Tag Archives: Ralph Jacobson

Going Beyond the Balance Sheet at the Steger Wilderness Center

What is the Steger Wilderness Center? 

Located in the boreal forests of Ely, MN, the Steger Wilderness Center is a facility designed to activate our understanding of what it means to be interdependent—with each other, with our earth and as a society. For many, the Center is a place for artisans to hone their craft for the trades-work economy of the Iron Range. Much of the Center is constructed using found or repurposed building materials, and has grown with a sustainable focus since the 1970’s.   

In January of 2020, the Center sought to improve it’s renewable energy system, which had been cobbled together with donated equipment over the years. By replacing their system’s reused parts with more efficient components, the Center hoped to take the next steps toward meeting its growing energy needs sustainably. 

Sharing a Common Goal

Will Steger assembled a group to discuss what could be done to help the Center in the short and longer term. Ralph Jacobson joined the conversation after becoming acquainted through the Summer Solstice fund-raiser event which IPS sponsored in the summer of 2019. As a result, Ralph Jacobson of IPS, Brian Allen of All Energy Solar, John Kramer of Sundial – key players in competing solar companies, would collaborate to support the wilderness center’s goal. 

Upgrading the Center’s system would be a daunting task, but that’s what drew Ralph toward this project in the first place. “We like to get solar set up in places where it’s a stretch” said Ralph, “It’s a challenging project in a difficult place to get to. The kind of place that’s a bit of an adventure.” 

The three split the equipment costs, and additionally, IPS covered the labor. An IPS electrician and his apprentice installed the new equipment and battery set, and ensured the system was fit for an electrical inspection and utility interconnection. IPS visited the wilderness center in March, replacing batteries, switches, inverters, and other components throughout the spring.

Solving Problems Sustainably 

“Thanks to the upgrades provided from IPS, we now have a reliable 24/7 off grid power that has been a game changer for the Steger Wilderness Center,” said Will. “Our woodworking shop is now carbon free and everything functions with a flick of a switch. This is goodbye to our 50 year dependence on fossil fuel generated power.”

Ralph and the team were excited to finally visit the Center and get to know Will Steger, famed arctic expedition leader and the Center’s namesake. The Steger Wilderness Center certainly lived up to its ideals by connecting competitors, allowing an apprentice to hone their skills, and solving problems sustainably. Today, the project is fit for interconnection, and ready to support the Center’s growing energy needs.

Impact Power Solutions is always available to answer questions about solar. If you’d like to find out what solar would look like for your organization, feel free to email, contact, or get a quote. 

The Way to Undo Systemic Racism is by Aligning our Interests

Author: Ralph Jacobson

It took a meeting with a union organizer and our eight crew members to open my eyes as to how my crew’s narratives about the world differed from mine.

As an electrical contractor, I am a signatory to the IBEW (International Brotherhood of Electrical Workers) contract, I had recruited and hired these men for my company from the Black community to install solar arrays.  I was planning to organize each of them into the electrical apprenticeship program which would get them started on careers as electricians. Solar installation has been deemed electrical work by the Minnesota Board of Electricity, so being an electrician gives access to a lot of work in this field.

But one after another, each one said, “I don’t want to spend five years of my life being ordered around by middle-aged white electricians. No thanks!” As that sunk in, I realized that to them, this pathway looked like indentured servitude, of which generations of Black people have experienced too much. “Been fooled before, not this time!” This was my rude awakening to the narrative that they carry, and some darned good direct feedback!

My story about trade unions begins with my grandfather, who was the first business agent of the Ironworkers Local #512 when it was organized under the AFL-CIO in the 1930’s. Following him, my dad and my uncles all made careers in ironwork. They had good jobs, solidly blue-collar middle class. Then  what was up with the members of the installation team? Didn’t a union electrical career look good to them? A friend from the Northside clued me in: up until the 1930’s, contractors up north would sometimes hire skilled Black workers from down south for lower wages. The narrative the members of the installation team brought into the conversation is that the trade unions were organized to keep Black workers out. 

These men  took pride in their work; and loved that they were making a difference in the world. A lot of the work of installing solar panels is actually skilled labor work and not electrical, but it is all covered under the union contract. So now I was in trouble with the union because I had hired non-union workers who were not interested in the path to membership that was offered. I began to wonder if there are any alternatives – what about a laborer’s union track? Again, each one said, “I could do that.” A white guy might not catch the difference: it would seem like a parallel role, not a subservient one, to the electrical work. 

There has been talk for a while about creating a “construction electrician” track for just this purpose. This has met with resistance from the rank and file electricians because they don’t want to give up work that they and their forerunners fought for. I don’t find that to be unreasonable – most electricians have seen times when work was scarce. 

