Xcel's plan to sell solar power to Colorado homeowners rejected

Xcel Energy’s proposal to procure large-scale solar power in Colorado and then sell it on to its retail customers on a voluntary basis has been shot down by the state’s regulator, in a decision applauded by the local solar industry.

The ruling underscores the tricky balance US regulators face as utilities wade into the business of retailing solar energy, with many in the PV industry claiming that utilties possess a unique ability to stifle the competition.

This spring Xcel, which is among the largest US power utilities, proposed its “Solar*Connect” programme in Colorado, one of eight states it serves.

Xcel’s plan was to buy the output from a 50MW utility-scale PV plant to be sited somewhere in Colorado, and then sell the power for a premium to its retail customers who wanted to use solar electricity in their homes. Customers would have been able to derive anywhere from one-quarter to all of the electricity consumed by their homes, without needing to install PV panels on their rooftops.

But after a three-day hearing Colorado’s Public Utilities Commission (PUC) has rejected the proposal, agreeing that the Solar*Connect programme would have given Xcel – the monopoly electric utility in many parts of Colorado – an unfair advantage over private solar companies.

Rebecca Cantwell, executive director of the Colorado Solar Energy Industries Association, points out that at the same time Xcel was proposing its 50MW Solar*Connect programme it was also recommending that just 6MW of new capacity from community solar “gardens” be allowed onto Colorado’s grid each year.

Community-owned solar gardens allow consumers who do not have access to rooftop PV to buy an ownership or leasing stake in a PV project sited elsewhere, and then benefit from the power produced. Such community solar arrays have proven popular in Colorado over the past few years.

“We are completely open to the idea of utilities participating in solar in the future – we think it’s going to happen,” Cantwell tells Recharge.

But there were concerns within the solar industry that Xcel’s Solar*Connect programme – even if slightly different than many existing community solar schemes – would have created a less-than-level playing field.

As the monopoly utility, Xcel is the ultimate buyer and distributor of the power produced by privately owned community solar arrays – meaning it knows all of the customers and prices charged by such schemes.

Companies involved in Colorado’s growing community solar sector include Clean Energy Collective and SunShare.

Minnesota-based Xcel, which is the single largest buyer of wind power in the US, said it was “disappointed” by the PUC’s ruling. "We thought that Solar Connect could bring a solar product to consumers in Colorado that do not currently have the option to install solar panels."

The PUC’s decision came as a surprise to some in the industry, Cantwell says, and demonstrates that Colorado’s power regulator remains independent minded.

“For them to just flat out reject a new and somewhat innovative proposal from [Xcel] I think really shows their awareness of the importance of not crushing Colorado’s nascent solar industry.”

Cantwell notes that the ruling comes amid a “very hot debate” about the future of solar net metering in Colorado, a factor which may have influenced the PUC’s thinking on community solar projects.