Update, August 13, 2016
In late July, state regulators approved Minnesota Power’s plan, with modifications. Noting that community solar gardens “represent an opportunity to explore new frameworks for providing customers with affordable, renewable, and distributed electric generation,” the Public Utilities Commission is requiring Minnesota Power to work with stakeholders to draft plans for three small independent solar gardens, which could expand opportunities for solar developers and offer more options for customers.
The commission also is requiring Minnesota Power to conduct a competitive bidding process to determine how subscribers should be compensated for renewable energy credits that the company plans to retain. This issue is so complicated that the commission is requiring the company to submit promotional materials to the commission for approval.
Also, Minnesota Power must follow the state’s established system to determine the value of the energy the solar garden will produce. Advocates say utilities typically understate the value of distributed solar generation.
Finally, the commission did not allow the company to count the solar garden project toward its small-scale solar requirement. A 2013 law requires that by 2020 utilities must produce at least 1.5 percent of their retail sales from solar energy, and at least 10 percent of that must be generated by facilities of 20-kilowatts or less. Minnesota Power’s pilot solar garden project consists of a 40-kilowatt array and a 1-megawatt array.
Both Minnesota Power and advocacy groups expressed satisfaction with the commission’s order. Minnesota Power says 250 people have expressed interest in participating in the solar garden. The company is also proposing to triple the dollar value of rebates offered to customers installing solar systems on their homes and businesses.
An Agate Original
Bill Mittlefehldt has been worrying about climate change for more than twenty years. An active member of Duluth’s Peace United Church of Christ, Mittlefehldt helped organize a local chapter of Minnesota Interfaith Power and Light, a multi-denominational group that raises awareness of global warming. Several area churches had energy audits done on their buildings, and then got interested in whether solar panels could work for them. Following site evaluations, the group sent a letter to the local utility, Minnesota Power, one of five investor-owned utilities in the state, serving 144,000 customers in northeastern Minnesota. The letter offered to lease land or roof space at about ten churches. They wanted to create community solar gardens – a relatively new model in which utility customers can purchase a “share” of a centrally-located solar development and receive credit on their energy bill. Many families and businesses can’t build solar collectors on their own buildings because they are renting, or the building is too shaded or faces the wrong direction. A non-profit promoting clean energy, The Clean Energy Resource Teams have a good explanation of community solar gardens.
“Minnesota sends about $18 billion out of state every year to pay for energy, when the solar energy is right here,” said Mittlefehldt. The Minnesota Department of Commerce says the state has solar potential similar to Florida and Texas.
In the fall of 2015 Minnesota Power announced it would build two pilot community solar gardens – a 1-megawatt array (capable of serving about 150 homes) somewhere in St. Louis County, and a 40-kilowatt array (capable of serving about 5 homes) on Minnesota Power property in Duluth. Mittlefehldt says his group is “delighted that Minnesota Power is planning to invest in solar,” but they are disappointed that the program doesn’t permit churches and other independent groups to build solar installations, and they are pressing the utility to buy into their broader vision.
“The more we reviewed the details of their proposal, we were frankly let down that they seemed to be more interested in capping the interest rather than expanding and capitalizing on that interest,” Mittlefehldt said.
The group also wants to use the transition to cleaner energy to address poverty and other social inequities. It says the pilot program should guarantee participation by at least some low-income families and should include training for low-income people in new energy technologies.
Other groups and agencies, from Fresh Energy to the Sierra Club to the Minnesota Department of Commerce, have weighed in on the plan. Essentially, they argue it should be more like what Xcel Energy is required to do under legislation passed in 2013. The legislature directed the state’s largest utility to purchase solar electricity from independent developers who will build solar gardens and sell shares to individuals and businesses. Most promise to save money for participants. Xcel is not allowed to limit the number of projects.
About a year after Xcel Energy began accepting bids from developers, there is now one operating solar garden, 100 have been approved, and more than 1,000 are in the pipeline. The company expects to have 250 megawatts coming from solar gardens by the end of 2016. That’s enough to power about 40,000 homes. Sixteen electric co-ops, mostly in rural parts of the state, have also set up solar gardens.
Minnesota Power’s plan
Renewable energy advocates would like to see a similar boom across Minnesota, in areas served by investor-owned electric companies other than Xcel. Minnesota Power is the first such company to create a plan voluntarily. If Minnesota Power were to allow independent developers to build solar projects, it would create more options for consumers, according Allen Gleckner, an attorney at Fresh Energy, a non-profit based in St. Paul. “Minnesota Power could set up a program with certain rules, lay out an application process and define what the bill credits would look like,” Gleckner said. “The variety of programs that could come forth would compete with each other and offer different products for different customers. That way the program can grow to what the market will bear.”
When Minnesota Power submitted its plan for a solar garden project to the Public Utilities Commission, more than 400 people submitted comments, and the company has revised its proposal in response to those comments. But it doesn’t apologize for its pilot plan.
“This is a new and burgeoning field; I don’t think there is one right answer for approaching this,” said Margaret Hodnik, Minnesota Power’s Vice President of Regulatory and Legislative Affairs. “We’ve seen multiple approaches across the country for offering solar, and I think it’s wise for us and wise for the state to allow pilot programs and variations in how things are done.”
The Minnesota Power program offers three choices: customers can buy a share of the system for a flat price; they can buy a share over time with payments that have a modest carrying cost; or they can buy energy off the system and pay for it on a kilowatt-hour basis. Shares will be available in increments of 1 kilowatt.
Hodnik said the company will evaluate the pilot project and “if there is a lot of interest, if it’s sold out, we would offer additional solar installations.” Unlike Xcel, Minnesota Power is not required to offer solar gardens. “It’s an offering we’d like to give to our customers; we’d like to see how it would work and then base further offerings of this program based on the results of the first one,” Hodnik said.
Interest groups are pressing for a more ambitious and customer-driven approach because they see Minnesota Power’s program, only the second in the state and the first not required by law, as a possible model for other investor-owned utilities. The Public Utilities Commission will hold a public hearing June 2 and can ask Minnesota Power to change its program, or approve it.
Minnesota leads the region
Minnesota is a national leader in community solar, due in large part to the state’s 2013 law requiring Xcel Energy to offer programs. In Michigan, state laws do not promote community solar, but several utilities are starting projects to meet customer demand. Each must design its own price structure, producing questions such as those being asked in Minnesota. Meanwhile, the Michigan legislature is debating policy changes. In Wisconsin, meanwhile, regulators have been awarding utilities higher fixed monthly charges on electric bills. Power companies say the charges can help them recoup grid costs from customers who produce their own electricity, but solar advocates say they are designed to kill small-scale solar energy production. Wisconsin’s electric coops have pioneered community solar projects, and a few investor-owned utilities are beginning to make small offerings to their customers. In Canada, Ontario was an early adopter of a feed-in tariff, setting a guaranteed rate higher than the retail rate for renewable energy producers. One program is for individual homes or businesses; another encourages community groups to build solar arrays.