It is not my intention to start blaming the union or anybody else, but here is a situation that clearly illustrates the difficulty of rooting out systemic racial bias, once we go from setting a broad intention, to actually digging down and finding that root to pull out. We find that there is no one person or rule to go after, but a whole lot of reasonable people just doing their jobs. However, we are up against attitudes on all sides, and each one has some history to reckon with. 

Systemic racism is so pervasive in our society that most of us find it impossible to find a way to get started on that kind of work. We each have a lot of work to do in the circles that we operate in, where we can have an impact. Thinking about where attitudes come from may give us a pathway to solutions, like the little piece of yarn sticking out of the sweater, that you pull on and the knitted structure starts to unravel. An attitude that makes me not want to share comes from a place of fear and anxiety, even if one’s family has been blessed with having enough for generations. The fear is vestigial, but it runs deep, and it can influence our behavior towards other people. Helping someone soften that kind of an attitude usually can’t be done in one swift move, it takes time. I was reminded by a friend who works in a factory that when people who were different from each other, worked side-by-side, they got to know each other. Their attitudes softened as they became real people in each other’s eyes. 

A potential way out of my impasse came up recently, when I received a call from an officer at a large electrical company, which is a union shop. He wanted to get some insight about why the union shops are not getting much market share in the burgeoning solar industry. We had a chance to discuss some economic realities, that perhaps having higher-paid electricians doing all of the labor work on a solar installation is pricing them out of the market. We agreed that if he could support the creation of a construction electrician track, his pricing could be more competitive, and his electricians would see  more work in the solar field. 

This change could show up to the electricians as an opportunity for new work, and not as a need to give up some work. It could make it easier for some union members to soften their attitudes, because their interest in solar work would align with the creation of a track under the union contract that would be more acceptable to a group of people that the members of the installation team spoke for. I find it encouraging to think that the interests of these two groups could be aligned, and I view this is an example of where the real work needs to be done in order to move from well-stated intentions to actually taking down oppressive barriers to full participation of Black people in the economy.

We’re not there yet, but there is already a lesson in this for me. If we can find a way to align the interests for all of those involved, so that change shows up as opportunity, more people may be willing to look beyond their deeply emotional attitudes, and work together to undo structures that exclude or reduce opportunity for people based on the outdated notion of “race”. We can find ways to align our interests in such a way that everyone can benefit.

[Ralph Jacobson (ralphj@ips-solar.com) is the Founder of IPS Solar and Chief Innovation Officer of IPS Development, a 30-year solar development company in Roseville, Minnesota, and was the founding Board Chair of the Minnesota Solar Energy Industries Association.]

The Pathway to Larger-Scale Solar in Minnesota – Parts 1-4

Click the links below to read parts 1-4 of Ralph Jacobson’s The Pathway to Larger-Scale Solar in Minnesota series. 

 

Part 1: How Can We Steer the Market For DG Solar?

 

Part 2: The 4th Market Bucket of Dispersed Solar

 

Part 3: How Much Can the CSG Model be Scaled Up?

 

Part 4: Community Benefits and Distributed Solar

The Pathway to Larger-Scale Solar in Minnesota – Part 4

The Pathway to Larger-Scale Solar in MN

Community Benefits and Distributed Solar (Part 4)

Author: Ralph Jacobson


DG Solar is a nimbler non-wires alternative

A recent article in the New York Times documents the organized public opposition to utility-scale solar farms in upstate and western New York. That state has created some very effective incentives to attract big solar development, but there is no agreement among the public about how much solar is too much, and which landscapes are right for big solar arrays in the first place. This is a hard fight that’s heating up, not just about what we value besides money and property rights, but who has a voice in those decisions. 


We have seen similar fights in Minnesota about wind farms, and it won’t be too long before bigger solar is caught up in the fray. Several counties, townships, and cities have declared moratoria on any further permitting of the one-megawatt sized CSG, which occupies a ten-acre parcel of land. What kind of opposition will arise when the locals are asked to approve solar arrays which occupy several square miles of nearby land? Public attitudes toward larger-scale solar are driven by unrealistic expectations due to seeing miniaturization in most electronics. Unfortunately, the solar resource is extensive: if you want ten times more solar power, you have to deploy ten times more area in solar. 


As we shape the market for bigger solar arrays, we would do well to position DG solar as a smaller and nimbler alternative to the truly utility-scale solar. When sited to provide multiple local benefits, as discussed below, it can be more acceptable to locals and require a shorter development timeline. DG solar can play a key role as a non-wire alternative (NWA) to help minimize the overbuilding of distribution infrastructure.


