Value-of-Solar is Delayed; Minnesota Community Solar Gardens Move Forward

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Last Thursday, the Minnesota Public Utilities Commission (“MPUC”) approved Xcel Energy’s first Minnesota-based Community Solar Garden (CSG) program. After Xcel’s initial program filing was rejected by the MPUC in April, Xcel filed a revised CSG tariff with the MPUC in June. In a related filing, Xcel also argued that a  value of solar (“VOS”) rate for CSG projects was not in the public interest and applicable retail rates should be used for the program instead. The MPUC approved Xcel’s basic program, with relatively minor modifications and at the applicable retail rates. As a result, Xcel customers will soon be able to invest in a solar project without having to own a home or the perfect roof for solar.

Many of the details were already prescribed by statute (Minn. Stat.§ 216B.1641): 

  • Subscribers to a CSG will purchase one or more 200-watt subscriptions up to 120 percent of their energy load
  • CSG projects must include at least 5 subscribers with no single subscriber amounting to more than 40% of the total CSG capacity
  • Each CSG is to be no more than 1MW in size, but the program as a whole remains uncapped

The statute also requires that Xcel Energy purchase all of the energy output of a CSG system at a VOS rate once it is approved by the MPUC. Many interested parties have invested considerable time and resources into developing a way to calculate the costs and benefits distributed solar deliver to a utility, its customers and society (more on that process here, here and here). Last spring, the MPUC approved a final methodology to calculate VOS rates - the culmination of that work. Xcel’s CSG tariff filing was then the first test of the methodology and the CSG program its intended first application. 

Ultimately, the MPUC approved the use of the applicable retail rates instead of a VOS rate as Xcel requested. With parties diverging on the VOS rate itself as well as what, if any, additional incentive may be needed to make the projects financeable, the MPUC opted to spend more time getting any future VOS rate and associated incentive right. As that work continues, the program will go forward with the rate for immediate CSG projects being the applicable retail rate and an additional 2-3 cent adder for associated solar renewable energy certificates transferred to the utility. This amounts to rates from approximately 11.5¢/kWh for larger systems subscribed by commercial and industrial customers to 15¢/kWh for smaller systems subscribed by residential customers. 

Will such rates “reasonably allow for the creation, financing, and accessibility” of CSG projects under Minnesota law? One of these days, perhaps before the Harvest Moon, we will see whether Minnesota solar gardens are ready to sprout.

Topics:  Electricity, Energy Projects, Renewable Energy, Solar Energy, Solar Farm, Utilities Sector

Published In: Energy & Utilities Updates, Environmental Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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