Xcel Announces RFP for 150 MW of Solar

19 March 2014 Renewable Energy Outlook Blog

Solar project developers and investors should mark their calendars for April 15, 2014, when Xcel Energy plans to issue a Request for Proposals (RFP) for up to 150 MW of solar generation. The RFP is needed because Minnesota enacted a Solar Energy Standard last year, which mandates that at least 1.5% of investor-owned utility total retail electric sales come from solar energy by 2020 (10% of the 1.5% requirement must be met with systems ≤ 20 kW). The goal is to increase this amount to 10% by 2030. Minnesota is one of the leading states in promoting renewable generation, and the Solar Energy Standard is not just a carve-out for solar within Minnesota’s existing renewable portfolio standard (RPS), but in addition to the RPS, which requires that at least 20% of electric sales originate from renewable energy sources by 2020, and 25% by 2025 (for Xcel Energy, these percentages are 25 and 30, respectively, due to its nuclear generation fleet).

Xcel accounts for approximately half of Minnesota’s retail electric sales and estimates it will need approximately 300 MW of new solar capacity to meet the Solar Energy Standard. Xcel believes that in order to attract project developers it is imperative to act quickly before the Investment Tax Credit (ITC) is reduced from 30% to 10% on January 1, 2017. The ITC has been the primary driver of solar project development and many industry experts believe it is absolutely essential that it is renewed in order to continue promoting renewable generation, diversifying the country’s energy supply, and maintaining job growth within the industry. Nevertheless, Xcel is dividing its 300 MW requirement into two separate RFPs, one now and one after the expiration of the ITC, in order to promote more stable phased-in growth and gauge the level of interest towards allocating more of its generation portfolio toward distributed solar projects in the second RFP.

Xcel will not compete directly in this RFP, but may be interested in participating through a partnership with a third-party. Proposals are due June 1, 2014, and selected projects will be submitted to the Minnesota Public Utilities Commission in October 2014. Investors and developers should stay tuned for the second round 150 MW RFP in 2017/2018. Xcel’s filing notifying the Minnesota Public Utilities Commission of its intent to issue the RFP is available here.

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