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The latest solar scam: “Investing” in “solar timeshares” aka “community solar gardens.” Only $100/month for 20 years
View related content: Carpe Diem
Suppose you’re a green, progressive, anti-fossil fuel “watermelon” who voted for Hillary Clinton and/or supported Bernie Sanders and opposed the Dakota Access pipeline in North Dakota. That is, suppose you’re a typical resident of Minnesota. And your hatred for fossil fuel energy is only outweighed in intensity by your deep love for renewable energy.
An enduring love for solar energy gives a Minnesotan a strong motivation to pay $20,000 to have solar panels installed on his or her rooftop to capture clean, free energy from the sun (many Minnesotans would install wind turbines in their backyards, but that’s not practical). In addition to expressing a personal devotion to renewable energy with a green altar on your rooftop, Minnesotans also get a cornucopia of tax credits and rebates that allow fellow citizens to share in the costs of installing solar panels on their neighbors’ roofs by paying higher taxes to provide the subsidies, tax credits and tax exemptions that provide the incentives to motivate those investments in solar systems.
In addition to the 30% federal tax credit for the entire cost of an installed home solar system, you get additional savings from a Minnesota state energy rebate, state solar renewable energy credits, property tax exemptions in Minnesota that exclude the added value of a solar system from the valuation of your property for tax purposes, and an exemption from the 7% state sales tax that applies to almost everything else you buy for your household (automobile, furnishings, appliances, plumbing services, etc.). As solar panel producer DA Solar brags on its website for Minnesota:
Combine the falling costs of solar equipment and installation, multiple state rebates, property and sales tax exemptions, the high cost of electricity, and the 30% Federal tax rebate and you have excellent reasons to go solar in Minnesota!
But suppose Minnesotans don’t have the $20,000 for a home solar system, or they don’t want to have to look at the unsightly solar panels every day on their otherwise very handsome and charming home. Well, there’s now another option for Minnesota watermelons – they can “invest” in a “community solar garden” as an alternative to installing a home solar system on the top of their homes. Think of a community solar garden as an “investment” in a “solar timeshare” that is like a cross between a “vacation timeshare” and a “community supported agriculture” membership.
And why are the “investments” in solar gardens being offered in Minnesota?
Largely because of Minnesota’s Renewable Portfolio Standards (RPS) legislation passed in 2007 (at the early stages of America’s shale revolution) that require state utilities to increase their production of electricity from renewable energy sources (wind, solar, biomass, and geothermal) to 25% by 2025 and to 31.5% for Xcel Energy (the state’s largest utility and the supplier of electricity for the Twin Cities). In 2013, Minnesota state legislators passed another law requiring electric utilities to get 1.5% of their electric power from solar by 2020 and further required Xcel Energy to create a community solar garden program.
So Xcel needs significantly more solar and wind power to provide nearly one-third of its electricity within eight years, it’s mandated to create community solar gardens, and solar companies are springing up like weeds in Minnesota and appealing to Xcel customers in the Twin Cities to make “investments” in community solar gardens. Here’s how it works:
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 watermelons its “solar timeshares.” Their pitch starts with a misleading question like (from two personal experiences I’ve had in the last six months) “Would you like to save 11% on your electric bill every month and help the environment with the increased use of solar energy?”
Here’s how the Star Tribune describes the process:
Most solar garden subscriptions are for 25 years, and the most popular are payment models with no upfront cost. In these pay-as-you go plans, solar subscribers pay a monthly amount to the operator, usually based on how much electricity is generated [which depends on the weather and the amount of sunshine].
The solar garden’s electricity goes on the grid, not directly into subscribers’ homes. In fact, the subscriber isn’t buying the power — Xcel is buying it, and at a state-mandated price 2 to 3 cents higher than the retail rate. Subscribers still get all their power from Xcel, at retail rates. The pricing difference is what creates savings for subscribers. Every month, the subscribers are credited by Xcel at the higher rate for their share of the solar garden’s output.
Here’s how Xcel Energy explains it:
Community solar gardens reflect Minnesota’s [i.e., the nanny state’s] growing commitment to renewable energy. The solar gardens are an alternative to private solar panels; residents, business owners, nonprofits and municipalities may purchase subscriptions to a solar garden without having to install solar panels on their own roof or property. Subscribers receive credit on their bills for the power their panels produce.
But what are the risks of “investing in a solar garden”? Here’s the story of one resident of the Minneapolis suburb of St. Louis Park:
Sean Brown was excited when an NRG salesman knocked on his door in October of 2015 selling community solar. But he quickly got turned off by a requirement to undergo a credit check before getting to read the contract.
Once Brown got a copy, he looked at the termination clause. If he moved out of Xcel’s region, he could be stuck with the solar garden subscription. If no one else wanted to take it over, NRG would keep charging him each month — even though he got nothing in return. He didn’t sign up. “I wanted it to work,” he said. “There were too many red flags.”
Sounds just like a vacation timeshare, no? And there’s more…..
If something goes wrong with a solar garden [like bankruptcy], consumers shouldn’t expect Xcel to resolve it. Xcel does handle the bill credits for solar gardens, but most other things are the operator’s responsibility. If consumers feel wronged, they can file complaints with the state Public Utilities Commission or attorney general.
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.
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. In reality, it’s more like getting locked into a 20-25 year “investment” that is probably extremely risky and like a vacation timeshare could be very difficult to sell in the future ?
For my risk preferences and investment and energy tastes, I’d much prefer a share of a “community shale garden”? Are those available? Those might actually have a future…..