Minnesota utility regulators want the state’s largest power company to pick up the pace on connecting small solar projects to its grid.

Xcel Energy’s interconnection process has emerged as a bottleneck in the state’s clean energy transition, with some home and business owners having to wait months or years to connect solar panels to the company’s power grid.

In its latest attempt to address the delays, the Minnesota Public Utilities Commission last month instructed Xcel to start evaluating multiple applications at once as a way to clear the backlog, which now exceeds 1,700 projects totaling about 490 megawatts.

The number of requests to connect to the utility’s grid has surged in recent years, but critics blame the problems on Xcel’s own narrow interpretation of the state’s interconnection rules. The company has said it was prohibited from processing more than one application at a time for each substation.

The commission’s Jan. 20 decision clarifies that is not the case. It instructs Xcel to implement a new process in which it will conduct group or cluster studies that assess the grid impact of multiple connection requests. And the utility will also pilot a cost-sharing program to prevent individual projects from being overly burdened by expensive upgrades that will also benefit future applicants.

The state’s interconnection process has left Xcel and solar developers with a strained relationship despite years of hearings and workgroups to try to improve the process, which applies to projects less than 10 megawatts. The utility has a set amount of time to act on detailed applications submitted by solar producers but often fails to meet them. Scores of applications have been labeled “on hold” by the utility because other projects on the same substation are currently being studied.

“There’s been story after story of just unreasonable delays for solar projects,” said Logan O’Grady, executive director of the Minnesota Solar Energy Industries Association. “I think [the commission’s recommendations] are progress in terms of creating better interconnection timelines.”

In a statement, Xcel said it also welcomed the commission’s decision. “Studying projects in groups, or clusters, is one of the changes the Commission endorsed that we believe will help us study projects in a more streamlined manner,” a spokesperson for the utility said. “We believe this will help clear a number of projects in the queue and move projects faster to completion.”

In addition, Xcel will begin phasing out “on hold” status for projects. It has one year to clear the existing “on hold” list, using grouped studies to clear the queue. The commission also asked for quarterly reports on the status of projects still in the queue.

The interconnection process does not include fines for missing deadlines, nor did the commission discuss them in its deliberations. Should Xcel continue to struggle with long wait times for developers, the commission could add more rules or refunds. Still, no precedent exists for these actions in dealing with distributed energy resources.

David Shaffer, policy and government affairs director for the solar developer Novel Energy Solutions, said the commission’s on-hold decision would help developers. “We have a ton of projects in the queue, and they’re just stuck there, sometimes for years, almost approaching decades,” he said. “There’s no reason why they have to be moving that slowly.”

The line to connect at transmission lines in the Twin Cities region can be long, he said, and developers want to know whether their projects have any chance of being built without having to wait years for a decision by Xcel. When applying for access to the grid, a developer usually has a rough idea of whether capacity exists, but more extensive studies are required before Xcel approves projects, Shaffer said.

Isabel Ricker, senior clean energy manager at Fresh Energy, publisher of the Energy News Network, said the on-hold status has mainly affected community solar projects, but at least 30 smaller systems have been on hold for 18 months or more. Those customers tend to live near community solar projects that have consumed much of the local available capacity, she said.

Xcel warned, though, that many feeder stations near popular community solar sites are near capacity and cannot accommodate more solar projects. “There are still challenges with more projects proposed on some feeders than those feeders can handle,” the company said in an email.

The commission will also allow Xcel to help customers with smaller systems who may face hefty fees related to improving interconnections. If a part of the electric grid needs an upgrade to serve a client, the last solar customer pays the entire cost of the improvement. That can add $15,000 or more in costs, enough for a homeowner to kill a solar project.

The commission and Xcel agreed to a proposal from clean energy organizations to assess solar applications of less than 40 kilowatts between $100 and $150. The money collected would help pay for substation upgrades of up to $15,000, so no one business or family would have to pay the entire bill.

“Hopefully, this will help some of these customers who are getting sticker shock when they get the engineering results back from Xcel and saying, ‘Why is this going cost me $10,000?’” Ricker said.

Danielle DeMarre, permitting and interconnection director for All Energy Solar, said such high costs prevent customers from moving forward. Two of its clients in Northfield saw thousands of dollars for additional fees for upgrades and it was unclear what triggered it, she said.

“Being able to share those costs will allow more interconnections to go through,” DeMarre said. “It’s going to be helpful for all customers.”

Ricker said the problems Xcel faces are primarily a result of the success of solar in Minnesota. “There are some legitimate, practical reasons why [backlogs are happening], and the biggest one is there are a lot of applications and a lot of developers are successfully developing projects,” she said.

The commission is expected to issue a formal order on the interconnection process within months.