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Minnesota’s new solar law: Looking beyond percentages

Solar panels at the Audubon Center of the North Woods near Sandstone, Minnesota. (Photo by CERTs via Creative Commons)

Solar panels at the Audubon Center of the North Woods near Sandstone, Minnesota. (Photo by CERTs via Creative Commons)

Minnesota Gov. Mark Dayton on Thursday signed into law an energy bill that’s projected to give the state a more than thirtyfold increase in solar generation by the end of the decade.

The Solar Energy Jobs Act was rolled into a larger, omnibus economic development bill and approved by the state’s legislature last week.

The section that’s drawn the most attention is a 1.5 percent by 2020 solar electricity standard for large utilities that is on top of the state’s existing 25 percent by 2025 renewable mandate.

But the bill has several other components that could rival the solar standard’s impact, from expanded incentives and net-metering reforms to the creation of shared, community “solar gardens.”

Solar standard

Clean energy supporters in Minnesota had high hopes going into this year’s legislative session, the first since an electoral sweep in November flipped control of both chambers back to Democrats.

A coalition of environmental groups announced in January that its top energy priority was a proposal to make utilities generate a tenth of their electricity from solar by 2030.

The coalition included members of RE-AMP, which also publishes Midwest Energy News. Fresh Energy, the organization where Midwest Energy News is based, had a role in developing the policy.

The bill was ultimately diluted to a 1.5 percent solar standard by 2020, with a non-mandatory goal of hitting 10 percent by 2030. It also exempts municipal utilities, rural electric co-ops and large industrial customers.

“It’s important for people to understand that while 1.5 percent seems like a low number, it’s in a relatively short timeframe and it’s actually a fairly significant amount of solar deployment,” said Lynn Hinkle, policy director for the Minnesota Solar Energy Industries Association.

Over the next seven years, investor-owned utilities in the state will need to add an estimated 450 megawatts of solar power to their systems — up from about 13 megawatts today.

Solar incentives

At least a tenth of that new solar generation will need to come from small systems of up to 20 kilowatts. To help finance those installations the bill extends an existing rebate program, with some changes.

Xcel Energy had sought to phase out its Solar Rewards rebate program at the end of 2013. The Minnesota Department of Commerce ordered Xcel to continue the program through 2015, and now the Legislature has mandated a similar incentive stay in place until 2018.

The bill allocates $5 million per year for the program from a state renewable development fund. The biggest change is that instead of upfront rebates, the incentives will be rewarded based on the amount of electricity produced.

The move from rebates to a production incentive is intended to make sure Minnesota is getting the most bang for its buck by discouraging people from installing systems in shady or low-performing locations.

“A production-based incentives gives the money to the best producers instead of just rewarding whoever puts up a system,” said Laura Cina, managing director for the Minnesota Renewable Energy Society.

The shift to production incentives also applied to the Made in Minnesota incentive, an additional subsidy for locally manufactured solar panels that was extended to include solar thermal systems.

Solar gardens

Most people today don’t have an opportunity to claim these incentives, though. Cina said only about a third of Minnesotans own a rooftop that’s sunny enough, strong enough and angled correctly for installing solar panels.

That’s why solar supporters are particularly excited about a new program created in the bill known as community “solar gardens.”

The concept will let customers buy individual solar panels in shared, community solar installations. The electricity generated by a customer’s panels would be credited on their utility bill the same as if it were on their own rooftop.

“This opens up the door for a really large number of people to participate in solar,” Hinkle said.

Xcel Energy, the state’s largest utility, is required to file a plan with regulators by Sept. 30 for setting up and operating a community solar gardens programs, which will be optional for other investor-owned utilities.

The projects must have at least five subscribers each with no member owning more than a 40 percent interest. The size is capped at 1 megawatt, but there is no limit on the number of shared systems built.

One project has already been announced, a 40-kilowatt array to be developed by Applied Energy Innovations and Minnesota Community Solar on a Minneapolis warehouse rooftop.

Net metering 2.0

The bill will also make it easier for investor-owned utility customers to connect larger solar installations to the grid by lifting the state’s net-metering cap to 1,000 kilowatts.

Net-metering is a policy that standardizes utility payments and hook-ups for all solar and other customer-owned generation that fits the criteria, which until now was limited to systems under 40-kilowatt capacity.

Minnesota passed the nation’s first net-metering law in 1983, but in the 30 years since then the size limit became an artificial cap on commercial solar development, deterring companies from building larger systems.

The new legislation also opens the door for a possible successor to net metering known as “value of solar.”

Instead of paying customers the retail electricity rate for their unused solar power, as they do under net metering, utilities can choose to offer a different rate based on the value their customers’ solar panels offer to other ratepayers and the environment.

State energy officials will create an outline for how to calculate the value of solar, which must consider the value of the electricity, transmission and distribution benefits, and environmental benefits, and utility regulators would need to sign-off on the studies.

The process could help lend some clarity in the debate over whether customers who own their own generation are pushing costs onto other customers or creating benefits for the electricity grid.

Criticism of the law

Not everyone is happy with the new law, however. The bill, which passed the House by a narrow margin, included protections for the state’s mining and paper industries in order to gain the support of lawmakers from northern Minnesota. Critics say those carveouts prove the bill will create a financial burden for other energy users.

Utilities also opposed the measure, citing lack of demand for new generation and concerns about higher costs for ratepayers.

“We think that solar energy has a lot of promise, but we think that promise is in the future and we think that we need to go slow,” Rick Evans, Xcel Energy’s Director of Government Affairs, told a state Senate committee in April.

