Artificial solarfication, an explainer

The Minnesota Public Utilities Commission (MPUC) is holding one of its regularly scheduled meetings tomorrow. There is only a single item on the agenda. It’s an obscure report produced by the state’s largest electric utility, Xcel Energy, called the 2023 Hosting Capacity Report.

To be somewhat unkind, think “hosting” in the parasitic sense: to grossly oversimplify, the purpose of the Hosting Capacity report is to document how much room there is on the utility’s grid for additional small-scale renewable (solar) power, without straining the system.

But let’s catch up first: you will recall that the DFL “trifecta” enacted in 2023 a new state mandate to have 100% “clean” (renewable) electricity by 2040.

But this legal mandate quickly runs up against the laws of physics and economics. Utilities have already invested in a diverse portfolio of resources (coal, natural gas, nuclear, hydro, wind and solar) to meet projected demand for years to come. No new generating capacity is needed at this time.

To create room for new resources, existing coal and natural gas plants are being shut down prematurely, years (even decades) ahead of schedule. Even then, utilities must invest $billions of their customers’ money on new transmission lines to bring the renewable power from where it’s generated (mostly rural areas) to where it’s consumed (mostly urban areas).

None of this benefits utility customers. They lose the benefits of resources they’ve already paid for and are on the hook for expensive new power they don’t need.

Which brings us back to the Hosting Capacity Report. There is a niche group of solar power developers who specialize in small-scall solar projects (roof-top, parking lots etc.).

These developers would love to build more projects and take advantage of mandated, higher-than-market prices, and lucrative tax subsidies. One problem: the grid is “full.”

Utilities build local distribution systems just big enough to deliver electricity to homes and businesses. They do not build in extra capacity so that third-party providers can reap big profits by attaching unnecessary generating capacity.

Developers convinced the legislature to force Xcel to provide a road map of where (and how much) room there is on the grid for more small-scale installations. Xcel agreed to update the report annually, then quarterly. Now the debate is whether the data should be updated monthly, if not continuously.

In the end, there is fundamental conflict between privatized profits (solar developers) and socialized costs (borne by customers). The monopoly utility in the middle, Xcel, is indifferent, they make the same profit either way.

Nowhere within the regulatory system is there any true advocate for the consumer. There is no market force at work to balance genuine (not artificial) supply and demand.

So, the costs continue to go up. And you pay.