Yesterday the Minnesota legislature passed a substantial solar energy bill that will result in the development of more than 450 megawatts of solar by 2020. Solar advocates are awaiting Governor Dayton’s signature, which, given his support for solar, is expected shortly.
This bill represents one of the most significant solar victories of the 2013 legislative session. Fresh Energy, Sierra Club, MNSEIA, and many other organizations worked to pass this bill and kick-start a solar economy in their state.
The bill contains so many smart new solar policies that we recommend a full read. Below we highlight some of the most exciting parts of the legislation.
1.5 percent Solar Energy RES Requirement
Investor-owned utilities (IOUs) must generate at least 1.5 percent of their total electric retail sales from solar sources by the end of 2020. Municipally owned utilities and rural electric coops do not have to comply with the 1.5 percent solar requirement.
At least 10 percent of the new solar standard must be met by solar energy generated from solar devices of 20 kilowatts or less. The systems will be incentivized through a $5 million per year fund for the next five years. The incentives will be production-based, with a ten-year payment stream.
In addition to the 1.5 percent requirement, the bill includes language stating that it is a state energy goal (not mandatory) to get to 10 percent solar by 2030. However, the investor-owned utilities were able to get a provision in the bill that states that utilities can petition the Public Utilities Commission (PUC) to cap the total amount of net metered projects in their service district when it reaches 4 percent of gross sales. (Note that this cap does not apply to VOST projects, and the cap only applies to IOUs.)
“Made in MN” Solar Module Incentives
The bill authorizes additional production-based incentives for systems that use “Made in Minnesota” solar modules. Payments will be set by the Commerce Commissioner and go to owners of grid-connected solar projects smaller than 40 kilowatts. A total of $15 million is allocated each year for ten consecutive years to finance the “Made in Minnesota” solar production incentives.
Expansion of Net Metering
The bill raises the net metering system size cap from 40 kilowatts to 1 megawatt for IOUs. The credit under net metering for excess generation from systems between 40 kilowatts and 1 megawatt will be avoided cost rate; projects under 40 kilowatts will continue to receive retail rate. Meter aggregation is now allowed as well, with systems receiving the same compensation rates as other net metering projects and avoided-cost credit for excess generation. However, investor-owned utilities now have the authority to decide whether to continue offering net metering distributed solar projects or switch to a Value of Solar Tariff.
Value of Solar Tariff (VOST)
The legislation directs the Department of Commerce, Division of Energy Resources (DER) to develop a VOST rate calculation that utilities could opt in to in lieu of net-metering distributed solar facilities. The language on the VOST was carefully thought out by MN solar advocates, and will require the DER to consider all of the benefits that solar offers to the utility system, including: the value of energy and its delivery, generation capacity, transmission capacity, transmission and distribution line losses, and environmental value. The bill says the DER may also, “based on known and measurable evidence of the cost or benefit of solar operation to the utility, incorporate other values into the methodology, including credit for locally manufactured or assembled energy systems, systems installed at high-value locations on the distribution grid, or other factors.”
Importantly, the value segments must be evaluated over the life of a solar energy system. Once the DER approves the methodology, the IOUs can plug in their own numbers and then apply to the PUC for approval of the rate. Of note, the PUC is not allowed to authorize a utility to implement a VOST tariff rate that is lower than the utility's retail rate until three years after the commission approves a VOST tariff for the utility. The VOST rate will be recalculated and approved by the PUC annually. Additionally, VOST contracts will be twenty years (unless a shorter contract term is agreed to) and project owners will be compensated at a fixed rate.
Shared Solar: Community Solar Gardens
Vote Solar worked with Fresh Energy to ensure the bill included a shared solar component, an important way of broadening access to solar by allowing customers to invest in a solar project and get a credit on their utility bill, even if that project is not on their own roof. By September 30, 2013, Xcel must file a plan for this “community solar gardens” program, and other utilities can do so voluntarily. The shared projects can be utility-owned or developed by a third party, must be 1 megawatt or less in size, and may have participants from the same county or any contiguous county as long as they are in the same utility territory as the shared solar facility.
Participants receive a bill credit for their portion of the energy produced by the shared facility, at the value of solar rate described below, or at retail rate if the value of solar has not yet been calculated. Other IOUs, such as Ottertail Power or Minnesota Power, may opt to file a community solar gardens program.
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Annie Lappé, Solar Policy Director at Vote Solar directs policy campaigns across the West and Midwest. Erin Stojan Ruccolo is the Director of Electricity Markets for Fresh Energy. Justin Fay is the Legislative and Policy Coordinator for the Sierra Club North Star Chapter.