Solar, Microgrid Developers Say Xcel Has Monopoly Advantage in New Minnesota Resiliency Program

Solar and microgrid developers asked Minnesota regulators to overturn a March 15 ruling (Docket 22-170) allowing Xcel Energy to offer resiliency services to commercial and industrial customers, saying a utility monopoly will undermine competition in a market that’s thriving without Xcel’s involvement.

The Minnesota Public Utilities Commission (MPUC) on May 19 denied the request for reconsideration, saying the petitions don't raise new issues. 

Sunnova, Blue Horizon Energy, All Energy Solar and the Minnesota Solar Energy Industries Association had asked the commission to overturn the Empower Resiliency program under which Xcel owns, operates and maintains customers’ resiliency assets that are designed and built by third-party contractors. Customers generally make a 10% down payment and pay Xcel back over 15 to 20 years.

The developers worry that Xcel will prioritize its own projects for interconnection and will gain a competitive edge by using the data about its customers to target its marketing efforts.

“Xcel’s ownership of PV systems creates, at the very least, the opportunity for the utility to prioritize the interconnection of its own customers over the customers of other developers,” said Sunnova in its filing.

Sunnova had argued that Xcel’s resilience program undercuts the market and will harm all solar developers in Minnesota.“The market today is adequately served; allowing a monopoly to enter what is now a competitive market would be an overreach,” said Sunnova.

Xcel’s Empower Resiliency program is already available in Wisconsin, where it was approved in May 2021, and the first customer, Bayfield County, signed an agreement in January providing for a microgrid to bolster the county’s emergency services and response system during outages.

How Xcel’s program works

The company begins the resiliency projects with a quick, high-level estimate of costs and return on investment, and, if the customer wants to move forward, Xcel moves into the design and engineering phase, said Emmett Romine, vice president of customer solutions and innovation for Xcel. The customer can select the design and engineering firm or Xcel can do the selection, he said. Sometimes the customer requires bids, and Xcel will issue requests for proposals. 

“Sometimes customers say they have a vendor they want to work with. Or we can bring in a preferred contractor,” Romine said.

The resiliency customers can pay for the asset in full or can amortize payments through their bills, he said. The customer decides how to use the assets. The equipment can provide full backup or the customer can participate in demand response, peak shaving and energy arbitrage efforts.

Contrary to what the opposing parties claim, Xcel does not include the cost of the systems in its rate base, said Romine.

In approving the Xcel program, the Minnesota regulators addressed concerns about access to marketing data, interconnection and reporting requirements, said a press release from the commission. The commission prohibited Xcel from using its customers’ data to target customers for marketing. It also mandated that the installation work be done by independent third-party vendors.

“As approved, the program’s scale is sufficiently limited, and the commission’s additional reporting requirements ensure that the program is in the public interest without being limited to a pilot,” said the Minnesota Department of Commerce in response to the complaints. The MPUC modified the program to avoid anti-competitive use of utility data, the commerce department said. 

Xcel expects to develop only 15 projects over six years in its Minnesota service territory, according to the Department of Commerce.

Utility edge?

In spite of these measures, the solar and microgrid developers aren’t happy.

All Energy Solar said in its filing that the program gives Xcel exclusive access to energy consumption and hosting capacity data, which identifies when and where capacity will be available on the grid, and this creates inequities in the market.

“[The program] furthers the entrenchment of monopoly control of the grid and redefines the power of a regulated monopoly to include services far outside the boundaries of what has been historically permitted by the regulatory compact,” All Energy Solar said.

All Energy Solar also argued that Xcel Energy could limit expedited interconnection to its own resiliency projects.

Xcel’s microgrid portfolio

This isn’t Xcel’s first foray into microgrids. The utility has several microgrid projects in the states it serves, said Theo Keith, a spokesman for Xcel Energy.

In Minnesota, the company is developing microgrids at three Minneapolis community centers – Sabathani Community Center, Minneapolis American Indian Center and North Minneapolis Community Resiliency Hub – through the Resilient Minneapolis project. The solar microgrids provide electricity during power outages and serve as community gathering places. The batteries can be used for grid services during nonemergencies.

“These projects are part of broader efforts to invest in our disadvantaged customers and communities and support the use of advanced energy strategies throughout the Twin Cities,” Keith said. Xcel anticipates the microgrids will be installed in 2024 and 2025.

Xcel is also developing six community microgrid projects in Colorado under the Colorado Resiliency Initiative. The sites are the Alamosa Recreation Center, the Arvada Center for Arts and Humanities, Denver International Airport, the Denver Rescue Mission, the National Western Center and the Nederland Community Center. The microgrids could provide emergency services to the communities during power outages. 

Three of the Colorado sites are under construction, while the other sites are in either the commissioning stage or the permitting process, Keith said.

Xcel also provided funding to the University of St. Thomas Center for Microgrid Research. The on-campus microgrid is now operational, said Keith.

Pursuing resiliency with such projects is important, but it is also necessary to ensure all solar and microgrid developers can compete for these projects, according to the Minnesota Solar Energy Industries Association.

“While maintaining traditional electric service is in the public interest now and for the foreseeable future, Minnesota’s goal to have 100% clean energy by 2040 will require Minnesota to have a competitive marketplace for the development of distributed energy resources as well,” the Minnesota Solar Energy Industries Association said in its filing.

Track news about microgrids. Subscribe to the free Microgrid Knowledge Newsletter.