Minnesota Judge rules solar power a better deal for the State

by Zachary Shahan.

Image Credit: Brian McConnell, Resilience
Image by Brian McConnell, Resilience.

Nicely matching the Credit Suisse findings I shared yesterday, I just got word of some positive clean energy news out of Minnesota: Administrative Law Judge Eric Lipman this week concluded that Xcel Energy should invest in some large solar power arrays rather than natural gas generators in order to meet projected power needs in Minnesota. The reason solar was preferred is that the solar power arrays would offer ratepayers a better deal. If Minnesota’s Public Utilities Commission (PUC) upholds the decision, Minnesota could see its solar power capacity increase at least 7 times over.

“Edina-based Geronimo Energy plans to build about 20 large solar power arrays on sites across Xcel’s service area at a cost of $250 million” if the decision holds strong, StarTribune writes. Geronimo has already built wind farms in the state, farms that supply electricity to Xcel Energy. The company is building more wind farms in Minnesota, North Dakota, Michigan, and Nebraska. However, it seems that Geronimo is now turning its eyes towards increasingly competitive solar.

Geronimo Vice President Betsy Engelking claims that this project would be the first solar project in the US to officially outcompete natural gas in a state without utility or state solar incentives.

The key force behind this solar first is one very familiar to CleanTechnica readers:

“The cost of solar has come down much faster than anyone had anticipated. This is one of the reasons solar is going to explode.”

Indeed, the cost of solar panels is about 100 times lower than it was a few decades ago, and half of what it was just a handful of years ago.

Falling cost of solar
Falling cost of solar

Interestingly, the decision to make these power projects compete on price was a first in Minnesota. StarTribune reporter David Shaffer writes:

It is the first time the state has used a competitive bidding process for a major power generation project. The commission ordered the trial-like proceeding to force energy companies to compete on price.

Xcel, based in Minneapolis, and three other energy companies offered various proposals, mostly generators powered by natural gas. Xcel’s plan included a new gas generator at its Black Dog plant in Burnsville, where the utility intends to retire the remaining coal-burning units.

In a 50-page ruling, Lipman said “the greatest value to Minnesota and Xcel’s ratepayers is drawn from selecting Geronimo’s solar energy proposal …”

Xcel Energy — no stranger to controversy — isn’t that into the judge’s decision, and the energy company is writing up a response aimed at swaying the PUC. (As always, Xcel is willing to fight for what it it thinks is right… better for itself, not its ratepayers. To catch up a bit on Xcel’s relationship to solar, here are a few stories to check out:

Actually, it seems that Xcel isn’t so much against cheaper solar as it is against solar from anyone but itself.

Hopefully the Minnesota PUC is on the side of the people Minnesota and thus decides to concur with the judge in this case, but feel free to reach out and contact the PUC if you want to be sure the commissioners understand the value of solar in Minnesota.

Minnesota — Solar?

If you didn’t think snowy Minnesota was a likely candidate for strong solar growth, you’re probably not alone. However, it was recently identified by GTM Research as a potentially huge solar market. Utility-scale solar is cheaper due to economies of scale, but rooftop solar is also a great investment for homeowners and businesses there. As I wrote back in October, “for homeowners who go solar in Minnesota, you’re expected (on average) to get a 10% internal rate of return (IRR) on your investment, which beats the S&P 50-year CAGR of 9.9% — very, very good.”

Minnesota actually has a requirement that utilities get 1.5% of their electricity from solar power by 2020, which Judge Lipman noted these proposed solar projects could help with, and it has a 2030 goal of 10% electricity from solar.

For renewable energy as a whole, Xcel Energy is required to be providing 31.5% of its electricity from renewables by the end of 2020. With only 1.5% designated for solar (minimum), cheaper wind is clearly king. However, solar is an excellent match for times of peak demand when the wind isn’t always blowing, and as Judge Lipman has concluded, solar PV is now even cheaper than natural gas for that purpose.

Geronimo Solar Project Timeline

If approved by the PUC, Geronimo intends to build its proposed solar power plants in 2015 and 2016. It already has the necessary land, as well as extra land if an issue popped up with the preferred sites. If built, Enel Green Power — Geronimo’s financing partner — would have the first option to purchase the power plants. If Enel Green Power decided not to purchase them for some reason, Geronimo could then sell them to Xcel or another energy company.