Sacrificing System Efficiency for Economics of Scale

In a 2005 article, “Critical Thinking About Energy: the case for decentralized generation of electricity,” Thomas R. Casten and Brennan Downes show that electric power industry efficiency peaked at about 65% back in 1910, and decreased to 33% by 1960, where it has remained. The drive to lower the cost per megawatt of generation, by building bigger plants to harness the economies of scale, did not result in greater efficiency. Quite the opposite: in 1910, plants were much smaller and located near thermal loads which could utilize the “waste” heat as combined heat and power (CHP). By 1960, large coal-plants were situated nearer to coal fields and further from cities, and the heat was devalued and wasted as an acceptable loss. 


Keeping city air cleaner and economies of scale were valid reasons for building coal plants far from population centers and their loads. Following that trend, utility-scale solar is far from loads, as we see the largest solar plants built in desert areas. As mentioned above, ground-mounted arrays do take up a significant amount of land, and much of that land in Minnesota is considered prime agricultural land. This might be the toughest of a handful of issues to wrestle with in determining how much of the solar build-out should be DG solar and not utility-scale. A more complex web of issues may pull much of the expected deployment closer to towns and cities.

 

Land use issues

As was true for coal power plants, the further we build large solar arrays from cities and major loads, the more we have to overbuild them to make up for more line losses through the wires. In the US, large power plants must burn up to 15% more fuel to overcome just the transmission line losses. Because DG solar is closer to loads, it is inherently more efficient, and as a bonus its smaller footprint may result in fewer land use battles. Battles over land use can drag on for years and could become a major impediment to the solar contribution toward clean energy targets at 2030 and 2050. It would also make matters easier if we could move away from the single-use approach to land use. There would be more public support for putting solar arrays on prime ag land if the solar could be providing other benefits to a local community, as well. 


Don’t boil DG solar down to commodity electrons

There is a false dichotomy underlying the discussion about the economics of utility-scale versus DG solar that must be addressed in order to do serious planning. Anyone who was watching attempts at solar legislation at the Minnesota Legislature in 2019 saw the utility narrative make a stark U-turn from past years. Where previously the claims were that “solar is too expensive, so we shouldn’t be spending money on it” the message morphed into “utility-scale solar is so much cheaper, why do anything else?” As we saw in the last century around ever-bigger coal plants, that argument works if the only consideration is the cost of generating a flow of electrons, and other multiple benefits are cast aside as having little value. But little value to whom, as we consider it in the context of land use?


Aligning solar with multiple community benefits

The methodology for calculating the Value of Solar tariff includes the social cost of carbon, which utilities have balked at including in the rate structure because solar provides a benefit to the broader community, not just their customers. But it may be much more fruitful to consider this in the context of DG solar: to identify a variety of more specific public benefits, creating a pathway to monetizable value not paid by a commodity electron. 


This would be similar to the concept of renewable energy certificates, or RECs, which can be separated from the tariff with other funding mechanisms. In recognizing that environmental benefits have a value in allowing prime agricultural land to be used for solar, there is an implicit opportunity to monetize some of that value to help overcome the extra cost of DG solar arrays above utility-scale costs, to help make DG solar financeable. We could also go the other direction and apply disincentives to utility-scale solar to address the loss of opportunity to use solar to meet such public or societal benefits.


Identifying other public benefits

Aware that aggressive solar policies are getting pushback in mature markets like that in upstate New York State, Minneapolis-based Great Plains Institute is organizing a campaign of “Siting Partnerships” to build broad public support for use-cases in which solar arrays that are ground-mounted on agricultural lands would align with an environmental benefit. The campaign will enable the solar industry and the utilities to link arms with municipalities and other stakeholders to create site-specific agreements where deployment of solar arrays on prime agricultural lands can be defended. In each of five use cases identified, the landowner will benefit from payments for the use of their land, this aligns their interests with the solar deployment:


Protection of municipal water supplies
Siting appropriately designed, vegetated solar installations on Drinking Water Management Supply Areas and Wellhead Protection Areas currently under agricultural production.

Watershed protection 
Siting strategically designed solar arrays in impacted watersheds to serve as infiltration areas or buffer areas to limit non-point pollution.

Carbon sequestration 
Solar development designed to maximize ground cover or buffer areas to sequester carbon in the soil. Minnesota farmland has an enormous potential to help reverse the build-up of carbon in the atmosphere by building up black dirt.

Habitat protection 
Solar development designed to buffer critical habitat core areas and limit opportunities for development that would degrade habitat functions (pollinator-friendly, for example).

