With a new law taking effect, the utility will be reconfiguring the program that reimburses customers who install the panels. The popular Xcel Energy program to subsidize solar panels on
Minnesota homes and businesses is slated for major changes next year
that may make it less attractive to customers who install such systems.
But Xcel said Thursday that it expects more people to
take advantage of its Solar Rewards program even if incentives are
reduced further in 2015 and 2016 as the company proposes. “We have a pent-up demand for the money that is allocated
for incentives,” said Deb Sundin, who directs Xcel’s renewable strategy
and planning.
Instead of giving customers an immediate rebate covering a
quarter or more of the cost of their solar panels, the new incentive
system will offer annual payments over 10 years based on each system’s
electrical output.
That change, specified in the state’s 2013 solar law, had been
anticipated. On Thursday, Xcel proposed how the new incentives would
work. Now, a 10-kilowatt solar panel array is eligible for a
$15,000 rebate. A homeowner installing the same system in 2014 would get
no money up front. Each year for 10 years, Xcel proposes to pay 8 cents
for each kilowatt hour of power from the new system. Based on an
average output of 12,500 kilowatt-hours per year, the 10-year payback
would be $10,000. That would be cut in half for systems installed in
2016.
The change in incentives won’t alter the credit a solar
customer gets on his bill for excess power sent to the grid via a
two-way meter. Those extra kilowatt hours are credited back to the
customer, reducing his monthly bill. In effect, the solar customer sells
power back to Xcel at retail rates, a system called net metering.
Lynn Hinkle, director of policy development for the
Minnesota Solar Energy Industries Association, said he was still
reviewing Xcel’s filing with the state Public Utilities Commission. But
he said he understands Xcel’s rationale for reducing the incentive over
time. “They are trying to reflect how cost effective solar has become,” Hinkle said.
Sundin said solar panel prices have dropped in the past
few years, reducing the need for incentives. Even with the reduced
subsidy, Xcel projects that Solar Rewards will encourage 918 customers
to install new systems in 2016, up from 261 in 2012.
That’s important to Xcel because the new solar law not only requires
it to get 1.5 percent of its power from solar by 2020, it also requires
10 percent of it to be generated on small rooftop-type arrays. Solar Rewards, which Xcel once wanted to drop,
is funded by Xcel ratepayers at a cost of $5 million per year. Each
year of the program, there has been such strong demand for the incentive
money that it soon ran out, leaving many applicants out of luck.
In addition to Xcel’s Solar Rewards incentive, solar
projects also are eligible for a federal tax credit. If the panels are
made in Minnesota, another ratepayer-funded subsidy also is available. Sundin said the new Solar Rewards incentives require
regulatory approval before Xcel can put them into effect. She expects
that will happen in February, and the utility will be ready with a new
Web-based system to accept applications
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