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Xcel Energy is slowing the growth of community solar gardens, consumer advocates say

Xcel says bids for building new community solar sites for low-income residents came in at prices far too high, but companies say it’s a familiar slow-walk by a power competitor.

Arvada SunShare solar power solar community garden Jefferson County
JeffCo Community Solar Garden, developed and managed by SunShare, on Feb. 3, 2022 in Arvada. The 1.5-megawatt farm serves homes in Arvada, parts of Jefferson County and other surrounding counties. (Olivia Sun, The Colorado Sun via Report for America)
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Community solar builders and consumer advocates who want solar gardens extended to more low-income customers say Xcel Energy has reneged on a plan to award 75 megawatts of new garden construction, and they want state regulators to step in. 

Xcel responds that the bids from community solar builders came in far higher than expected, and that awarding the full amount of projects would quickly drain the renewable energy fund accumulated from a state-sanctioned surcharge on all utility ratepayers. The renewable energy fund collects about $30 million a year, Xcel said, and compensates utilities for clean energy projects above market rates. 

Xcel says it put a “timeout” on about half of the 75MW bidding, and has asked the Public Utilities Commission for guidance whether it should accept all the high bids or start a new request for proposals with a bigger emphasis on market-rate projects and fewer expensive, lower-income projects. Community solar gardens are small clusters of panels whose energy is sold in subscriptions to customers who can’t put solar on their own homes. 

“The increase could create some concerns about the future viability of that fund,” said Jack Ihle, Xcel’s director of regulatory and strategic analysis. “We are simply trying to prudently manage that budget.”

Solar builders and environmental justice advocates say Xcel is trying to put off more power generation outside of its control, and that supporting low-income projects for social justice is exactly why the renewable energy fund was created. They plan to remind the PUC of provisions of a Colorado law passed last year requiring that a portion of new power generation projects be dedicated to better serving low-income communities. 

If the proposed solar gardens are more expensive, Colorado GreenLatinos director Ean Tafoya said, “that’s the cost of a just transition. This is exactly what the community has been working for.”

Colorado’s environmental justice movement has argued that lower-income households are not financially able to seek individual solar panels for their homes, yet often live in communities with higher impacts from power plants and other pollution. Subscribing to a community solar project can lower their energy bills and allow them to participate in the green energy movement, advocates say.

Xcel slowing down projects it doesn’t completely control is “typical and disappointing,” Tafoya said. “Extracting all this money to Wall Street from our ratepayers, and then they want to slow walk the programs that would help free us, it’s wrong.”

Xcel’s summary of the current round of community solar bidding said the projects would take a total of $3.3 million to $7.9 million a year from the subsidy fund. There are other renewable energy projects besides community solar gardens that want to use those funds, according to Xcel and other industry players. Some of the annual revenue is already being spent on rooftop solar and other subsidized power alternatives, Xcel said.

For now, the companies with winning bids for about 37MW of small solar projects can go forward while Xcel looks to the PUC for more answers on how to handle the other 38MW of potential energy. 

In community solar, third-party companies sign up customers who subscribe to a portion of electricity from a newly built cluster of solar panels, on a far smaller scale than the 150MW or larger projects commissioned by big utilities. 

Customers may pay full price for the subscription, and then get a credit on their utility bill. Lower-income customers might get a donated subscription and then the builder seeks compensation from the renewable energy fund to get enough revenue for the project. The higher the percentage of lower-income customers signed up for about $70 a month in donated credits, the larger subsidy the project needs. 

Xcel also builds some of its own smaller community solar projects, though the far greater share of its renewable energy projects are massive wind or solar arrays it builds or contracts through others. 

SunShare, one of the earliest community solar builders, said Xcel’s “pause” is giving solar power a bad name by making it sound more expensive than traditional forms of power production. 

“The cost of community solar did not just skyrocket, this is not a bad business model,” SunShare CEO and co-founder David Amster-Olszewski said. SunShare is one of the companies bidding on the initial 75MW RFP, but has not announced whether it was selected for the first awards. 

The current bids are higher than other recent solar projects because of the donated subscriptions, and because it costs more to market to and sign up lower-income customers who have not considered solar before, he said. 

If Xcel wants to save the renewable energy funds for other projects, Amster-Olszewski said, “what are you saving for and why is that more important? There’s a lot of people in the state that want low-income people to get more donated energy, and they think that this is a good use of funds.”

The Office of the Utility Consumer Advocate, which can intervene for customers with the PUC, also wants to know more about why Xcel is not going through with the 75MW plan. 

“It’s a really bad precedent to issue an RFP for a total amount, and then try to walk it back when the results do not suit them,” said Joseph Pereira, deputy director of the consumer office. The PUC, he said, “has been very clear to them that they need to do low-income projects.” 

Another community solar builder, Cloudbreak Energy Partners in Sterling, said Xcel deserves some sympathy for having to balance the demands for lower-income projects with its own business of providing power, while administering a fund forced on them by state laws. In other states, Cloudbreak managing partner Alec Shobe said, a government agency like a utilities commission is making decisions on renewable energy subsidies. 

Xcel should provide more answers about the other demands on the renewable energy fund, and how it plans to parcel them out in coming years, Shobe said. 

“If you award all 75MW every year to projects that exclusively have an equity focus, I don’t think that would be sustainable,” he said.


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