After a full day of hearing arguments on Xcel’s proposed Community Solar Garden (CSG) program (see more on that here), the Minnesota Public Utilities Commission deliberated in public on the issue yesterday and made some important modifications to Xcel’s proposal. The program would allow Xcel customers to invest in off-site solar facilities and receive bill credit for their portion of generation. Ultimately that credit would be at the Value of Solar rate, but as parties await a decision on the Value of Solar (VOS) methodology (more on the VOS here), the Commission settled on an interim rate for the program (though its final vote on the matter is still forthcoming). It is largely based on average retail rates but importantly includes a placeholder value of any transferred Solar Renewable Energy Certificates (SRECs). A CSG developer could transfer the S-RECs to Xcel at a compensation rate of $.02/kWh for facilities with a capacity greater than 250 kW and at $.03/kWh for those with a capacity of 250 kW or less. The S-REC value is not intended to reflect a market rate and is intended and is intended to be strictly temporary, expiring upon the approval of Xcel’s VOS tariff. Furthermore the rate and S-REC value are to be reviewed annually and adjusted if necessary.
The illustrative range of rates (assuming the SREC is transferred) is as follows:
Residential: $.14033 or $.15033
Small General: $.13738 or $.143738
General Service: $.11456 or $.12456
In addition, Xcel’s proposed 2.5 MW quarterly cap on the program was removed given the statute precludes a cap. While a final decision has not yet been issued by the Commission, newsmedia have already begun to report on it (see Star Tribune article here).
Final comments were filed yesterday on the proposed methodology for calculating a value of solar (VOS) rate for utilities in Minnesota (more on the proposed methodology is here). With the Commission required to make a decision within 60 days of January 31, 2014, parties remain in fairly wide disagreement about what is required by statute, particularly what values are truly “known and measurable” and whether the value calculation or proposition applies to the particular utility or more broadly to society. Depending on the interpretation of these factors among others, the estimated VOS rate could vary from half of that suggested by the Department’s original $0.135/kWh example to something considerably higher. The rate would eventually apply to Xcel’s Community Solar Garden (CSG) Program and potentially as an alternative to net-metering arrangements for projects under 1MW. In a separate proceeding yesterday, the Commission set interim rates for the CSG program that could be even higher with a placeholder SREC value included (more on that in a separate blog).Continue Reading...
In May 2013, the Minnesota Legislature passed legislation that, among other things, set a solar standard, directed Xcel Energy to develop a community solar garden program, and provided for the development of an alternative tariff mechanism to net metering that would also serve as the rate for community solar garden programs. Under this new scenario and instead of traditional net-metering arrangements, customers would potentially buy all of their electricity from their local distribution utility and then sell all of their PV generation under that utility's Value of Solar (VOS) tariff which would be designed to capture the societal value of PV-generated electricity.
The legislation directed the Department of Commerce to work with stakeholders to develop a VOS methodology and to deliver its recommendations to the Minnesota Public Utilities Commission (Commission) on Friday, January 31, 2014. The Department’s filing today includes its recommendation, with a more in-depth document addressing the methodology. The Department’s recommendations do not set a rate, but rather propose the methodology for calculating a utility-specific rate for distributed PV solar (1 MW and smaller). If the Department’s sample calculation is any indicator of what’s to come, however, the value went from $0.126/kWh in its initial draft to $0.135/kWh in the documents filed this morning.Continue Reading...
At the close of last year, Minnesota Administrative Law Judge Eric Lipman determined that the single solar proposal in a competitive resource acquisition process would provide the best value to Xcel ratepayers (see more here). Key to his decision was his conclusion that Xcel's capacity needs in the timeframe considered were uncertain and potentially declining substantially. Yesterday Xcel and the natural gas bidders (Calpine and Invenergy) in the process filed exceptions to his findings and took sharp aim at the Judge's determination that Xcel's capacity needs appeared to be declining from what had earlier been predicted. In a related news article, Bill Grant, the Deputy Commissioner for Energy Programs at the Department of Commerce, voiced concern that the Judge had relied on an "untested and unusually low forecast for future sales" and suggested that ratepayers would be better served by Xcel's procurement of solar resources through a solar-specific process. The parties with the selected solar (Geronimo) and capacity (GRE) bids, perhaps unsuprisingly, do not agree with these voiced concerns and largely applauded the Judge'sselection of scalable resources in light of uncertain need . Reply comments are due at the end of this month and ultimately the matter will soon be taken up by the Minnesota Public Utilities Commission.
