State says Xcel should keep solar subsidy

Aug 28 - McClatchy-Tribune Regional News - David Shaffer Star Tribune (Minneapolis)

Xcel Energy's popular program to subsidize solar-electric arrays may not be extinguished after all.

The Minnesota Commerce Department's energy resources division, which reviews utilities' energy conservation spending, said it supports continuing Xcel's Solar Rewards program, which costs the utility's customers $5 million a year.

However, the division supported scaling back the subsidies, a move that would allow more homeowners and businesses to take advantage of the program.

The rebates for installing arrays are so popular that Xcel already has run out of money this year. The rebates, when combined with another credit for Minnesota-made products, can cover 60 percent of the solar panels and installation cost.

The Minneapolis-based utility wanted to scale back the program next year, and then drop it after 2013, shifting the spending to energy conservation instead.

Xcel has said solar power remains too expensive, and customers shouldn't have to bear it. The utility said solar power is 10 to 15 times more expensive than electricity from fossil fuels or nuclear power.

State officials said the program is cost effective and beneficial, but conceded that it isn't a conservation effort. The state recommended that Xcel discuss placing solar rebates under a separate program in the future.

The decision Tuesday is not final. The department will accept public and utility reactions to Tuesday's findings for 15 days, and issue a final order in 90 days.

Xcel says the Solar Rewards program helped 560 Minnesota homes and businesses install solar arrays since 2010. The current subsidy is $2.25 per watt of installed power, though under the department's plan that would drop to $1.50 in 2013. Xcel had also supported dropping the subsidy level.

Solar energy advocates opposed killing the program, saying it would hurt an industry just getting off the ground. Supporters included two state economic development agencies, seven Iron Range legislators, city leaders in Minneapolis and St. Paul, solar manufacturers, engineers, electricians and various other solar industry and clean-technology advocates.

The Solar Rewards program is part of Xcel's state-mandated energy conservation program, which last year achieved a record 1.5 percent drop in Minnesota power use. The utility proposes to increase conservation-related spending overall by 9 percent to $260 million for 2013-2015.

David Shaffer --612-673-7090