It cuts the energy bills of over 12,000 subscribers, reduces energy costs for all electric customers, and employs over 4,000 workers. So why is Minnesota’s community solar program under fire at the legislature this year?
[image_caption]John Farrell[/image_caption]Community solar exists to democratize access to solar energy. Rather than limit solar to those with a sunny rooftop and the financial means to own a system, community solar allows ordinary residents and businesses share access to solar energy. The project can be placed anywhere nearby. The customer can buy just as much as they need, or can afford. And Minnesota gets more clean energy and jobs.
Two recent analyses suggest community solar provides major benefits. A study released by Vote Solar, the Institute for Local Self-Reliance, and MnSEIA shows financial benefits for over 12,000 participating residents and businesses, over 4,000 jobs, and over $5 million in local property taxes and landowner payments each year. The report provides several examples of the program’s benefits:
Businesses like Andersen Windows and Insight Brewing in Minneapolis are going solar to show their commitment to sustainability and to lock in stable long-term pricing. Schools, local governments, and hospitals make up almost half of non-residential subscribers, and can use the savings to provide better services.
The program also reduces energy costs. An analysis I published for the Institute for Local Self-Reliance shows that subscribers receive lower bills. In fact, participants may receive bill credits totaling over $1 billion over the next 20 years. But the program also cuts costs for other utility customers. That’s because the bill credits provided to solar subscribers cost the utility less than the value of that energy to the grid. These private (and public) investors have collectively provided enough capital to build 500 megawatts of power (a medium-sized power plant). And that clean energy machine reduces pollution harmful to human health, protects against volatile gas or coal prices, and saves money on electricity transmission.
Despite its benefits, Xcel Energy has raised several complaints to the media and legislators about the program. Some legislators have responded with a bill to sharply curtail the program. Xcel Energy’s dislike for the program isn’t personal: It’s all about its legal obligation to provide maximum shareholder value.
If the utility had built 500 megawatts of solar itself, it would have spent approximately $1 billion of shareholder money or loans. And on every dollar, like monopoly investor-owned utilities in 29 states, Xcel would get a guaranteed 9 to 10 percent return on its investment. The policy of guaranteed returns and protection from competition is a 100-year-old legacy from the time the electric grid was built. And it hasn’t changed much in that time. The bottom line: 500 megawatts of community-owned solar represents a missed opportunity for Xcel shareholder profits.
These battles for market share are happening everywhere. In Colorado, Xcel is seeking a guarantee that they will be able to own any energy infrastructure that replaces the coal plants set to retire over the next 10 years. In New Mexico, monopoly utility PNM recent won a similar guarantee through clean energy legislation. These aging monopolies hope that legislation or regulation will erect a bulwark against a veritable landslide of new technology allowing customers some real choice for the first time in nearly 100 years. Solar energy enables customers to drastically reduce their reliance on the monopoly. Solar installer Sunrun adds batteries to 1 in 10 installations in California, further reducing grid reliance. And overall electricity consumption has been flat for a decade, thanks to LED light bulbs and other energy-smart technology.
It is a powerful lesson. When any customer participates in Minnesota’s community solar program, it provides substantial financial, economic, and environmental benefits for all. It also provides customers one of the few opportunities to vote with their dollars in an uncompetitive electricity marketplace. Utility shareholders may not like it, but Minnesotans deserve an electricity system that works for everyone.
John Farrell is the director of the energy democracy initiative at the Institute for Local Self-Reliance and widely known as the guru of distributed energy.
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