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Solar plan outbids gas in Minnesota

After reviewing whether Minneapolis-based Xcel Energy should invest in large solar power arrays or new natural gas generators, Administrative Law Judge Eric Lipman found that solar is a better investment, in a 50-page ruling.

This is the first time Minnesota has used a competitive bidding process for a major generation project, according to a report from the Star Tribune.

If the Minnesota Public Utilities Commission (MPUC) agrees with the finding, then Geronimo Energy plans to payout $250 million for a solar project consisting of about 20 large power arrays, spreading throughout 17 counties. This is five time larger than the state’s current largest solar array.

The project, called Geronimo’s Aurora Solar Project, would not receive state or utility subsidies. However the project would qualify for a federal investment tax credit upon completion.

If this project is selected, Xcel is likely to enter a long-term purchase power agreement, helping meet the state mandate to have 1.5 percent solar power by 2020.

Geronimo, who has already landed agreements for land, stated that if the project is approved solar arrays will be built in 2015 and 2016 and would be near existing substations to avoid transmission-line costs. The company would still need to obtain the necessary permits by the state and local jurisdictions. Geronimo has pledged some local governments to pay up to $110,000 annually in lieu of taxes.

In a statement, Xcel said it did not agree with some of Judge Lipman’s findings and would file a written response. Before the five-member commission votes, competitors are able to take exception to the ruling, under MPUC rules.

In an interview, Geronimo Vice President Betsy Engelking said that this is the first time in the U.S. that solar energy, without a state subsidy, has beaten natural gas in price comparison. Engelking noted that the cost of solar has rapidly declined.

Proposals were offered by four energy companies, including Xcel, consisting mostly of natural gas generators.

Xcel proposed a new gas generator at the Black Dog plant and plans to retire the coal-fired units at the facility.

Geronimo and Xcel have worked together for a number of wind farm projects including the Prairie Rose Wind Farm in the southwestern part of the state, and two wind farms currently in the works near Windom, Minn. and Jamestown, N.D.

Judge Lipman also mentioned Houston-based Calpine, which proposed a gas turbine at its existing power plant in Mankato and Chicago-based Invenergy, which proposed gas turbines at Cannon Falls and Hampton, according to the report. Xcel also proposed two gas units near Hankinson, N.D.

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