Xcel Energy makes changes to solar rewards program

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Major changes to a popular Xcel Energy program to subsidize solar panels on Minnesota homes and businesses could make it less beneficial for customers to install the systems. Even with the new system of paying those rewards Xcel expects more people to take advantage of the program.

The Star Tribune reports that Xcel will no longer cover a quarter or more of the cost of the solar panels up front, but the new incentive system will offer annual payments based on each system's output, over 10 years.

Xcel's Deb Sundin said, "We have a pent-up demand for the money that is allocated for incentives."

Xcel says the next generation of its Solar Rewards program has the potential to add more than four times the existing roof top solar power to Minnesota by 2020. There has been such strong demand for the incentive money each year that the money soon ran out, leaving many applicants out of luck.

Under the current system a 10-kilowatt solar panel system is eligible for a $15,000 rebate. A homeowner installing the same system in 2014 would get no money up front. But Xcel proposes to pay 8 cents for each kilowatt hour of power from the new system annually for 10 years.

The newspaper reports that calculated over an average output of 12,500 kilowatt-hours per year, the 10-year payback would amount to $10,000. That number would then be cut in half for systems installed in 2016.

The redesigned program will still be funded with $5 million annually from Xcel Energy's Renewable Development Fund.

The change in incentives though won't alter the credit a solar customer gets for excess power sent to the grid through the two-way meter. Those extra kilowatt hours are credited back to the customer reducing that customers bill.

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