City Council approves community solar garden subscription agreements

The Minneapolis City Council agreed Oct. 20 to subscribe to two proposed community solar gardens.

The council approved 25-year agreements with two companies, Renewable Energy Partners and ReneSola, for their proposed gardens. The agreements are for up to 1 million kilowatt-hours of electricity annually, including 310,000 kWh from Renewable Energy Partners and 680,000 kWh from ReneSola.

One million kilowatt-hours is enough electricity for approximately 109 Minnesota residential customers for one year, based on 2015 U.S. Energy Information Administration estimates.

Community solar gardens allow utility customers in Minnesota to support solar energy and save money on their electricity bills. Customers typically “subscribe” to a portion of a solar garden and pay the garden’s operator for electricity their portion of the garden generates. Utilities hook up the gardens to their electric grids and credit the customers for the electricity generated by their portions of the gardens.

“There’s a spread between the credit and what you have to pay the garden operator,” said Brian Millberg, energy manager for the City of Minneapolis. “That’s how the subscribers make money.”

Millberg estimated that customers could save 5–10 percent on their electricity bills by subscribing to a garden. Customers can only subscribe to gardens in their home county or an adjacent county, per state law.

Before the latest agreements, Minneapolis had already signed subscriber agreements for 24 separate gardens for an annual total of 7.5 million kWh. The city estimates it will save $1 million–$4.7 million over the 25-year terms of the agreements.

The latest agreements are different, however, because they require the garden operators to earmark at least 20 percent of the gardens’ electricity for low-income households in Minneapolis. Those households haven’t typically been able to subscribe to community solar gardens because garden operators typically require subscribers to have high credit scores, Millberg said.

“A lot of the companies that are financing these solar arrays are traditional financing organizations,” said Dan Thiede, communications manager for Clean Energy Resource Teams, a public-private partnership. “They see participant credit score as a way to be able to avoid risk in their investments.”

Millberg said the city is trying to prove to the marketplace that low-income people can be trusted when it comes to these subscriptions. “We’re willing to take that risk, because we think the market is unfairly keeping these people out of saving some money,” he said.

The city required the developers to say how they plan to attract low-income subscribers as part of their requests for proposal. As part of the agreements, the city said it would pick up any lapsed subscriptions, provided its total stays under 40 percent of the garden’s generation. State law limits subscribers to no more than 40 percent of a garden’s generation.

Renewable Energy Partners, a North Minneapolis-based firm, is in talks with Minneapolis Public Schools about installing its garden on the North High School roof, according to founder and President Jamez Staples. The company would offer MPS a 10-percent subscription at no cost and would offer the district another 10-percent subscription at a cost, Staples wrote in a memo.

It plans on offering the remaining 60–70 percent of subscriptions to low- and moderate-income customers of Xcel Energy, focusing first on residents of North Minneapolis, he wrote.

The firm’s proposed financing model is different than the model for a typical community solar garden. Renewable Energy Partners doesn’t plan on charging subscribers for their subscriptions, Staples wrote, but plans on having subscribers pay 75–80 percent of their bill credits back to the firm.

The St. Paul Port Authority has offered financing for the project from a special fund that supports energy projects benefitting low-income communities and business development for small women- and minority-owned businesses, according to Staples. Renewable Energy Partners will solicit subscribers in conjunction with Community Action of Hennepin County and Pillsbury United Communities, he wrote.

He wrote that the company could have the project operational late in 2018, assuming all goes well with MPS and/or other host sites.

A representative of ReneSola didn’t respond to a request for information about its project. Millberg said subscribers of both projects likely wouldn’t receive bill credits until 2019.

The Minnesota Legislature created the community solar garden program in 2013 as part of a broader bill to expand the use of solar energy. The program has contributed to the rapid growth of solar capacity in the state.

Minnesota’s solar capacity was just one megawatt as recently as 2009, according to the state Department of Commerce. The state had an estimated capacity of 579 MW as of Oct. 1, according to department Director of Communications Ross Corson. The department is forecasting that Minnesota may add a total of 550 MW of new solar capacity in 2017, Corson said.

Community solar gardens appear to be a significant portion of that capacity. As of Sept. 31, Xcel Energy had 42 community solar gardens that were interconnected to its grid, with those gardens having a capacity of 140 MW, according to Lee Gabler, senior director of customer solutions for Xcel Energy. He said another 475 MW worth of projects are in the design or construction phase.

Xcel is hoping to have a capacity of 250 MW through community solar gardens by the end of the year, Gabler said.

Minnesota had a capacity of 143.4 MW of community at 69 sites available from 30 utilities as of the end of the third quarter, Corson said.

Community solar gardens aren’t cheap for Xcel, Gabler said. Solar energy from the gardens costs the company 12.5 cents per kilowatt-hour, almost twice as expensive as utility-scale electricity.

Xcel passes those additional costs onto all of its consumers by charging them more for fuel. For every 100 MW of community solar that comes online, it costs customers an additional $17 million, Gabler said.

The 2013 legislation also stipulated that 1.5 percent of public utilities’ retail electricity sales must come from solar energy by 2020. It also increased the total percentage of public utilities’ retail-electricity sales that must come renewable sources by 2020 and 2025.

Xcel will probably exceed the 1.5-percent solar requirement by the end of 2017, Gabler said. He said he believes the company has already surpassed its renewable standard, which are 25 percent for 2020 and 30 percent for 2025.

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