Buffer against unchecked urban sprawl
Use solar development to discourage sprawling development patterns, limit infrastructure expansion, and protect areas designated as having rural character.


Utility locational benefit plus community benefits

Although this will not explicitly favor DG solar over utility-scale, the opportunities for both will be quite literally “all over the map,” as communities cultivate local awareness and support. Any community benefits of solar arrays will be location-specific, as determined by the communities themselves. This can augment the work already being done under the Mn PUC Docket #13-867 to identify locations where solar arrays (as non-wires alternatives) could be electrically beneficial to the power distribution system. 


DG Solar Plays to the Modernized “Smart Grid”

In the electric power grid of today, power flows in one direction: from remote central station generators to the cities and towns where the loads are; utility-scale solar follows this model. DG Solar, on the other hand, can fit with the network architecture of the modernized grid, where power flows whichever direction is needed on the wires from local generation points to provide power for loads in the area. Every device will have an IP address identifier for communication and balance of power flows around the network. In this context, DG solar is considered as a distributed energy resource (DER), along with demand response, energy storage, efficiency measures and other non-wires upgrades to the electric power system.


Are we trying to pack too much into a DG solar tariff?

Larger-scale solar will have fewer non-utility players: contract guidelines may be more useful than tariffs. A tariff is a standardized contract, approved by the Public Utilities Commission for offer to the general public. Under net metering and CSGs, potential users of the tariff are mostly utility customers who wish to self-generate or subscribe to a CSG; they may number in the hundreds of thousands. 


However, DG solar developers will likely number in the dozens and will be working in a more complex market. While selling energy or through a PPA, the system owner might simultaneously be aggregating multiple solar and storage installations to participate in the wholesale power market, or be selling community benefits. This means that contracts must be useful to several participating entities and dovetail with other transactions which may be involved in making a financing scheme viable, and a tariff need only represent one piece of the cash flow. 

Where there are specific locational or functional benefits, or other income streams involved, the particular benefit or function may determine location, contract terms and conditions, and even which utility will be involved. 


The 4th market bucket of DG solar in 2050

By 2050, as little as 10% and as much as 60% of total solar deployment in Minnesota could be in that 4th market bucket. How much DG solar actually is deployed will depend heavily on how we go about shaping the market for it. Because locational and community environmental benefits will play key roles in making DG solar financeable, much of the opportunity is across the state in municipal and cooperative utility service territories. And we will need the support of utilities and municipalities to deploy bigger solar arrays on prime ag land. 


The “tried and true” strategy of asking the legislature and/or the regulators to make the utilities pay higher tariff rates for DG solar, will only reach the investor-owned utilities, and they will fight that. This will only get us a little past that 10% mark. To reach the lightly regulated coops and munis, and gain their support for a larger statewide market, we must limit how much we try to pack into DG tariffs. More effort must then be put into creating linkages with capital sources to monetize environmental benefits and unlocking the market for grid benefits with the addition of energy storage to the electric power system. 

– Ralph Jacobson, July 2020


Next: Energy Storage Will Enable Higher Solar Deployment

 

 

 

The Pathway to Larger-Scale Solar in Minnesota – Part 3

The Pathway to Larger-Scale Solar in MN 

How much can the CSG model be scaled up? (Part 3)

Author: Ralph Jacobson

 

What have we accomplished with the CSG model?

By the end of 2019, about 650 MW of CSGs had been installed and brought online, with another 200 MW under development. For comparison, Xcel is proposing to bring 4,000 MW of solar online by about 2035 and would prefer that most of it not be under the Community Solar Garden (CSG) model. Given that the CSG model appears as a place holder for larger scale solar in the Solar Potential Analysis report, as mentioned in Part 1, we need to consider the issues that exist now in that market segment. 

Then we should ask whether it makes sense to stretch the CSG model into duty for a much bigger role than it was designed for, or do we set a course to develop other models for larger solar? One thing to keep in mind is how much uncertainty attaches to the CSG model, and how likely this is to hinder the flow of capital into vigorous deployment of larger solar in the crucial decade ahead. 


Moving a half-step away from the net-metering paradigm

The CSG model was the first opportunity in Minnesota to develop larger-scale solar. There was no size cap per Garden site, and no overall planning target, until the regulators agreed to end the practice of collocating one-megawatt Gardens, which effectively limited the size to one-megawatt per site. Through this program, the local solar industry, Excel Energy, and the many affected communities have become familiar with the complex of land-use, engineering, financing, permitting, and other issues which pertain to larger-scale solar. We have all gone up a steep collective learning curve!


