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Clean Energy

News Release: Minnesota is first state to establish what solar power is really worth

For Immediate Release: March 13, 2014

Contact:
Erin Stojan Ruccolo, Director, Electricity Markets
651-726-7567, 651-829-0581, ruccolo@fresh-energy.org

Ross Abbey, Policy Associate
651-291-7144, 612-227-7393, abbey@fresh-energy.org

ST. PAUL – Yesterday, Minnesota became the first state in the nation to formally adopt a method to calculate the “value of solar.” Under Minnesota law, the Public Utilities Commission (PUC) was required to establish how electricity from solar systems on homes and businesses should be valued. The PUC approved the statewide formula for conducting the calculation on a 3 to 2 vote.

Onsite solar systems provide many benefits which can be individually valued and “stacked up” to create a solar energy tariff for crediting consumers’ bills for solar electricity produced. In addition to the energy value, the PUC ruled how solar will be credited for its many other attributes.

  1. Solar is typically generated at the site that energy is used, and this avoids new transmission and actually frees up both transmission and distribution lines for other uses.
  2. Solar electricity has capacity value, and if a utility’s peak demand is on a hot sunny day, that value will be even higher, essentially delaying the need for new utility generation investments.
  3. Because solar is fuel-free, the energy has a fixed price over the life of the solar panels, so solar producers must be credited for avoiding the need for fuel and protecting ratepayers from rising coal and natural gas costs.
  4. Because it produces no pollution, the value of solar includes the avoided health and environmental impacts of fossil fuels.

“Yesterday, Minnesota utility regulators decided what solar power is really worth, and it turns out to be worth more than what producers have been credited for in the past. When utilities credit people’s bills fairly for the solar electricity they produce, soon everyone who wants solar can have it,” said Michael Noble, Executive Director of Fresh Energy.

“This process confirmed that rooftop solar delivers tremendous benefits to Minnesotans. Individual investment in local solar power reduces the need for expensive utility infrastructure in addition to delivering real economic, public health, and environmental benefits,” said Rick Gilliam, Program Director – DG Regulatory Policy for Vote Solar.

Jigar Shah, solar business pioneer and founder of SunEdison, called the new policy “Amazing and revolutionary. This is the future of net metering.”

Geoff Stenrick, President and CEO of SimpleRay, a solar distributor in the Midwest, called the decision “a solid foundation toward a long-term, sustainable solar market in the Midwest. I am thrilled to see Minnesota be a leader toward a brighter future.”

The PUC decision comes on the heels of the Solar Energy Jobs Act, signed into law in 2013 by Governor Mark Dayton. That law requires Minnesota’s investor-owned utilities to procure at least 1.5 percent of their electricity from solar resources by 2020. The state currently has approximately sixteen megawatts of installed solar; the new law will increase this about thirty-fold over the next six years.

The 2013 law does not require Minnesota’s four public utilities—Xcel Energy, Minnesota Power, Otter Tail Power, and Alliant Energy—to adopt the value of solar tariff as an alternative to net metering. Each utility must first apply to the PUC before implementing the approved method to calculate a solar rate.

“A great process and engaged stakeholders made this a solar success story,” said Karl Rábago, owner of Rábago Energy in Denver, Colorado. “Now is the time for utility leadership.”

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Fresh Energy has transformed widely held economic and environmental ideals into smart energy policy for more than 20 years. Through advocacy, research, and collaboration, we work to fight global warming, make clean energy more available, and provide people less polluting, more efficient transportation options. For more information about our work, please visit www.fresh-energy.org.

Yesterday, Minnesota became the first state in the nation to formally adopt a method to calculate the “value of solar.” Read more in Fresh Energy's official news release.

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