Is Xcel holding back substation capacity from solar developers? It’s complicated.

Is Xcel holding back substation capacity from solar developers? It’s complicated.

Clean energy advocates believe technical restrictions imposed by Xcel Energy are curtailing the expansion of solar energy in Minnesota.

The Minnesota Solar Energy Industries Association and a group of more than 20 developers, clean energy organizations and individuals filed a complaint in September (E-999/CI-16-521) with the Public Utilities Commission arguing Xcel’s “technical planning limit” violates state law and reduces the ability of Xcel customers to benefit from solar.

Last March, Xcel began limiting use of its substations to 80% of the equipment’s rated capacity. The company has argued in filings to regulators that it needs a 20% reserve margin for safety and reliability as it manages fluctuations from the increasing number of solar installations on its system.

The solar advocates argue the margin is too high. They say Xcel has not presented evidence that occasionally operating substations at full capacity poses a challenge. 

The debate comes down to substation technology, grid reliability and whether Xcel has the authority to impose a capacity limit without regulatory approval.

Substations serve an essential role on the grid, receiving electricity generated from different sources and standardizing it to distribute to customers on the grid. They do the equivalent of keeping the trains — in this case electricity — running on time and without failure. 

Before instituting the new margin rule, Xcel ran substations at full capacity whenever needed, Xcel spokesperson Theo Keith said. But with the rise of variable generation, “that century-old practice has become much more complex,” he said.

“Now, we need to manage the distribution system for both variable generation and load while introducing significant two-way power flows. As we’ve come to appreciate these complexities, we implemented the 20% operational and reliability margin to ensure safety and reliability based on system modeling results and best practices.”

Critics say the limit is hurting clean energy production. Research by the Interstate Renewable Energy Council concludes that it will reduce Minnesota’s solar energy capacity by 2.5 to 3 gigawatts, or the equivalent of several power plants. Logan O’Grady, executive director of the Minnesota Solar Energy Industries Association, said his members believe the rule is bad for business.

“They’re telling us this is severely restricting the deployment of solar in Minnesota,” he said.

O’Grady said that the rule dampens the spread of clean energy as the state prepares to achieve 100% carbon-free energy by 2040. Minnesota saw 78 megawatts of solar installed last year, a number expected to drop this year, due to a long queue of projects waiting on approvals and a congested grid. A good portion of the state’s 1.9 gigawatts of solar were built from 2016 to  2019, with numbers declining since.

The buffer comes at a time when Xcel continues to struggle with a congested grid. In October, Xcel reported to regulators that 22% of substations are “capacity constrained,” along with 4% of its “feeder,” or  distribution lines. Those lines connect substations to customers they serve. The lack of capacity at substations has put on hold nearly 200 rooftop and 57 community solar projects. 

How substations work

University of Minnesota Duluth electrical engineering instructor Scott Norr explained that transmission lines carry hundreds of thousands of volts of direct current electricity to substations. The substations step it down to alternate current to transmit it via distribution lines to customers. 

The system works well even when a significant generator like a power plant goes offline, but intermittent electricity sources such as solar can cause stress, he said.

Norr said that bigger solar producers push hundreds of kilowatts onto distribution lines connected to substations that can be managed by electrical technology equipment. 

But when solar output suddenly drops due to clouds, so does the line voltage, requiring the substation to make adjustments to balance loads in a process that takes several minutes. That can cause voltage drops for customers along the distribution lines. Cloudy days could mean constantly shifting those settings, he said, or “tap ratios” as the industry calls them.

“Low voltage means your lights get dim, your clothes take longer to dry and your refrigerator works way too hard to maintain a cool temperature,” he added. “Low voltage is especially hard on motors such as pumps, fans, and compressors.”

Norr likened the electrical system to the water system. The city’s water network is the equivalent of a transmission grid, and the pipes in the home serve as distribution lines. 

Water enters the home at a high pressure, which a valve — the equivalent of a transformer — reduces pressure so water doesn’t spray at high volume. If a homeowner adds their own onsite well — equivalent to a solar array in the analogy — the same valve has to adapt to adjust water flowing unexpectedly from the customers, but at a much faster speed than a transformer does with electricity.

