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An administrative judge in the US state of Minnesota has ruled solar generation to be a better investment than natural gas for electric and natural gas utility, Xcel Energy.
The judgment is the first time in the US that unsubsidised solar energy has been officially ruled to be a better deal for ratepayers than natural gas in a competitive bidding process.
The competitive bidding of utility-scale generation projects was ordered by Minnesota’s Public Utilities Commission to choose the most cost-effective projects to help Xcel reach what the commission said was an additional 150MW of new capacity needed by 2017.
Administrate judge Eric Lipman compared five energy resources to determine the most cost-efficient generation to meet forecast energy shortfalls. A 100MW PV project by Minnesota-based utility-scale wind and solar developer, Geronimo Energy, was chosen over the others.
Geronimo proposed to build 20 solar parks, across 17 counties in Minnesota – some as big as 70 acres and costing an estimated US$250 million. Named the ‘Aurora Solar Project’, Geronimo’s solar project would receive no state or utility subsidies, but would qualify for a federal investment tax credit. The Aurora project is approved, with completion expected by 2016.
In his ruling Lipman said the project was the best way for Xcel to meet its near-term needs.
Judge Lipman ruled if solar is not sufficient to meet Xcel’s surplus energy demand, the utility should consider purchasing power from one of its competitors.
Solar was considered in comparison to a gas turbine at an existing plant in Mankato, proposed by Calpine, and two turbines at Cannon Falls and Hampton, proposed by Invenergy, as well as Xcel’s own proposal for a gas plant.
Lipman’s ruling still needs to be upheld by the Public Utilities Commission.
The commission has a six to eight-month window to review and process Excel’s energy resource plans.
In evidence given to the hearing in November, Excel disputed the commission’s estimates of its required new capacity, suggesting this week’s ruling may be challenged.
But Geronimo’s vice president of development, Elizabeth Engelking noted at the evidentiary hearing that “while Xcel’s overall need in megawatts may be uncertain, there is no uncertainty regarding Xcel’s need to add solar resources.”