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In bid against gas, Minnesota regulators say solar can proceed

This solar array near Slayton, Minnesota provides power for Xcel Energy. Geronimo Energy proposed similar projects to help meet peak energy needs. (Photo by CERTs via Creative Commons)

This solar array near Slayton, Minnesota provides power for Xcel Energy. Geronimo Energy is proposing similar projects to help meet peak energy needs. (Photo by CERTs via Creative Commons)

A proposed $250 million distributed solar project appears to have held its own in a Minnesota regulatory process that put it in competition with three natural gas options.

The Minnesota Public Utilities Commission on Thursday ordered Xcel Energy to pursue a power-purchase agreement with a Twin Cities solar developer to meet part of its projected generation shortfall later this decade.

Geronimo Energy’s 100 megawatt solar proposal will be paired with one or more natural gas projects, to be determined later, to provide up to 500 megawatts of new generation Xcel expects to need by 2019.

The agreements would be subject to further review by the PUC.

“It’s a big win for us,” said Betsy Engelking, a vice president at Geronimo Energy. “We participated in an RFP against natural gas and we were selected.”

The decision is also being touted as a landmark victory for solar, one that validates advocates’ claims that solar can be cost-competitive with fossil fuels in certain situations.

That position was bolstered in December when a judge who reviewed the competing bids concluded the most “reasonable and prudent” option was to include Geronimo’s solar project.

“Notwithstanding the statutory preference, it seemed that nonrenewable energy sources always won the head-to-head cost comparisons. Not anymore,” Judge Eric Lipman wrote.

Geronimo’s plan calls for building about 20 solar arrays adjacent to Xcel substations, where they can help meet demand on hot summer days without adding to transmission congestion.

Other bids submitted as part of the process included three separate natural gas proposals and an offer by Great River Energy to sell Xcel surplus capacity from its system.

The PUC disagreed with portions of the judge’s report, but ultimately agreed with his conclusion: that including the solar project is in the best interest of ratepayers.

“I would argue that we have the evidence in front of us to say the solar bid is in the public interest,” said Commissioner Nancy Lange, who made the motion to advance the project.

The commission unanimously approved the motion, but not before raising several questions about reliability and whether the solar installations would produce power when customers need it.

“I can’t tell you that these aren’t just paranoid concerns, but I really want to be sure when we hit system peak that we’re going to have a resource that’s going to deliver,” Commissioner David Boyd said.

Xcel Energy isn’t confident that will be the case with solar.

“[Solar] has a little more predictable pattern to it than wind power, but just like wind power it is a variable resource. I can’t count on it being there at peak,” said Jim Alders, Xcel’s director of regulatory strategy.

The Midwest’s regional transmission grid operator, MISO, requires utilities to maintain enough capacity to meet their peak demand, plus a reserve margin. From the Geronimo project, Xcel would get to count 72 megawatts toward the MISO requirement.

Kevin Reuther, legal director for the Minnesota Center for Environmental Advocacy, said the project will provide an opportunity to learn how well solar in Minnesota matches up with the hours when electricity demand is highest.

“To be honest, there’s still plenty to learn with how solar is going to perform, but in terms of system reliability, it’s not an issue. Xcel has a lot of capacity and a lot of redundancy built into the system,” Reuther said.

Reuther represented several environmental groups supporting Geronimo in the case (including Fresh Energy, a member of RE-AMP, which publishes Midwest Energy News).

John Farrell, a distributed solar expert with the Institute for Local Self-Reliance, said nationally he’s not aware of another case, certainly outside California, in which a solar bid has come out ahead of natural gas in a head-to-head competition.

“It’s really quite monumental that it’s happened in Minnesota,” Farrell said.

The next step is for Xcel and Geronimo to negotiate a power-purchase agreement for the solar project, which will be subject to approval by the PUC.

 

Comments (7)

Thanks to Midwest Energy News for being first and best with this important story!

By Karl R.. Rabago on Mar 27, 2014

Dan, thanks for the quick update. This is a major victory for renewable energy, the country and the environment.

By Delroy Leslie on Mar 27, 2014

You mean, “victory for corporate dominance of what should be distributed energy production”. Should we all be cheering for large corporate developments getting their solar contracts locked in while the average home owner and small business operator is left to watch from the sidelines? What is so jiggy about this? Simple incentives for distributed energy production would go much further to bring solar to mainstream and mainstreet. As usual, the govt is in wedlock with their funders while ethics and fair play is no where to be seen.

By AT THE BRIDGE on Mar 27, 2014

Congratulations to the Geronimo team, and quodos to the PUC for considering Geronimo’s submission on it’s merits.

Progress!

By Matthew Blackler on Mar 27, 2014

A significant, positive decision. But Xcel usually gets its way in Minnesota, so the game may not be over….

By Alan Muller on Mar 27, 2014

Whoppieeeeeeeeeeee!
The utility is right to be concerned about the slight possibility of a peak when solar isn’t available. The way to address that slight risk is via remote shutdown of high load customers. NYC does this via office buildings and other big users that agree to reduce AC and other elec use (they get paid for the contoller installation and related work, and get paid for the power they don’t use.
As to connections at grid substations, that is still a HUGE jump in the right direction towards distributed generation and reducing strain on the distribution system, and you can be sure the utility will keep trees from shading the arrays, keep all the inverters online, etc..

By Russell Higgins on Mar 29, 2014

Once again the MN PUC rubber stamps projects to increase charges to consumers. Their primary focus should be on the best possible service at the best possible price. It’s obvious by their history, they do neither. A developer whines a little-project approved. Don’t forget solar and wind are exempt from any in depth environmental studies-only the bogus surface studies dictated by the DOE-All make strange bedfellows. Who are the winners? Guaranteed it isn’t the consumer. C Mueller

By C Mueller on Apr 5, 2014