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Please clarify final recommendations on: o Xcel’s proposed Methodology for the PV Demand Credit going forward;

 

o The appropriate PV Demand Credit to apply in the interim period, prior to the establishment of a new methodology for the credit; and

 

o The potential Commission options provided by the Department of Commerce in their Supplemental Comments, filed August 16, 2019, pages 19-20.

 

2 Responses

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Rao Konidena about 1 month ago

Dear Commission, This is important topic, and thanks for asking for comments. Here's where I land on this - Keep the Xcel Current Demand Credit Rider of Credit per kWh of $0.07139 for solar PV generation during the peak period of 1:00 pm to 7:00 pm for all days - for the next 20 years. Why? Because there are lot of uncertainties when it comes to actual solar production due to weather, cloud cover, tariffs impacting panel prices, inverter costs and compliance with standards such as IEEE 1547. Changing the methodology for this rider only increases that uncertainty for commercial solar developers like my clients. I have come to know first hand after I left MISO that, it takes a long time to get paid in this business. By throwing a wrench in this rider process, Commission actions might delay solar commercial business interests because third part financing will not have clear signal on penciling out the projects in Minnesota.

So, please - don't change this rider for the next 20 years. Solar especially distributed solar is just getting started in our state. Thank you, Rao Konidena of Rakon Energy LLC

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Mouli Vaidyanathan about 1 month ago

As you are well aware, one cannot put a coal plant on the roof, nor can they put a nuclear plant, a gas plant or a hydro plant on the roof. Solar is the most practical energy generating technology that can safely be installed on the roof and close to the load. This proximity of solar generation to the load provides less transmission loss, better environmental (using existing rooftops instead of land) management and low infrastructure costs (substation not required). In Minnesota, solar distributed generation for 5% of solar production compared to community and utility scale solar. Entities such as independent school districts, faith-based organizations do not pay taxes. These nonprofits typically have long time vision (20+ year) than for-profit organizations. A school will always remain a school. Further these organizations want to be sustainable because of their constituents i.e. students, communities are asking for solar production. For solar to be economically viable, they need tax paying investors because solar is a tax benefit. Investors with tax appetite need certainty that cash flows will be stable. In the 3rd party investor model, the investors own the solar asset and also operate the solar asset during the period tax is being monetized. Once the tax has been monetized, the host (school, church, government building, etc.) can purchase the solar asset at a lower price (fair market value) that will offset future energy costs. This type of solar investing is 3rd party investment. Since solar generation is mostly an offset to the conventionally generated kWh and not a demand charge offset, the economic value of the solar kWh generation is dependent on the conventionally generated $/kWh rate. Schools, churches and government entities in MN pay roughly $0.07/kWh. This is fairly low to make solar an economically viable alternative. Comparatively in CA, NJ, MA, and other US States this $/kWh is roughly $0.15 to $0.3/kWh. The low conventionally generated $/kWh rate in MN requires a rider (or a rebate) to encourage solar, especially by a 3rd party investor. Without this encouragement, there will be no 3rd party investment model as it is now. In MN, there is only 5% distributed solar generation while 95% is utility and community solar garden. This lop-sided portfolio must change since solar is the only generation source that can be done on the roof and close to load. Today, Xcel Energy’s PV Capacity Credit rider provides a $0.07139/kWh for solar generation between 1PM and 7PM until year 2024. After year 2024, the rider value is ambiguous. After 2024, the rider value needs to be certain and not ambiguous for 3rd party investments to occur. There are 2 options that Mouli Engineering would like to propose. These are: Option 1 – The current PV Capacity Credit rider should be extended beyond 2024 for at least 20 years.
Option 2 – Any distributed generation solar project should “lock in” PV Capacity Credit rider for 20 years so there is certainty for investors to invest in solar.

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