Update: Initial exceptions to this ruling are due on January 21, 2014, see attached scheduling notice.
On December 31, 2013, Minnesota Administrative Law Judge Eric Lipman determined in a competitive bidding process that solar provided greater value to ratepayers than natural gas. In a first-ever competitive bidding process under Minn. Stat. §216B.2422, subd. 5, 4 bidders competed directly with Xcel Energy’s own natural gas proposal to fill an increasingly uncertain future need for capacity resources. If the Minnesota Public Utilities Commission (the “Commission”) agrees with Judge Lipman, Edina-based Geronimo Energy will build 100 MW of solar energy across 20 different sites in rural Minnesota and additional procurement would be put off until better information is available for the timeframe beyond 2019.Continue Reading...
After much anticipation, Xcel Energy submitted its petition for approval (PDF) of the company's proposed community solar gardens program on September 30th. The program would give utility customers a new way to engage in solar generation without having to invest onsite. A solar garden is a "facility that generates electricity by means of a ground-mounted or roof-mounted solar photovoltaic device whereby subscribers receive a bill credit for the electricity generated in proportion to the size of their subscription." Other required details of the program are set forth in Minnesota Statutes 216B.1641 and include:
- each garden must also have at least 5 subscribers whereby no single subscriber has more than a 40 percent interest;
- each subscription must be at least 200 watts and the total garden size cannot exceed 1 MW; and
- each garden must be within Xcel's service territory and its subscribers must be retail customers located in the same or contiguous county as the solar garden site.
While many of the details of the program are set forth by law, Xcel also clarified several procedural elements of its filing. For example, Xcel plans to take applications online on a first-come, first-served basis but limit the program to 2.5 MW per quarterly application period for the first two years of the program. A successful applicant would enter into a 20-year, fixed rate power purchase agreement with Xcel Energy.
Although the rate paid for the energy generated by a solar garden facility will eventually be the forthcoming Value of Solar rate, Xcel states that it is likely the solar gardens program will need to begin operations and issue bill credits before Xcel has a Value of Solar rate in place. For the interim period Xcel proposed to use a blended retail rate that differs by demand and non-demand class and by season. For no-demand metered service this would be just over $0.10/kWh and for demand metered service this would be just over $0.06/kWh, both with slight increases for the summer months. This price is expected to include the transfer of any and all solar renewable energy certificates generated by the garden to Xcel.
Last Thursday, the Environmental Protection Agency released its proposed rule for the 2013 Renewable Fuel Standard (“RFS2”) volume obligations. Every year the EPA is required to determine and publish the annual volume requirements for each class of renewable fuel that obligated parties will have to comply with for the upcoming year under the RFS2 program. The volumes required under the proposed rule for 2013 are as follows (generally in ethanol equivalent volume): 14 million gallons of cellulosic biofuel, 1.28 billion gallons of biomass-based diesel (actual volume), 2.75 billion gallons of advanced biofuel, and 16.55 billion gallons of renewable fuel. As always the categories are nested and the advanced biofuel volume includes the volumes set for the cellulosic and biomass-based diesel categories. The renewable fuel category accounts for all renewable fuel including traditional corn starch ethanol.