Norr said a solution for utilities someday will be the ability to draw electricity from electric cars and other grid-connected batteries to balance variations in  solar generation. Utilities such as Xcel also have demand response programs that allow them to drop power to customers who agree to participate and in return for less expensive electricity. That might help restore some of the reserve margin, he said. 

Is regulatory oversight required?

The solar advocates have asked the Public Utilities Commission to rule whether Xcel can impose the measure without regulatory oversight. The attorney general’s office and Commerce Department agree the imposition of the technical planning limit warrants an investigation, and that the Public Utilities Commission, under Minnesota law, has the authority to review Xcel’s interconnection practices. 

The attorney general pointed out that a March 2022 commission order was unclear whether Xcel could use the technical planning limit without its approval. “Resolving whether Xcel had — or whether any other similarly situated utility would have — the authority to implement such a broad limitation is of vital importance to the future of [distributed energy resources] in Minnesota,” the attorney general’s office wrote.

Other states are dealing with the issue. Virginia regulators recently denied interconnection parameters Dominion Energy had begun using without their approval. The utility argued the parameters provided reliable and safe operations, but the Virginia Distributed Solar Alliance contended the limitations created “substantial new costs” to projects. Xcel points out Duke Energy and a handful of states use the same technical limitations. 

O’Grady said he hopes the Public Utilities Commission agrees Xcel should not be able to “unilaterally impose something so restrictive on the system,” a move he claims is less about safety and more about slowing “the deployment of clean energy not owned by the utility.”

He said Xcel has not provided data illustrating why and how a substation would function less efficiently by operating beyond 80% capacity. “I’ve asked the utility for data on why it thinks it needs to reserve,” he said. “I don’t think it’s 20%. I haven’t seen anything that shows me that that is what we need for safety, reliability, or whatever. It differs probably throughout the grid, but 5% might be more reasonable.”

Curtis Zaun, the solar association’s policy and regulatory affairs director, said Xcel is operating equipment at 80% of its capacity even though its manufacturers has established a limitation that it believes does not impair safety or reliability.

“Running something at 100% of its equipment rating is totally fine — that’s why it has that equipment rating because you can run it at 100%,” Zaun said. 

“This is probably one of the biggest energy issues that Minnesota has been facing from the context of whether it can forge a clean energy future but also the PUC’s role in regulating utilities,” Zaun said.

In response to the petition by solar advocates, Xcel said in a statement that the Public Utilities Commission decided in January 2022 it had “the authority to use planning standards to ensure the safety and reliability of the system.”

Xcel also argued that its 20% reserve margin fell with industry norms and offered more flexibility than other utilities. When delivering electricity to customers, Xcel does not use the full capacity of lines, holding back 25% of their rated capacity. It considered the same percentage for substations but dropped it to 20% so “more distributed solar can connect to the grid,” Keith said.

A case-by-case approach?

Xcel suggested wiggle room for modifying the reserve margin to add small solar systems. Earlier this year, the Legislature requested that the utilities commission begin a proceeding requiring the interconnection process to move systems under 40 kilowatts ahead of larger ones in the queue.

Interstate Renewable Energy Council attorney Sky Stanfield said the interconnection process Xcel had used for years allowed for greater capacity than the 20% reserve margin. She said that Xcel did not present much evidence to the Public Utilities Commission in a January 2022 meeting that higher capacity at substations had caused outages or other issues.

Stanfield said IREC understands Xcel’s goal of safety and reliability but believes such a blanket restriction does not consider the difference in substations and circuits. The interconnection process often involves studies of how solar generators will impact areas of the grid, she said, and that should inform planning limitations rather than a blanket restriction.

“Our preferred approach is that they do it on a more case-by-case basis,” she said. “Even if they want to adopt a broader standard, something that’s more transparent and which we typically support, something this broad and this conservative is overdone.”

The Public Utilities Commission will hear arguments Dec. 14 on whether to investigate the solar advocates’ complaint.

Is Xcel holding back substation capacity from solar developers? It’s complicated. is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

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