Xcel plans for large, low-income solar energy program in Colorado

Energize Weekly, November 2, 2016

The growth in solar energy has been dramatic in the U.S., but for the most part, low-income households unable to afford rooftop arrays or shares in solar gardens have been left out in the cold—that may be about to change in Colorado.

Xcel Energy, the state’s largest electricity provider, is proposing a plan for nearly 20 megawatts of solar arrays for low-income customers, enough for 7,000 to 8,000 households, according to Joseph Pereira, director of low-income energy services at the Colorado Energy Office (CEO).

The plan is part of a proposed settlement agreement between Xcel and the solar industry, industrial customers, government agencies and environmental groups on three dockets pending before the Colorado Public Utilities Commission (PUC). The commission is expected to rule on the settlement agreement in this month.

“This is one of the most robust and well-designed low-income solar programs in the country,” said Tom Figel, policy and regulatory manager for community solar at GRID Alternatives, a non-profit group that develops low-income solar projects. “This is the first time a utility in the state has come together with stakeholders and made a comprehensive solar program.”

Both the CEO and GRID Alternatives are parties in the settlement.

The plan seeks to develop both community solar gardens—ground-based installations in which a number of households shares the benefits—and a low-income, rooftop solar program for single-family homes. Xcel declined to comment since the settlement is still before the PUC, company spokeswoman Michelle Aguayo said in an email.

When it comes to renewable energy and utility bills, low-income households are in a doubly difficult situation. They do not have the up-front cash needed to install photovoltaic solar panels and in many cases, live in rental units so that rooftop solar isn’t an option. They also can’t afford to buy a share in a community solar garden.

At the same time, low-income households pay more of their income to cover utility bills than higher income families. The average share of income used for utility bills, the so-called energy burden, is 4 percent in Colorado. Low-income households pay an average of 10 percent to 15 percent, according to the CEO.

“It isn’t uncommon to find families paying a third or even a half of their income for utilities,” said Skip Arnold, executive director of Energy Outreach Colorado, an agency that helps the poor pay their utility bills.

After the risk of violence and physical abuse, utility bills are the second leading cause of homelessness among Colorado families, according to the Colorado Statewide Homeless Count.

Participating in solar programs is a way for some of those families to reduce their energy bills, just as households that have bought or leased solar arrays have, Arnold said.

Under the settlement plan, Xcel would issue calls for bids from developers for 12.5 megawatts of solar gardens over the next three years exclusively for low-income customers. This is defined as households at 185 percent of the federal poverty level. In 2016, that comes to $21,600 for an individual and $44,860 for a family of four. Figel estimates that there are 298,000 Xcel customers who may qualify.

In a standard community solar garden, participants buy a share of the installation and get a credit for a portion of the garden’s electricity output equal to the share. The buy-in is a key part of the business plan for the gardens.

For the low-income gardens, developers are expected to tap grants, and Xcel is going to make funds available from the Renewable Energy Standard Adjustment or RESA. Xcel customers, by law, pay 2 percent of their bills into the RESA to promote renewable energy projects.

The RESA has primarily funded incentives for Xcel’s rooftop solar program, Solar*Rewards, with many of the projects in suburban Denver and Boulder.

About $553 million of RESA funds have been spent with hardly any of it going to low-income customers, Figel said. Still, all those low-income customers have paid their 2 percent into the RESA—an estimated $46 million over the last 10 years.

“Low-income customers have been paying into the RESA fund for some time, but had no active avenue to engage with the fund,” said Pereira. “This gives them that avenue.”

Solar gardens being built in Xcel territory currently must allocate 5 percent of the facility to low-income households, but developers say it has been difficult to find those customers. Under the agreement, Xcel will aggregate the low-income requirement from commercial solar gardens and build one or two installations expressly for low-income customers.

There will also be a rooftop solar program done by the CEO in cooperation with Xcel. The CEO has operated a successful low-income home-weatherization program under the U.S. Department of Energy (DOE). “The weatherization addresses the natural gas side of the bill,” Pereira said. “Getting at the electric side of the bill has been harder.”

CEO has gotten approval from the DOE to include rooftop solar in the weatherization program using federal dollars along with RESA funds on homes that are deemed to be good candidates for solar, Pereira said.

Up to $3,545 in federal funds can be used for up-front costs. Xcel is offering a $2-a-watt up-front incentive and 3.4 cents for each kilowatt-hour the array puts on the gird.

Over three years, the program is to install 300 arrays, totaling about 1 megawatt, according to the settlement.

“Xcel needed to create a market for niche developers for low-income projects,” Pereira said. “The up-front incentive creates a market environment.” The goal is to create energy savings of about 50 percent on the utility bill. “We aren’t looking to zero out a homeowner’s bill,” he said.

The sharp drop in the cost of photovoltaic arrays—down 61 percent since 2011, according to the Solar Energy Industries Association—has also helped make the low-income programs viable, Figel said.

Among the other issues covered by the settlement are new rates for customers and the company’s overall renewable energy plan.

“Xcel deserves a lot of credit for stepping up on this issue . . . not many utilities have,” said Erin Overturf, a senior attorney at West Resources Advocates, a Boulder-based environment group that participated in the settlement.

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