Minnesota Department Of Commerce Brushes Off Big New Solar Project, Prefers Natural Gas

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The Minnesota Department of Commerce has advised Xcel Energy, one of the state’s biggest utilities, to not take on a new solar project in its search for new power sources.

Xcel expects it will have to add over 550 megawatts of new electricity generation by 2020 to meet Minnesota’s rising needs, and to that end the utility established the Competitive Resource Acquisition Process to solicit ideas for new projects. It got five responses, including a 100 megawatt solar project — spread among 31 sites throughout the state — put forward by Geronimo Energy.

But Minnesota’s Department of Commerce was not impressed, and criticized Geronimo’s proposal as not cost-effective, according to a report in the Post Bulletin. “Record evidence indicates Geronimo’s proposal is priced above the market,” the Department wrote in two lengthy filings submitted during a public comment period on the question. “Based on the record, Geronimo’s proposal is not a cost-effective option for the intermediate and peaking capacity purposes for which the [Minnesota Public Utilities Commission] requested proposals. All of the strategist modeling in the record demonstrates that Geronimo’s proposal is significantly more costly than natural gas proposals.”

Geronimo also sought letters of support from local officials in the state, but the Dodge Center City Council was the only local entity to give them an official endorsement.

Instead of solar, the Commerce Department recommended that Xcel go ahead with a prior plan to convert a coal-fired power plant in the town of Burnsville to a 215 megawatt natural gas setup. Xcel itself had originally planned to meet new power needs by building three 215 megawatt natural gas facilities — one in the Twin Cities and two more in North Dakota — but then Minnesota passed a new bill earlier this year requiring the state get 1.5 percent of its energy from solar by 2020. That’s on top of Minnesota’s already-passed renewable energy standard, requiring the state get 25 percent of its power from renewables in general by 2025. Estimates say meeting the mandates will require 450 megawatts of new solar power.

One problem with adjudicating the Commerce Department’s criticism is that the total costs of Geronimo’s solar project are protected as trade secrets. Another sticking point is just how much the solar arrays can be relied on to provide electricity. Because solar and other renewables are intermittent, Xcel assigns projects a “capacity credit” to quantify how much of the projects generating capacity will actually line up with the utility’s needs at a given time. Xcel only gave Geronimo’s proposal credit for about half its capacity, but Geronimo’s own estimate pegged the credit at 72 megawatts of the projects 100 megawatt capacity. Along with Minnesota’s obligations under its renewable and solar mandates, that number is the basis of Geronimo’s pitch.

It’s actually not clear how long natural gas’ competitive edge will last. Several recent scientific presentations estimated that even with the advent of horizontal drilling and hydraulic fracturing, the immediately economically viable gas deposits won’t last more than a decade. After that, the price will rise again, while the price of electricity from solar just keeps heading down. An analysis by Lux Research actually argued for using solar and natural gas in concert, in order to balance out solar’s intermittency and to protect against price spikes for natural gas.

From an environmental standpoint, the latest research on methane leakage suggests natural gas may be no better than coal in terms of cutting greenhouse gas emissions.

As for Geronimo Energy, they’re down but not out: Administrative Law Judge Lipman’s is scheduled to release his legal opinion on the proposals on December 31, and Minnesota’s Public Utilities Commission won’t issue its final ruling until March of 2014.