Here is how community solar works, and why it’s a good deal for people who are eligible to join Community Solar programs.
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To be a Community Solar subscriber in Minnesota, you need to:
1. Be an Xcel Energy customer.
2. Live in a county (or adjacent county) to where there are solar farms with open capacity. Xcel Energy customers who are residents of the following counties are currently eligible: Hennepin, Dakota, Carver, Scott, Rice, Le Sueur, Sibley, Wright, Meeker, Stearns, Kandiyohi, Pope, Todd, Morrison, Benton, Sherburne.
3. Have an interest in clean energy and/or saving money on electricity costs.
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Community Solar is designed to allow Minnesota residents to benefit from the environmental and economic benefits of going solar without the need to install solar panels themselves. This is great for homeowners with shady roofs, roof layouts that aren’t solar-friendly, renters, and people who can’t make up-front financial commitment required for solar panel installations.
Community Solar programs have no up-front costs. You don’t own or lease the solar panels. Instead, community solar companies look at your Xcel Energy history to determine how much electricity you typically consume, then allocates an appropriate portion of a solar farm to offset your energy consumption with solar energy.
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- The community solar vendor puts your solar energy on Xcel’s grid.
- Your solar energy shows up as a credit on your Xcel Energy bill.
- In months where your solar panels produce more energy than your household consumes, your Xcel bill will be negative. Xcel will carry the credits forward monthly.
- As days get shorter in the fall, your solar panels will produce less electricity, which will lead to working down your Xcel credits.
- If you end the year with a negative bill, Xcel Energy will send you a check in the spring to settle up.
Community Solar is a carbon-offset system. The electricity generated by the solar farm on your behalf is contributed to Xcel Energy’s grid, but it’s not the exact energy that powers your home. Your home will continue to receive the same, reliable, energy from Xcel that you receive today.
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There is no cost to sign up. You don’t pay or lease the solar panels. Instead, you subscribe to a community solar contract and receive bills for the solar energy from your community solar vendor. The solar energy shows up as a credit on your Xcel bill, which leads to lower – and even negative – Xcel Energy bills.
Does this cost more than my normal Xcel rates?
It depends. There are two main factors.
1. The difference between what the community solar company charges you for solar energy and how much Xcel Energy pays you for your energy.
2. How community solar rates will increase relative to Xcel Energy’s rates over time.
Rate Differences Between Community Solar and Xcel Energy
Many people are willing to pay a premium for their energy in order to avoid burning coal, but it’s even easier to make the switch when it’s cheaper than Xcel Energy’s normal rates.
As of February 2023, Community Solar contracts generally allow people to switch to solar while simultaneously saving money on electricity costs. The savings are around 7%, which comes to around $100/yr for a typical Minnesota household.
Rate differences between Community Solar contracts and Xcel Energy over time
Community Solar contracts are typically designed to be cheaper than Xcel in the first year. Additionally, subscribers may realize increased savings over time based on the different annual rate increases in community solar contracts vs. Xcel Energy’s rates. Community Solar rates may vary by vendor so it’s worth understanding what you’re agreeing to when signing up. Typically, community solar programs have fixed annual rate increases that are projected to increase at lower rates than Xcel Energy’s rates. If that happens, you’ll save more money over time as your fixed annual rates look better and better vs. Xcel Energy’s rates.
For a household with a fairly average $100/month electricity bill, the savings would work out to around $100 in the first year with larger savings over each year of the contract, and total savings of ~$6,000 over the life of the contract.
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What happens if the solar farm goes offline?
If anything was to happen to the solar farm (ex. hit by a tornado) you’d see no impact on your home’s energy reliability. You’d simply see a shift in the bills coming to you from your community solar vendor and Xcel while the solar farm is restored. Your community solar vendor would be motivated to get things back online so they can get back to charging you for solar energy.
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