Although it was intended to be a step away from the “early market” net-metering framework, addressing the issue of cross-subsidization, some aspects of that paradigm have followed into the CSG model for Xcel Energy. First, it creates an open market where solar developers can originate and propose projects, instead of responding only to utility RFPs. As Gardens become more numerous and/or larger, Xcel will experience more uncertainty in its ability to plan for the timing, location, and financing of new generation. 


Second, the regulators set subscriber rates close to retail-level, using the Value of Solar (VOS) tariff for the first time in the state, as set forth in the 2013 Minnesota Solar Jobs Act, to enable the financing of one megawatt CSG installations. The intent of the VOS had originally been to address the tendency of net-metering programs to “cross-subsidize” one class of ratepayers at the expense of other classes and non-participating customers – to democratize solar by spreading the benefits over all rate classes. But has the ability to finance Gardens under the VOS adequately addressed the democratization issue? Most CSG developers find it easier and more profitable to find subscribers among municipalities, schools, churches, and corporations than among the multitude of residential customers. Although the issue is still unresolved, Minnesota is now host, over Xcel’s protests, to the most vigorous CSG market in the nation. More about the VOS further on.


Uneven access to the CSG model 

The language to enable the CSG model, under the 2013 legislation, was aimed only at Xcel Energy. While other utilities in the state have experimented with CSGs, such Gardens are only built as a service to those members who wish to participate. This will not support a market the way that the Xcel program does. Even in Xcel’s service territory, because of the requirement that subscribers reside in the same or an adjoining county as the CSG, farms which are located on slivers of Xcel territory in very rural counties of Minnesota do not qualify to host Gardens because there are not enough potential subscribers who qualify under that rule. Again, this seems to undermine the original intent of the program for broader access to solar.


Repeal of the contiguous county requirement would correct this uneven access with a “two-for” benefit: not only would those farmers be able to host gardens, but inner-city residents would have broader access to those solar gardens. This is because most of the CSG activity now is in a “doughnut” of counties which ring the metro area but are two counties away from residents of Hennepin and Ramsey Counties. Such a rural-urban connection could be constructed to help the program better meet the original intent. 


Impact on utility business model

Unlike net-metering, where most of the power is utilized onsite, the CSG delivers all of its power to the utility as a “merchant system.” Being on the large end of the net-metering framework, the CSG has more impact on the utility electrically and on the “wholesale to retail” business model. Without a better coordination regime to address hosting capacity and congestion, the utility loses control of the ability to target new generation siting in its planning, because solar developers are free to originate projects wherever they can. Furthermore, gardens capped at 1 MW are difficult to finance beyond a short distance from substations; this limits the number of good sites for solar gardens, clusters them near substations, and keeps the cost to build relatively high.

 

Two very different market structures

The CSG is a policy-driven market structure which the utility has had to accept from its regulators because, through the subscriber arrangement, consumers (ie: unsophisticated investors) are involved in the transactions. This complicates the model because it is illegal to take money from unsophisticated investors, and so capital has to be provided by third parties who expect to get a much quicker return on the investment than the utility is allowed to get on its investments. Furthermore, the cost of that power to the utility is set by a stakeholder process which the utility does not control; it is currently starts at just over 9¢ per kwh. 


By contrast, utility-scale solar transactions are almost entirely between the utility and its solar developer vendors. The wholesale market is more economics-driven, which aligns better with an updated utility business model where, unlike the richer context of the VOS approach, the goal is to generate electricity from solar arrays in the same cost range as from burning coal. This parity has already been achieved in some places, where the wholesale price of electric power from utility-scale solar arrays is under 3¢ per kwh (kilowatt-hour). 


Potential improvements to the CSG model

If claims made by us, the solar developers, at the legislature in 2019 are to be believed, the best sites for development of CSGs have already been utilized, and further sites are more expensive to develop (that was part of our argument). Adjusting the one-megawatt collocated cap on CSGs to two or three megawatts would somewhat alleviate this constraint and expand the range of sites for financeable installations; it would also somewhat lower the cost to build new Gardens. 


Allowing Xcel customers from non-contiguous counties to subscribe would fill out the CSG market in very rural areas and very urban areas of Xcel territory. Xcel  representatives consistently maintain that they originally believed that subscribers would mainly be residential customers. The “residential adder” incentive, which increases the subscription rate as more residential participants are included, will align the program better with the original intent. It will attract some developers to expand into cities and towns with urban rooftop CSGs. Further, having more residential subscribers could be made a requirement for allowing larger Gardens or subscriptions from non-contiguous counties.


