Xcel Energy penalizes early solar adopters

by Nathan Paine | July 31, 2009 • Xcel Energy, the largest power provider in Minnesota, recently announced a plan to charge Colorado solar-panel owners a connectivity fee which would amount to about $1.90/month. Xcel’s position is that non-solar panel customers should not have to subsidize solar panel owners. During months when the solar panel owner uses no electricity he also pays no electrical fees, and so the solar-panel owner essentially gains the significant benefits of the electrical grid (reliability and transmission) for free. It should be noted that widespread adoption of home solar panels would impose significant reliability and transmission issues.

But imposing this fee on solar panel owners is not without problems. The major problem with the connectivity fee is that it runs counter to the state law mandating that 4 percent of the renewable energy used to meet the Colorado’s renewable energy standard come from solar. The second problem with the connectivity fee is that the cost benefit analysis did not factor the some of the benefits of home solar to the grid. Solar panels often produce most of their power during peak hours, but the solar panel owner is only paid a flat fee and is not compensated for the higher price of electricity during peak periods. To a certain degree, adoption of home solar panels may also alleviate some transmission constraints while posing other challenges as mentioned above.

Hopefully Xcel won’t try the same thing here in Minnesota.