Solar “Gardens” Labeled Solar “Scam” by Economist
Solar power currently provides less than one percent of Minnesota’s total electricity generation. But the push for more solar energy production continues, and utility customers are being heavily encouraged to “invest” in “community solar gardens.”
Not everyone is convinced these “gardens” are a bright idea.
According to Mark Perry, an economist at the American Enterprise Institute, solar gardens are the “latest solar scam.”
Established under a 2013 state energy law, Xcel Energy’s solar garden program offers solar to customers who don’t want to or can’t install onsite solar systems. Instead, customers buy a “solar garden” share from a central solar facility constructed for multiple customers.
For a one-time investment of about $20,000 or monthly payments of about $100 over 20-25 years, you can buy a small “solar garden” share from a very large corporate “solar farmer” like NRG Energy (NYSE: NRG), which has salespeople going door-to-door in the Twin Cities trying to sell unsuspecting Minnesota[ns]… its “solar timeshares.”
As usual, when door-to-door salespeople present you with an offer that sounds too good to be true, and start with a pitch about “saving you 11% every month on your electric bill by switching to solar,” it’s highly likely that it is too good to be true.
Here’s how “community solar” works:
Utility consumers purchase their electricity at retail rates from Xcel — who buys the power at a price that is higher than the retail rate — but then receive credit on their utility bills for the energy produced by their solar garden share.
So, what’s the catch?
According to Perry, Minnesota’s weather and lack of sunshine – especially in months like November, December, and January – make solar production inconsistent on a month-to-month basis.
Further since solar garden subscribers in Minnesota get credited monthly by Xcel for their share of a solar garden’s output, what happens when solar production is really low during months of low sunlight? Those credits and promised monthly savings could be significantly reduced.
Even the Office of Minnesota Attorney General Lori Swanson admits “the sun does not always shine in Minnesota” and “a solar developer’s claim that its facility will produce a certain amount of energy may not pan out.”
Solar has become a focal point in the state, and Minnesotans are given strong incentives to “invest” in solar power — tax credits, rebates, tax exemptions.
But proceed with caution.
The solar garden’s contract length, termination clause, and cost-savings claims raise some red flags. Are these “gardens” a bright spot in Minnesota’s energy future, or is the program really just full of weeds?