Colorado’s Community Solar: Challenges, Opportunities, and Next Steps


Colorado’s Community Solar: Challenges, Opportunities, and Next Steps

February 6, 2024

Colorado became one of the earliest adopters of community solar when its legislature passed the country’s first community solar bill in 2010. Since then, the main path for third-party development has been the Solar*Rewards Community (S*RC) program, administered by Xcel Energy. Despite having taken on various shapes and sizes over the last decade, the S*RC program has yielded fewer than 200 MW of operating community solar projects as of early 2024. In this blog, our policy team will cover what capacity remains and the path ahead for community solar in Colorado.  

Table of Contents

A Brief History of Xcel’s S*RC Program

The S*RC program was originally seen as too expensive – and not in the interest of ratepayers – before Xcel established an RFP process in order to drive down costs and prioritize projects that could pencil with minimal REC payments. Developers began submitting REC prices as low as they could go, until bids eventually dropped below zero and the negative REC was born: if you could build for less and wanted to secure development capacity, paying Xcel became the norm. After the negative REC concept came into play, Xcel added a separate incentive for projects serving more low-income customers. The market shifted from allowing only the cheapest projects to also supporting inclusive projects. The new incentives led to some projects delivering bill credits to eligible households at a 100% discount; developers were effectively donating community solar savings to qualified subscribers. 

Xcel files a Renewable Energy plan (RE plan, formerly RES plan) every few years to outline its strategy for meeting the state’s Renewable Portfolio Standard. The RE plans, including Xcel’s most recently approved version that runs from 2022 through 2025, typically include key details for community solar: available capacity, upcoming solicitation processes, and project requirements. The latest plan split the community solar capacity into two buckets: general projects and income-qualified/disproportionately-impacted (IQ/DI) projects, with 70% of the funds going toward the IQ/DI section. It also identified two different solicitation processes that would happen in succession (as has been done in the past), an RFP and a Standard Offer. The RFP is a competitive bidding process where Xcel focuses heavily on project economics. The Standard Offer distributes capacity on a first-come, first-served basis where high project maturity metrics are required and REC prices are determined by the RFP results. 

The Final Phase of S*RC in Colorado

The RFP opened in March 2023 and saw nearly 160 applications; Xcel announced awards in May, approving 70 MW across 17 projects: 8 general and 9 IQ/DI. Xcel announced final REC prices after reviewing all the bids: –$35.15/MWh for general projects and $15.07 for IQ/DI. Next up is the Standard Offer, which was originally expected to open in 2023 but has been delayed as industry members work with Xcel to design a capacity award process and interconnection queue that can work smoothly and in parallel.

This final Standard Offer should open in the spring of 2024 and will wrap up by the end of 2025, when the RE plan concludes. There will be 210 MW of available capacity issued across three separate blocks, each of which will offer a REC price that is 10% lower than the previous block. The Standard Offer will require high project maturity requirements, including a signed interconnection agreement. Half of the program, 105 MW, is reserved for projects serving IQ/DI subscribers. Those projects will require 100% of subscribers to be eligible per the program rules: 50% have to be direct-billed residential customers getting donated credits and the others must be offered at least a 30% discount on credits. Projects in the general bucket also have offtake requirements, including a 50% minimum to residential, agriculture, or income-qualified small commercial subscribers (“RASCIQ,” per the RE plan). Community solar stakeholders in Colorado are working directly with Xcel to make sure that as many of the remaining 210 MW as possible can end up getting built.

The Road Ahead

Since the program began, only about 10 MW per year have been installed, meaning that hundreds of MW of awarded capacity have been stranded. As the S*RC comes to a close, there is a growing coalition focused on the long-term vision of a new and improved, industry-leading community solar program in Colorado. Following in Minnesota’s footsteps, the goal is to pass a bill that expands the program, standardizes high project maturity requirements, serves more income-qualified subscribers, establishes utility consolidated billing, and aligns well with provisions of the Inflation Reduction Act, including incorporating funding from the Environmental Protection Agency if the Colorado Energy Office wins a Solar for All award this summer. With a Democratic trifecta that supports clean energy and is focused on equity, the road ahead looks promising for community solar in Colorado. 

Are you building community solar in Colorado? Connect with our Business Development and Policy team today to explore opportunities and get hands-on support with your upcoming  projects.


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