The CSG program needs a cap for planning purposes

The trade-off is that any deal will most certainly require a cap on how many megawatts of solar gardens which Xcel will be required to greenlight each year. There is no agreement about that yet, but a realistic cap would be a useful planning tool for everyone’s purposes. The tug-of-war of the CSG pricing and rule-making process is a tough environment for utility planning. Recognizing that the utility needs a cap for good planning, the cap should be high enough to allow the solar developers to continue to build the program out over the next 5 – 10 years to an agreed-upon overall goal of perhaps 1,500 total MW of CSGs. 


How will the VOS perform at higher solar deployment?

The VOS tariff will need a different baseline as more solar comes online. The VOS is based on a thorough methodology for valuing solar in terms that are relevant to utility economics. However, the basis of the valuation is a comparison of the cost of the solar build-out, against the cost of distribution system upgrades which may be deferred or eliminated because of the solar. But at higher levels of penetration of solar into the electric power market, perhaps associated with grid modernization and microgrid development, there will be new costs for system upgrades needed in order to accommodate more solar and other DERs (distributed energy resources), and deferral-based valuation must give way to valuation based on new build-out. 


Would the VOS then become obsolete?

Consider that the genesis of this approach was the desire to move past a frustrating debate about the catch-all of “externalities” which could be mitigated by solar energy. By creating an itemized list of market-oriented benefits of solar to the utility and its customers, the VOS is a rational method to price solar in an already complex electric power market. Far being discarded, the VOS could be a foundation for the even more complex challenge of valuing DERs in a more interactive and time-oriented power grid, requiring optimization between solar, energy storage, curtailment, gas peakers, and load management. Let’s celebrate what the VOS methodology given us that can be applied going forward !!


A limited growth forecast for the CSG model

Here is a recap of the issues I have with the Xcel CSG program:

– CSG market only functions in Xcel territory

– Priced too high to be a major power source

– Doesn’t address utility planning needs well

– Hasn’t effectively addressed ratepayer cross-subsidization

– VOS tariff will need update for valuation of DERs

Here are some of the suggested improvements to the program :

– Remove the contiguous county requirement under conditions minimizing cross-subsidization

– Set a yearly cap for the Xcel CSG program

– Raise the Garden collocated size to at least 2 megawatts 

– Firm up incentives for more residential subscriptions


We have a strong Community Solar Garden program right now, viewed by many as the best in the country. Although Xcel chafes under some aspects of the program, and the solar developers chafe about others, the process has brought us all into a better understanding. We will need that going forward. Rather than watch the program fizzle out over the next couple of years, a better strategy would be to make all of the improvements to the program that we can, including agreement on the ultimate scope, and keep the industry healthy by letting the program make a strong finish at 1,500 megawatts of Gardens by 2030. That’s about 10% of the solar we will need by 2050, as mentioned back in Part 1 of this article. And then  let’s get to work on the DG solar models for the other 20% to 50% of the solar that we will need.

– Ralph Jacobson, May 2020


Next: Public Benefits and Distributed Solar

The Pathway to Larger-Scale Solar in Minnesota – Part 2

The Pathway to Larger-Scale Solar in MN

The 4th market bucket of Dispersed Solar (Part 2)

Author: Ralph Jacobson

 

What Do We Mean By The 4th Market Bucket?

Let’s look at this through the lens of tariffs offered by the utility for distinct segments of the solar market, affectionately called “buckets.” A tariff is a standard contract, approved by the utility’s regulators, which defines the transaction between the utility and its customers who own solar. The net-metering tariff is offered to residential, commercial, and industrial customers for PV systems up to 1,000 kilowatts. This first bucket for solar has been the foundation for the solar industry for decades.

The second bucket is the community solar garden, which uses a tariff based on the “value of solar” concept to price the bill credit given to subscribers. Utility-scale solar, a third bucket, is just entering the market in Minnesota as the price of solar continues to come down. Being larger and relatively few in number, these transactions involve power purchase agreements (PPAs) and other purchase contracts where price and longevity are the key drivers.

 

Creating The 4th Market Bucket: Dispersed Solar

Dispersed solar arrays, DG for short and sized from one to ten megawatts, may be too large to be supported by policy-driven incentives, and too small to be competitive by a wholly economics-driven analysis. But recognizing that DG solar can utilize smaller parcels of land closer to loads, be quicker to deploy, AND be more compatible with utility business models, DG solar models will actually gain more traction in the solar marketplace than the CSG model.

To facilitate DG solar, we would do well to identify what need there is in the clean power market for solar arrays at mid-scale, how this market differs from what we already know, and what is needed to make it work for both utilities and solar developers. This will be a planning-driven market, and this should be seen as the goal of the distribution planning process initiated recently under the auspice of the Minnesota Public Utility Commission.