Three of the four categories are consistent with the volumes set forth by statute. The volume for cellulosic biofuel, however, is set by this rule because it must be the lesser of the statutory volume and EPA’s projection of industry production for any given year. As with each ruling prior to this one under the program, EPA set a dramatically lower cellulosic biofuel volume than the statutory volume based on its assessment of the industry’s status. Rather than 1 billion gallons as would otherwise be required by statute, EPA is requiring obligated parties to account for 14 million gallons of cellulosic fuel. Despite the dramatic reduction from the statutory requirement, this is significant because it is an increase over the 2012 standard of 10.45 million gallons that has been the subject of considerable recent controversy.Continue Reading...
ITC Confirms Anti-Competitive Trade Practices Finding -- Major Duties Imposed on Chinese Solar Imports
The U.S. International Trade Commission (ITC) today affirmed its preliminary ruling that Chinese trade practices were harming the U.S. solar technology industry. The ruling stems from the submission of trade cases by domestic solar-industry companies on October 19, 2011, that argued the Chinese government was using improper subsidies to underwrite its solar industry export campaign and dumping products at artificially low prices in order to gain U.S. market share.
The ITC ruling means that a series of duties will be imposed on Chinese solar products. Under a previous U.S. Department of Commerce ruling, the duties will consist of 31.73 percent on imports of solar photovoltaic cells and panels from Suntech, 18.32 percent from Trina Solar, 25.96 percent from other companies that had requested but not received individual duty determinations and 249.96 percent from all other Chinese producers, including those controlled by the Chinese government. In addition, the Commerce Department ruling called for anti-subsidy duties of 14.78 percent for imports made by Suntech, 15.97 percent Trina Solar and 15.24 percent for all other Chinese manufacturers.
The Commerce department ruling did not include photovoltaic cells produced in other countries and assembled in China within its scope. Some domestic solar companies have announced they will seek separate enforcement actions for these products, following the ITC’s harmful trade practices finding announced today.
The deadline for public comments on petitions seeking a waiver of the Renewable Fuel Standard (RFS) expired last night on October 11, 2012. The Governors of Arkansas and North Carolina had submitted separate requests, in letters dated August 13, 2012 and August 14, 2012, asking for a waiver of RFS volume requirements. Under Section 211(o)(7)(A) of the Clean Air Act, the Administrator of the EPA is permitted to waive national volume requirements of the RFS in whole or in part if implementation of those requirements would severely harm the economy or environment of a state, a region, or the United States, or if the Administrator determines there is an inadequate domestic supply of renewable fuel. Such a waiver may either be triggered through petition by one or more States, a party subject to RFS program requirements, or at the Administrator’s own motion. If a waiver is granted, it can last no longer than one year, but may be renewed by the Administrator after consultation with the Secretary of Agriculture and the Secretary of Energy.Continue Reading...
In a decision released this morning, the DC Circuit rejected a challenge to the introduction of E15, a gasoline blended with 15 percent ethanol, under an EPA waiver grant. Currently, the national gasoline supply consists largely of E10, a 10 percent ethanol/gasoline blend. With fuel manufacturers confronting mandatory annual increases of renewable fuels under the Renewable Fuel Standard (RFS), Growth Energy, a trade association representing the ethanol industry, had sought an EPA waiver for a new 15 percent ethanol/gasoline blend. The EPA provided partial waivers (1 and 2), under the Clean Air Act for the E15 blend, restricting the fuel’s use to light duty motor vehicles and engines from model-year 2001 and newer. Three sets of industry groups representing engine manufacturers, food producers and petroleum suppliers then sued, challenging the EPA’s waivers.
In a 2-1 decision, the court declined to make a decision on the merits, finding that the petitioners lacked standing to bring the action. In a strongly worded dissent, Circuit Judge Brett Kavanaugh disagreed. Kavanaugh then addressed the merits of the case, finding they were “not close.” He concluded that in granting the E15 partial waiver the “EPA ran roughshod over the relevant statutory limits.”
Where We Go From Here
The decision preserves flexibility for implementing the RFS renewable fuels mandates – for now. However, the lack of a decision on the merits means the EPA waiver process remains vulnerable to judicial challenge. In the meantime, the debate over corn-based ethanol fuel mandates may be shifting to Congress, as predictions for historically low corn crop yields continue to accumulate.