Shining A Light On The Key Point

While most of us are not that interested in the electricity specifics of the state of Minnesota, the overall point of this story is huge: solar power can now outcompete natural gas in the US, even in northerly Minnesota.

Actually, pulling from a September CleanTechnica article, it’s much cheaper (despite what Xcel might like to contend): “rooftop solar in Minnesota costs 36-75% less than natural gas power plants in delivering peak energy.” And that’s not even counting harmful pollution and the associated health problems society must pay for electricity from natural gas.

With solar costs continuing to fall while natural gas prices rise, that price difference will only grow.

This article, Judge Rules Solar Power A Better Deal For Minnesota Than Natural Gas, is syndicated from Clean Technica and is posted here with permission.

About the Author

Zachary ShahanZachary Shahan is the director of CleanTechnica, the most popular cleantech-focused website in the world, and Planetsave, a world-leading green and science news site. He has been covering green news of various sorts since 2008, and he has been especially focused on solar energy, electric vehicles, and wind energy for the past four years or so. Aside from his work on CleanTechnica and Planetsave, he’s the Network Manager for their parent organization – Important Media – and he’s the Owner/Founder of Solar Love, EV Obsession, and Bikocity. To connect with Zach on some of your favorite social networks, go to ZacharyShahan.com and click on the relevant buttons.

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U.S. Fossil Fuels Losing to Wind and Solar Power

by Giles Parkinson.

Wind turbines
Fossil Fuels, Coal, Oil, and Natural Gas, are losing the electrical generation battle to Solar and Wind Power.

Originally published on RenewEconomy

The price of new power purchase agreements for wind farms and new solar projects in the US continue to defy all expectations, making some energy experts wonder why anyone would contemplate a new fossil-fuel plant.

A new report by UBS analysts in the US has crossed our desk. It is basically a write-up from a webinar hosted by UBS and Declan Flanagan, head of local renewable energy group Lincoln Energy, but  it provides some fascinating insight of what is happening in that market.

The first notable conclusion is the declining cost of wind energy. Contracts in Texas, which accounts for around one quarter of all US installations, are regularly below $30/MWH, and some are at $25/MWh. Even with a tax incentive, this still put wind well below $50/MWh.

Why is this happening? New equipment is lifting capacity factors by 5 percentage points, and Texas’ excellent wind conditions mean that wind farms are getting capacity factors in the high 40s or low 50’s (per cent). Nearly half of this occurs during peak load, defying most characterizations of wind as essentially an off-peak power source.

What does this mean? Greentech Media recently quoted Stephen Byrd, Morgan Stanley’s Head of North American Equity Research for Power & Utilities and Clean Energy, speaking at the Columbia Energy Symposium in late November.

“Compare that to the variable cost of a gas plant at $30 per megawatt-hour. The all-in cost to justify the construction of a new gas plant would be above $60 per megawatt-hour.” So who would build gas?

Not as many people. Citigroup recently reported that some peaking gas plants were already being replaced by solar PV plants.

Why is this so? The UBS research note says that in Colorado, local utility Xcl has just announced new contracts for solar PV plants below 6c/kWh ($60/MWh). This, UBS said, was the lowest reported solar pricing it had seen in the US, although it confirms a recent survey by the National renewable Energy Laboratory, which found pricing in that range and with no inflation kicker, meaning that the solar plants would be producing for an effective $40/MWh by the end of their contracts.

That would match even depreciated fossil fuel plants. The variable costs of gas fired plants are likely to be at least $30/MWh, and that does not include their capital costs.

This article, US Fossil Fuels Losing Out To Wind And Solar, is syndicated from Clean Technica and is posted here with permission.

About the Author

Giles ParkinsonGiles Parkinson is the founding editor of RenewEconomy.com.au, an Australian-based website that provides news and analysis on cleantech, carbon, and climate issues. Giles is based in Sydney and is watching the (slow, but quickening) transformation of Australia’s energy grid with great interest.