 

Why Consider Dispersed Solar?

A recent article, “Is Bigger Best in Renewable Energy,” by Maria McCoy of the Institute for Local Self-Reliance, makes the case that there are limits to the economics of ever-bigger power plants. Very large solar arrays will likely require investment in new transmission lines, adding significant cost and longer timelines to utility-scale arrays. Other factors such as the cost of other infrastructure, powerline losses over longer distances, uncertainty in the market, and public attitudes about the use of agricultural land will take a great deal of political capital to overcome. In comparison, DG solar can be quicker and easier to plan and implement, as will be discussed further along. 

Another advantage of DG solar is that more widespread dispersal of solar arrays will tend to minimize the edge effects of clouds. The leading edge of a cloud bank can cause a sharp drop in power production, while a sharp increase in production can occur as the sun comes out from behind the trailing cloud edge. While electronics can minimize the edge effects of clouds by smoothing the ramping up or down of production, the fact remains that the more compact our solar is (i.e., fewer but larger arrays), there will be more impact from edge effects to be dealt with.

 

How Will Dispersed Solar Fit Into The Power Grid?

Utility-scale solar arrays are located on the transmission side of the power grid, more like central-station power plants. Dispersed solar arrays can be located on the distribution-side, much nearer to the farms, factories, and cities where the energy will be used. It may be more accurate to describe them by function or location in the electric system, such as feeder line support, than it is to describe by other categories.

A legitimate question to ask is, if community solar gardens are really taking off and very popular with electric customers of Xcel Energy, why can’t the model just be scaled up to take its place alongside utility-scale solar to realize the full potential for clean power? And furthermore, since it costs a little more per kilowatt-hour to build a dispersed solar array than it does to build a utility-scale solar array, what are the benefits which justify the extra cost and work of creating this 4th bucket for DG? So, let’s examine the market potential for community solar.

– Ralph Jacobson, March 2020

 

Next Time: How Much Can The CSG Model Be Scaled Up?

 

 

 

 

 

The Pathway to Larger-Scale Solar in Minnesota – Part 1

The Pathway to Larger-Scale Solar in MN

How We Can Steer The Market For DG Solar (Part 1)

Author: Ralph Jacobson

 

Moving Beyond the Net-Metering Framework

Don’t get me wrong: the lasting value of the net-metering policy is that it has supported the early decades of the solar power market, creating ample opportunities to work the technology and to continually improve it. Under a tacit agreement with the utilities which has lasted for forty years, most of the power produced by a solar array is used onsite, so it has little impact on the utility distribution system. When a net-metered PV system goes online, it looks very much like a daytime demand-side management measure has just been applied:

The net-metering framework has served us well to gradually de-risk PV technology at the grid edges, so that now utilities and other risk-averse players have the confidence to invest in it themselves. Net-metering has focused the market on the small-scale end, where strong incentives are needed to stimulate a sufficient volume of installations to make the market strong enough to develop reliable products and services. It has enabled the gradual scale-up of mass-produced PV modules, specialized mounting hardware, improved electronics, and national standards for interconnection of PV systems of all sizes to the electric power system.

These in turn have led to a dramatic decrease in the cost of PV equipment, and to a growing workforce that is trained to develop and install solar. So then, as the solar industry rides a wave of success, it is natural to assume that if we want a lot more of our electricity to come from solar, we should pursue the net-metering framework of the past 30 years more vigorously, right?

Well of course we will, but industry players know that small-scale solar by itself will get us nowhere near the amount that we must install to meet our clean energy goals. According to the Solar Potential Analysis report for Minnesota, released in November 2018 by Clean Power Research, roof-mounted residential and commercial systems could provide as much as 40% or as little as 10% of the total contribution which solar could make by 2050.

The contribution from utility-scale solar is heavily dependent on economic factors discussed later but note here that the expected range mirrors that of small-scale solar: more of one, less of the other.

Comparing the two scenarios, this leaves anywhere from 30% to 60% of the
market for the larger but less than utility-scale solar; in the analysis community solar appears as a placeholder with no consideration of other larger-scale solar. This is what is up for grabs in the discussion of the terms of a DG tariff– it represents a huge opportunity to shape the solar market that works best for everyone, including business development, modernizing the grid, and social equity, as well as meeting greenhouse gas reduction goals.

