Xcel Invests in Big Solar in Colorado — at Home Solar’s Expense?

xcel big solarIf you’ve been following Xcel Energy’s ongoing efforts to slash rooftop solar incentives in Colorado, you may think the Centennial State’s largest utility is simply anti-solar.

After all, Xcel is aggressively and unabashedly attempting to make its case to Colorado energy regulators and the public that the cost of net-metered on-site solar power at homes and businesses in its service territory is much greater than the benefit. Although utility executives claim they only want to make transparent a hidden incentive — which they view as surreptitiously cross-subsidized by non-solar ratepayers — this obviously is only Xcel’s opening salvo against the rooftop solar market in its current design.

But there seems to be a widening continental divide between the investor-owned utility’s attacks on rooftop solar and its simultaneous strong support of large-scale solar in Colorado.

After receiving permission from the Colorado Public Utilities Commission (CPUC) earlier this year to acquire 170 megawatts of new large-scale solar resources — including a 50-megawatt plant in the sun-drenched San Luis Valley and a 120-megawatt project near Pueblo — Xcel now is pitching one or more new large-scale solar plants totaling 50 megawatt.

Proposed to state regulators a week ago, Xcel’s SolarConnect demonstration program would allow residential, commercial, industrial or public-sector retail customers to buy blocks of solar power from a large-scale facility for a premium on their monthly electricity bills.

Xcel’s Windsource program, which has a similar design for residential purchases of large-scale wind power, charges $2.16 per block of 100 kilowatt-hours. The utility has not said what price it plans to charge under SolarConnect, which it proposes to launch in the second quarter of 2015.

The proposed program is targeted at the roughly three-quarters of a million Coloradoans who rent apartments or live in condos, as well as hundreds of thousands of Colorado homeowners and business owners whose rooftops are not well-suited for on-site solar because of limited space, shading and other factors. Additionally, customers currently connected to the grid as net-metered solar producers with undersized systems could augment their on-site solar by buying into SolarConnect.

According to a National Renewable Energy Laboratory study, while 66 percent of all U.S. residences are single-family homes, only 20 to 22 percent of residential rooftop space is available for solar panels.

So, in this sense, the Xcel program could help to tap potentially un-served or underserved solar appetite.

In written testimony before the CPUC, Alice Jackson, Xcel’s regional VP of rates and regulatory affairs, stated that the utility does not intend SolarConnect “as a replacement for our other successful voluntary programs” — in reference to Xcel’s SolarRewards program, which supports on-site net-metered customers, and its SolarCommunity program that enables homeowners and businesses to purchase photovoltaic (PV) power from a local “solar garden.”

But Xcel clearly does see its SolarConnect model as superior.
“Our SolarConnect program should offer more customers more solar at a better price for both participants and non-participants,” testified Jackson, adding, “It will be a less expensive way to achieve the carbon dioxide emission reductions desired by the people of Colorado.” According to the Xcel VP, the program “lessens the cross subsidy for embedded infrastructure” and “reduces the impact to those customers” who do not wish to support increased solar investment.

Frank Prager, Xcel’s VP for environment and public policy, went further in an April 6 interview with the Denver Post, claiming that Xcel’s net-metered solar customers “are not paying their fair share of the grid costs,” while at the same time they rely on the grid “more than other customers.”

Prager said that while solar “has a very, very bright future” in Colorado, “We need to find a way to do it in the right way, though. The wrong kind of subsidy, the wrong kind of approach can end up with huge costs for other customers.”

SolarConnect, on the other hand, “works for all our customers,” he added. “A lot of our customers live in apartment buildings or they can’t put solar on their rooftops.” Moreover, it “reduces the cost of subsidizing their neighbors energy usage,” Prager told the Post.

Xcel supports solar done “in a big way,” he added, which is large-scale solar “in 50 or 100 megawatt blocks” that is “much, much more cost effective.”

Xcel estimates the price of solar power from such large-scale facilities is about half the price of rooftop solar.

“What this product does is provide customers who are interested in solar with an alternative, so they can have access to lower-priced large scale solar facilities that are out there right now, that [are] under construction right now in southern Colorado and that we plan to add more of,” said Prager.

Solar from new large-scale plants is even “cheaper than the fossil alternatives” at new facilities in Colorado, he added.

However, Xcel has not stated either its price target or its resale price target for SolarConnect customers — which regulators should want to know since the utility proposes to keep all profits from the program. Recent deals for large-scale PV in other Western states — such as California, Texas and New Mexico — have ranged as low as 4.5 to 7 cents per kilowatt-hour.

Solar advocates cautiously supportive

Solar advocates were supportive of Xcel’s proposal, while also expressing some caution.

“We support Xcel’s decision to ramp up its investment in solar. The utility is smart to see that high demand for clean, local energy options exist,” according to Vote Solar‘s Rosalind Jackson. “But, it’s important to note that Xcel isn’t the only one that can do solar right, and this program should not come at the expense of customer choice,” she said in an email.

“Coloradans have the right to generate their own electricity on their own property, and now with affordable solar more are choosing to do so,” noted Jackson. “Individual investment in local solar power produced where it’s needed on the grid delivers its own set of very real financial benefits, which Xcel continues to discount,” she added.

According to Jackson, Vote Solar is calling for an “all of the above solar strategy that includes options for both customer and utility participation in the marketplace.”

Solar farm photo CC-licensed by Rainer Lippert on Wikimedia.

Author: Garrett Hering

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Posted in: Solar Energy, Solar Policy

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