Backers of the new law acknowledge there will be a cost, but predict it will be outweighed by the economic benefits.

“This is an investment,” said John Farrell of the Institute for Local Self Reliance, in an interview with Greentech Media. “For every dollar of public money put in, Minnesota will get an enormous return in private capital. It is, essentially, private capital building power plants for the public utilities. That’s a really great deal, especially when it also accomplishes environmental and economic goals.”

Editor’s note: An earlier version of this article incorrectly stated the target year for Minnesota’s renewable energy standard. It is 25 percent by 2025, not 2020.

Comments (12)

“A coalition of environmental groups… The coalition included members of RE-AMP, which also publishes Midwest Energy News. Fresh Energy, the organization where Midwest Energy News is based, had a role in developing the policy.” These are NOT environmental groups, but are lobby groups for the energy sector. Let’s not put lipstick on a pig to enter it into the pageant. This was NOT put in place for larger economic or environmental benefits, which is betrayed by the fact that no one actually knows what the real costs associated with this will be.

By Mary on May 24, 2013

So we have “wind farms” and “solar gardens”. How much did the PR firm charge RE-AMP to come up with these? Wind turbines are industrial power plants and solar panels are industrial collection panels, NOT farms or gardens. We are neither harvesting nor growing anything….except rates.

By Mary on May 24, 2013

Actually, Mary, usually energy companies find it simpler to just go ahead and hire actual lobbyists.

By Ken Paulman on May 24, 2013

@Mary, As opposed to “hunting and gathering” our energy as we have been doing for most of the industrial era, wind farms and solar gardens harvest energy that comes from the sun. Gardens and farms revolutionized the food stream during the agricultural revolution, and can change the way we produce and use energy.

By mpmclepv on May 24, 2013

“We think that solar energy has a lot of promise, but we think that promise is in the future and we think that we need to go slow,” Rick Evans, Xcel Energy’s Director of Government Affairs

Is 1.5% (of non-municipal utilities) in 7.5 years really too fast?

Properly streamlined, commercial scale rooftop solar projects can go from concept to connected in under a year, by far the fastest of any power source today.

By Shael Rotman on May 24, 2013

Shael, I agree with you. If solar energy holds promise and we should approach it pragmatically, 1.5% over 7 years sounds like just the ticket.

Regarding “solar gardens” and “wind farms” those terms have been around for quite some time. RE-AMP didn’t invent them, although I’d be impressed if they had. Every new proposal can use good marketing.

It’s amusing to hear claims that this was accomplished by “energy sector lobby groups” when all the utilities were fighting it.

By Eric on May 24, 2013

Did Enel, Italian partner of Gernimo Energy, send all the folks at RE-AMP and Fresh Energy a thank you card? They are pressing Xcel to acept a solar project that is 1000 times bigger then anything built in MN. If approved, almost all that rate money is going from the MN poor to Italian billionaires. Interesting that Enel/Geronimo’s solar application showed up at the MPUC in the middle of the legislative session while Geronimo was at the Capitol lobbying for 10% solar and lots more Big Wind.

By Kristi on May 24, 2013

They are pressing Xcel to acept a solar project that is 1000 times bigger then anything built in MN.

Kristi. The largest solar project currently in Minnesota is 2 MW. The largest planned solar project on Earth is the 579 MW Antelope Valley project in California.

So you’re telling us that someone is planning to build a *2,000 MW* solar project in Minnesota?

You might want to double-check your sources on that.

By Ken Paulman on May 24, 2013

Sorry Ken. It’s only 50 times bigger than the 2 MW existing. The main point is – this is not about rooftop solar on middle class homes. This is money to Europe and Wall Street and, perhaps, a few feel-good solar panels on some wealthy folks’ homes – all paid for by Minnesota tax and rate payers. Environmental benefit? Little to none. Whatever environmental benefit the RE-AMP crowd pretends to care about can be achieved by real energy sources at a MUCH cheaper cost. I believe the main reason for RE-AMP is making good salaries for sanctimonious unicorn sales people. What are you planning to do to solve the absense of a storage system? Just keep dumping it on MISO at a loss to the MN ratepayers? Or shall we shut down the reliable sources and double-pay that way?

By Kristi on May 24, 2013

Kristi, to be honest, after you hand-waved over a 50x vs. 1000x difference I’m not taking your arguments all that seriously.

But regarding small rooftops, the legislation is segmented to ensure that smaller systems are part of this effort. And I get tired of hearing about wealthy people’s homes. Solar isn’t within everyone’s reach yet, but at $5/watt and under pre-incentives, it becomes a matter of priorities and desires for many. Would you rather spend $3000 on a home entertainment system or a 1kW array on your roof? Maybe you’d rather spend it on a TV, but that’s not the same as saying it’s out of reach.

1.5% is a pretty modest goal. The doom & gloom & concern-trolling about storage, dispatchability, etc seems overblown to me at these levels of penetration.

By Eric on May 25, 2013

Kristi, I am willing to pay more for low CO2, mercury and toxic ash free power, I guess you are not.

By l klisch on May 25, 2013

Here’s the docket that Kristi’s referring to. Geronimo is proposing 31 distributed solar projects totaling 100 MW. Enel is one of their equity partners.

The application was submitted in April, two months after the solar standard was initially proposed in the legislature.

Not really seeing evidence of a conspiracy here, but we all have different thresholds for these things.

By Ken Paulman on May 26, 2013