The Next Market for Solar in Minnesota

The solar industry here has always operated with a bit of a subversive mindset, of trying to get our foot in the door of the electric power system and get a little piece of the action. But that dynamic will be turned on its head, as our disruptive solar technology becomes a major part of the system! We must now grow our thinking, by understanding a few things about larger-scale solar, so that we can steer the market growth in the directions we would most like to see. This will help stakeholders participate more effectively in distribution planning.

– Ralph Jacobson, January 2020

 

Next Time: The 4th Market Bucket of Distributed Solar

 

 

The Xcel Energy Community Solar Garden Program: What has it Accomplished in Minnesota

 

Written By Ralph Jacobson

IPS has been busy developing solar arrays through the Xcel Community Solar Garden (CSG) program since 2014. This year the CSG program is under fire from one house of the Legislature and getting a boost from the other house. Whether you are a skeptic, a subscriber, or just wonder what all the fuss is about, now is a good time to step back for a minute and consider some of the many ways that the program has benefited not only Xcel Energy customers, but the entire population of Minnesota. I have thought of eight; how many can you think of?

 

1. Minnesota now has a more sophisticated developer and utility partnership. 

The solar market here had been capped at a tiny size of 40 kilowatts since net-metering was enacted in 1980; this supported only a small group of solar installers competing for residential and small commercial business. The CSG program has helped to move the solar market out of the “early adopter phase” of sky-high cost, into the “early mainstream phase” where costs are still too high for utilities but are coming down fast. Our state’s utilities now have local partners who have the depth of experience and resources to continue wrestling with costs and risk factors until these are acceptable for utilities to more directly engage with solar.

 

2. The Minnesota PUC has successfully deployed a joint planning model embodied in the CSG working group, which transfers much of the workload to Xcel and the developers, while maintaining robust oversight.

The sheer volume of proceedings involving solar has created a tremendous increase in the workload of the state regulators. This working group has placed much of the responsibility on the solar power industry itself, utility and non-utility, to work together to find agreeable solutions. Although the issues are being hotly debated now, the groundwork has been laid here for a smoother Integrated Distribution Planning process, involving more players.

 

3. We Needed to Try the Value of Solar (VOS) Tariff.

The CSG program has provided a testbed for the Value of Solar (VOS) concept. After much collective effort and brain power went into developing the method for calculating each line item in the tariff template, no utility stepped forward to try it out. Solar developers thought it would benefit them by raising the price which utilities pay for solar; utilities thought they would see the price fall over time. The VOS started out as a rational approach to calculate the avoided costs for utilities, but because it is now in actual use for the CSG market, we will now find out whether the VOS really does reduce the level of contention on the price which the utility pays for solar power.     

 

4. Minnesota is no longer flyover country for capital, when it comes to solar. Many providers came from different corners of the capital market to check out the CSG model, and some stayed to play.

This was the first opportunity for many in the local solar industry to participate in third-party financing deals. Broader use of third-party financing has stimulated more possibilities for solar deployment, due to more interest from capital providers and more experienced developers and installers. One way to look at it: Minnesota is getting its share of the benefit from Federal Investment Tax Credits. 

 

5. Solar Deployment Has Greatly Accelerated With CSGs.

In the five years from when the CSG law was signed in 2013, through the end of 2018, PV capacity installed in Minnesota went from 17 megawatts to over 1000 megawatts. That’s an increase of 60X!! Over half of that increase is from solar arrays under the Xcel CSG program,  enough to power 50,000 homes.

 

6. Farm income is stabilized with CSGs: farmers who lease part of their land out to a CSG are finding, like their counterparts who lease out land for wind farms, that this builds some stability into their economics.

Typically, these 25-year contracts provide the farmer around $1,000 per acre per year; a CSG requires about 5 acres for deployment of a megawatt of solar modules. Think of it this way: the farmer is getting paid for taking some of their land out of heavy corn and soybean rotation, and to put that land into a soil improvement program which produces electric power at the same time.

 

7. CSGs are associated with soil improvement, and agronomists are beginning to study the positive impact of ground-mounted solar on soils.

Solar developers have largely adopted the planting of soil-building grasses and legumes as the standard soil treatment under a solar array. Fresh Energy’s Pollinator Pledge program has helped build public awareness and acceptance of ground-mounted solar as an enhancement of Minnesota agriculture, and not a distraction.

 

8. CSGs have helped Increase public acceptance of solar, because now there are a LOT more solar arrays deployed around rural Minnesota.  Five years ago, most people (including myself), considered larger ground-mounted solar arrays to be an unnatural imposition upon the agricultural landscape we were accustomed to. Many people live near, work near, or drive by a CSG regularly, and all of us can see for ourselves that a one-megawatt solar array has less visual impact than an ethanol plant, or other large agricultural installations.