Fort Collins is embarking on a program that could help boost the local solar industry while meeting renewable-energy mandates.

Under the program, businesses will be able to sell excess electricity generated by their solar arrays to the city’s utility.

As part of the two-year city budget approved by the City Council last month, Fort Collins will begin to solicit bids from businesses interested in taking part in the program, said Steve Catanach, the city’s light and power manager.

The city has budgeted $1 million for the program over the next two years. The program is expected to grow in popularity and could cost $1 million annually after the second year.

Fort Collins would join several other Colorado cities that run similar programs, including Denver, Aurora, Boulder, Westminster and Lafayette, according to the Colorado Energy Office.

The program stems in part from a mandate by the state requiring utilities serving more than 40,000 customers to generate 10 percent of their electricity from renewable energy.

Bids submitted by businesses competing for these so-called 20-year purchase-power agreements are supposed to help keep costs of the program low.

The utility hopes to buy 6 megawatts of power through the program. That’s still only a fraction of 300 megawatts distributed by the utility during peak usage times, such as a summer week day, but the city figures every bit helps.

The plan already has generated interest from solar installers. Namaste Solar, which has offices in Boulder and Denver, said it plans to open a sales office in Fort Collins.

Three of the company’s employees who already live in Northern Colorado will work in the new office, CEO Blake Jones said. Without the decision by the city, Namaste Solar would not have considered opening a new location here.

“The hope is that (the program) … spawns a growing solar market in Fort Collins that will allow us to provide more and more jobs there, have a bigger branch office there and have a permanent long-term presence in Fort Collins,” he said.

The city is leaning toward a model used by the Los Angeles Department of Water and Power, which uses a bid process to ensure the best price and maximizes the amount of solar deployed, Catanach said.

The program will cost Fort Collins utility ratepayers about 60 cents more per month for a total of $1 million in increased rate payments annually. That means the utility will raise customers’ rates by a half a percentage point next year and the year afterward.

The city once considered a “feed-in tariff” model for the program. That would have involved fixing a price the city would pay for solar-generated electricity.

Under the L.A. utility’s model, the Fort Collins utility would spend the same on the program, but instead assumes it will be able to buy more power for a lower price from businesses.

It’s unclear how easy it might be for the city to find companies ready and able to sell off excess power generated by their solar arrays.

Two of the better-known corporate names with solar arrays in Fort Collins are Odell Brewing Co. and New Belgium Brewing Co.

Odell, however, does not generate excess electricity from its solar panels, nor does it have the roof space for additional solar panels to participate in the program, founder Doug Odell said.

“That’s not in the near-term future,” he said. “The problem would be just the capital expense of installing it in the first place.”

A New Belgium spokesman declined to comment.

Besides offering purchase-power agreements, the utility wants to build one or more solar gardens from which people could buy solar-generated electricity. The project will be aimed at residents who do not have the means to install their own panels, whether their roofs face the wrong way or they live in an apartment complex.

Residents would pay slightly more to buy electricity from the solar array than they normally would pay on their monthly bill.

“We hope that premium is low and that we can interest as many customers as possible,” Catanach said.

The utility is determining where it might locate a utility-scale array, how much more residents would pay for the power and the size of an array. The city plans to ask residents what location they might prefer.

“There absolutely could be more than one (solar array) if demand is so great,” Catanach said.

That kind of solar garden could help fill Northern Colorado residents’ sizable appetite for solar.

When the Poudre Valley Rural Electric Association dedicated Northern Colorado’s first community solar farm this summer, the electricity cooperative’s customers already had spoken for each of the farm’s nearly 500 solar panels.

In addition to the 22 people who had bought panels at $618 apiece, 36 additional customers were in line to buy panels. The significant interest in the solar farm has the cooperative considering doubling its capacity.

“The success of this project is currently under review by the board to determine when and if future expansion is needed,” PVREA CEO Brad Gaskill said in an email.

The city plans to maintain a program that helps customers with an up-front incentive for their solar-system purchases, Catanach said. In fact, the city raised the amount per-watt rebate for solar projects from $1.25 to $2 earlier this year after the state cut its own incentives for such programs.