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Major Changes Ahead for Minnesota’s Solar Programs

The Minnesota Senate has recently progressed a DFL-sponsored bill that could phase out the state’s innovative community solar program by 2028. This proposed legislation also aims to cut significant financial incentives for onsite solar energy installations, particularly affecting utility customers in rural regions and small towns across Minnesota.

Furthermore, the bill proposes to dissolve Minnesota’s Renewable Development Account, which allocates millions of dollars collected from nuclear waste storage fees paid by Xcel Energy. These funds are instrumental in subsidizing residential solar panel installations, which could further hinder the promotion of renewable energy sources in the state.

Environmental activists and clean energy proponents vehemently criticized the bill during a recent press conference at the state Capitol. Steve Morse, executive director of the Minnesota Environmental Partnership, expressed his concerns, declaring that “this bill is a betrayal of Minnesota’s climate promises.” He characterized the legislation as a product of clandestine negotiations that prioritizes polluters over the public interest.

This proposed legislative package signifies a drastic shift from the energy policies enacted in 2023, which included extensive reforms aimed at expanding the community solar program and amplifying solar incentives for low-income individuals. Additionally, lawmakers instituted a mandate requiring Minnesota to produce all of its electricity from carbon-free sources by 2040.

Pouya Najmaie, the policy and regulatory director of Cooperative Energy Futures, highlighted the importance of the community solar initiative, noting that it currently powers approximately 30,000 households in Minnesota, creates local employment opportunities, and generates savings for many residents, especially those living in rental properties and low-income demographics.

The legislation includes measures that could dilute Minnesota’s clean electricity standard. These provisions might classify specific plants that burn wood waste and biodiesel as carbon-free. Moreover, new, larger hydroelectric dams would also be designated as potential sources of carbon-free electricity, which diverges from the principles established in last year’s legislation.

The Senate bill has garnered favorable responses from the Minnesota Rural Electric Association, an organization representing 50 nonprofit rural electric cooperatives serving around 1.7 million residents.

For over four decades, Minnesotans who own solar arrays have been entitled to credits on their electricity bills for the energy they contribute to the grid, a system known as net metering. However, the proposed bill intends to revoke this option for new systems set up in the territories of electric cooperatives and municipal utilities after December 31, 2026. Instead, it would replace this system with a less advantageous compensation model based on the “avoided costs” of energy.

Pre-existing solar installations would remain unaffected. Additionally, current and future systems in regions served by major utilities like Xcel Energy or Minnesota Power would still have access to net metering. Nonetheless, any new installations in co-op or municipal territories would only receive compensation at the newly proposed lower rates.

The Rural Electric Association suggests that these changes could prompt smaller power companies to accelerate the deployment of larger solar projects ahead of the 2040 deadline. MREA CEO Darrick Moe emphasized that utilities can acquire renewable energy at approximately half the cost by investing in utility-scale systems, thereby doubling carbon reduction efficiency for the same expenditure.

Moe pointed out that addressing net metering is a pivotal legislative focus for the MREA this session. He conveyed concerns that without amendments to the current structure, rooftop solar users could drive prices higher for the broader customer base.

California serves as a cautionary example of potential “cost-shifting” associated with residential rooftop solar systems. According to a University of California analysis, rooftop solar installations have shifted substantial costs, thereby influencing the utility bills of non-solar customers significantly.

Contrarily, numerous advocates, including John Farrell from the Institute for Local Self-Reliance and Najmaie, contest the idea of cost-shifting in an April 4 correspondence to legislators, asserting that retail-rate compensation is equitable. They argue that the electricity dispatched to the grid is ultimately utilized by neighboring residential customers, who are charged retail rates for it by their utilities, thus creating a standard credit process for solar owners.

While the Senate bill does not prevent electric co-op and municipal utility customers from installing solar to meet personal energy needs, it discourages “oversized systems” intended to leverage the existing net metering arrangement for financial gain. Moe articulated a desire for a moderate adjustment to the current net metering framework.

However, not everyone agrees with this viewpoint. During the recent press conference, Carmen Fernholz, a farmer who invested heavily in solar energy, conveyed that he would not have pursued solar options had he known about the potential elimination of net metering. Bobby King, director of Solar United Neighbors Minnesota, echoed this sentiment, warning that if the changes to net metering take effect, it could severely curtail solar adoption in rural and small-town Minnesota.

As the legislative session nears its conclusion, the energy omnibus bill is still subject to amendments, and the future of the proposed changes—including net metering adjustments and community solar program rollbacks—remains uncertain. Concerns linger that House Democrats, who share control of the state’s lower chamber, may not favor the contentious components of the bill.

Nonetheless, MREA’s Moe noted that inclusion in the Senate omnibus signals that the net metering issue is now open for bipartisan negotiation as the session draws to a close.

Source
www.renewableenergyworld.com