays may be headed to rural Blue Earth County. Each of them is at least three times bigger than Mankato’s current largest solar installation, a School Sisters of Notre Dame project that came online last fall atop Good Counsel Hill. If they are all approved — a tall order, considering the hundreds of applications waiting to be approved by utilities — Blue Earth County could have 28.6 megawatts of solar power by the end of the year.
In Xcel Energy’s territory, which includes most of Mankato, customers can subscribe to any solar garden in their county or a neighboring county. Mankato customers should have plenty of choices.
Take SunShare, which is developing solar arrays in Blue Earth, Waseca and Le Sueur counties. They expect to begin marketing to area residents in the next month or two.
“You should see quite a bit of activity in Mankato,” said Matthew Bowers, director of sales.
Though the deals can be complicated, the marketing is likely to be simple.
Jim Haler, whose St. James-based electricity cooperative will soon start selling memberships in a relatively small Lake Crystal-area array, said his members want to participate in solar power without buying their own panels.
“This really is worry-free solar,” he said.
Though the declining cost of solar panels helps, the 2013 state law creating solar gardens and mandating that 1.5 percent of the state’s power come from the sun by 2020 has been critical.
How solar gardens work
A community solar garden is a little like its agricultural namesake. In both cases, subscribers share the labor and expense as well as the harvest.
But instead of tomatoes, carrots and potatoes, subscribers to a solar garden get cash. Specifically, the value of their share of the solar panels’ electricity, at current prices, is deducted from their bills.
“They’re paying you a little more than they would if you just had solar panels on your roof,” Dan Thiede, communications manager at the University of Minnesota-based Clean Energy Resource Teams. That’s thanks to a renewable energy credit the solar developers receive.
Because the bill credit is based on the panels’ output, it will depend in part on how much the sun is shining in a given month.
In return, subscribers will pay for the electricity these panels produce. There are two ways to pay: on a monthly basis, like an electricity bill payment, or in a larger lump sum.
In either case, customers are likely to at least break even, Thiede said.
“With community solar in Xcel territory, as long as terms are decent with the developer — which in most cases they are favorable — people are going to be ahead financially, if not in year one then in year two,” he said.
The Clean Energy Resource Teams’ website has a decision-making tool that consumers can use to gauge whether to subscribe to a solar garden. Thiede said it uses standard solar garden rates, plus a conservative estimate for how much electricity costs will grow in subsequent years.
The tax credits and pricing method are essentially an effort to bring the cost of solar power as close as possible to that of nonrenewable sources such as coal and natural gas.
Mankato resident Bryan Schneider is a fan of solar, and he’ll be paying attention to the offers once they become available.
“It’s probably the cleanest type of energy and non-impactful to the environment,” he said. “It will be good if it’s actually a good deal.”
Though it’s quick and easy to subscribe to a solar garden — SunShare’s Bowers said it takes five to 10 minutes — there are questions to be asked. After all, standard deals require subscribers to join for 20 or more years.
Bowers said their 25-year agreement was created with homeowners in mind.
If a customer moves to an area served by a different electricity provider, “we just cancel your account,” Bowers said. The subscription is also transferable to new owners in the case of a sale, he said.
He said customers needn’t worry that the panels they pay for won’t produce, either due to accident or technical defect.
“Our business model is based on revenue from our subscribers’ monthly payments,” he said. “We’re going to be out there fixing systems as quick as we can.”
Smaller electric cooperatives are getting in, too.
The South Central Electric Association, based in St. James, is developing a of 134-kilowatt array Lake Crystal. Member surveys have shown the co-op’s customers are interested in solar power, said Jim Haler, its member services director.
The co-op is selling memberships in the arrays at a rate of around $1,175 per panel. In return for that upfront payment, members get a credit on their bill for the next 20 years.
Though electricity savings will likely exceed that up-front payment, the cooperative isn’t marketing the plan as a money-saver.
“We don’t say there’s going to be a payback; it’s more like they are pre-paying for electricity,” Haler said.
Demand, costs skyrocket
To meet the 1.5 percent solar mandate, Xcel estimates it will need to bring online about 400 megawatts by 2020. Lee Gabler, Xcel’s senior director of strategy, said this will cost about $48 million a year — an estimated $12 million for every 100 megawatts. That cost is above and beyond what it would have cost to generate this electricity through conventional sources, and it will be borne by the utility’s ratepayers, he said.
Seeking to limit those costs, Xcel Energy reached a deal with the Public Utilities Commission last year to reduce the maximum size of solar gardens to 1 megawatt, with up to five gardens located on one site.
Even at that size, the demand has far outstripped the 1.5 percent mandate. Xcel has received 1,541 applications totaling 1,457 megawatts of power, which shows that nearly all of the projects are at the 1 megawatt limit.
The pace of applications slowed dramatically this fall amid fears of a so-called “solar cliff” — the elimination of a federal tax credit. There were 652 applications in September and only three in October as developers rushed to get approval in time for 2016 construction.
But that tax credit has been extended for three years. It will gradually decrease to one-third of its current level by 2022.
Thiede, with the U of M clean energy team, said it’s been a very popular program.
“It’s drawing the attention of the whole country,” he said.
SunShare’s Bowers said they worked on a similar program in Colorado, but it was far more limited — about 30 megawatts per year.
“It’s fascinating to see the demand for it,” he said.
And it was clearly more than the state’s largest electric provider anticipated.
Too many projects?
In a June letter to the Minnesota Public Utilities Commission, Xcel Energy wrote the volume of unexpected applications was the “strongest evidence of the program’s dysfunction.”
“In fact, the company and department projected fewer MW (megawatt) of projects in the first five years than the 646 MW of projects that have been submitted in the first six months,” the company told regulators. All told, those contracts would cost ratepayers nearly $2 billion over their life, Xcel said.
Furthermore, Xcel believes it can meet the 1.5 percent solar mandate without any solar gardens at all. The utility expects 287 megawatts of large-scale electric power, not solar gardens, to come online in 2016.
In the Mankato area, these large-scale projects include arrays to the east of Mankato, one just east of St. Peter and a third on Waseca’s western border. Most are similar in size to the largest solar gardens but are not capped in size like solar gardens are.
Xcel will continue to participate in the solar garden program even though it doesn’t need to do so to meet the mandate, Gabler said. The utility plans to have 10 percent of its electricity come from solar by 2030.
Still, the utility can control the pace of projects coming online because it has to approve them. Responding to complaints that Xcel was moving too slowly, Gabler said in November that 79 percent of all applications are in the developers’ hands.
Applications are moving through Xcel’s pipeline more swiftly in recent months. In Blue Earth County, no applications had reached the final stage in November, but five had by early December (likely five 1-megawatt projects on a single site). After projects have hit this mark, they’re ready to be built, Thiede said.
If all the Blue Earth County projects with the county’s approval get built in 2016, it will be home to 28.6 megawatts of solar power. The entire state of Minnesota now has an estimated 25 megawatts.
But, in an example of how solar power continues to be dwarfed by fossil fuels, a single Mankato project will vastly outstrip the effect of the solar boom.
Xcel is developing a massive expansion to its Calpine natural gas-fired power plant. The facility, which produces up to 375 megawatts, is slated to nearly double in capacity to 720 megawatts as early as June 2018.