DENVER (AP) – The Colorado Public Utilities Commission on Wednesday rejected an agreement Xcel Energy reached last month to sharply boost the amount of power it obtained from community solar gardens.
“Rather than utilize the commission-approved competitive process, the parties filed a settlement that is not in the public interest,” PUC chairman Joshua Epel said in a statement.
Xcel Energy last month struck a deal with SunShare, Clean Energy Collective and Community Energy to buy power from new community solar gardens with up to 60 megawatts of capacity that they developed.
The state’s largest utility agreed to pay a renewable energy credit (REC) of 0.3 cents per kilowatt hour for the power that came back onto its grid, a cost that would pass back to ratepayers systemwide.
But the PUC cried foul. Last fall, those same solar developers in a competitive bidding process agreed to “negative” RECs, meaning they would pay Xcel Energy instead of the other way around.
PUC staff estimated that last month’s agreement would cost rate payers hundreds of thousands of dollars per garden built, and that the utility need to go through a commission-approved competitive bidding process.
“We are disappointed by the decision, but we will need to wait on the written order before providing further comment,” said Xcel Energy spokesman Mark Stutz.
Community solar gardens allow property owners to buy a fractional share in a solar development as an alternative to installing arrays on their own buildings.
Utilities in the state are under a mandate to obtain 30 percent of their power supply from renewable sources by 2020. After initially relying on wind-generated sources, Xcel Energy has ramped up its allocation to solar, which has seen a big drop in costs.
The agreement the PUC struck down was tied to the company’s 2014-16 renewable energy plan. The PUC in 2014 directed Xcel to sign agreements for at least 19.5 megawatts and no more than 90 megawatts of power from community solar gardens by the end of 2016.
The utility had commitments for 47.5 megawatts before reaching the deal for another 60 megawatts.
RECs represent a way to put a market value on the added benefits that solar and renewable sources provide, such as lower emissions, and foster more investment.
They are tradeable and can be “spent” by utilities and industrial firms to achieve compliance with environmental requirements.
But as solar has become more competitive in cost and more prevalent, the value of those credits has fallen.
In Colorado, which doesn’t set a floor price on RECs, their value turned negative last fall, setting off alarms in the solar industry.
Xcel’s 2017-20 renewable energy plan, which was recently filed with the PUC, calls for another 401 megawatts from solar. That’s such a big number it could have changed the supply and demand dynamics for solar.
Aside from the cost to ratepayers, the PUC also questioned how Xcel Energy was proposing to determine bill credits for participants in community solar gardens, and the utility’s plans to own its own garden.
