MN regulators adopt first of its kind value of solar rate

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Solar + barn - wabasha-mn-barn-photo-by-aquilla-solar-fe-received-permission-to-use-3-24-17_25940244141_oToday, Minnesota regulators adopted a value of solar rate for Xcel Energy’s community solar program – consistent with detailed recommendations made by Fresh Energy.

  • The decision by the Public Utilities Commission marks the first time a value of solar rate will be in place for an investor owned utility’s solar customers.
  • Using a value of solar rate is expected to increase pricing transparency for solar garden customers, stakeholders and regulators by accounting for the value of solar projects on the grid.
  • The only other utility in the country to implement a value of solar methodology is a municipal utility, Austin Energy.

The decision comes after more than a year of work by nonprofits, utilities, solar businesses, and regulators to shape the next phase of Xcel Energy’s community solar program. Though there has been tremendous interest in community solar in Minnesota so far, progress on the solar gardens themselves had been slow. However, we now expect 400 – 450 MW of community solar projects in service by the end of 2017. Today’s ruling will apply to the next phase of community solar projects, with a formal written decision expected sometime this fall.

The decision to adopt a customer bill credit at the value of solar rate is the right direction for community solar in Minnesota. The value of solar bill credit as adopted will be a transparent rate for subscribers that is based on a set 25-year bill credit schedule, creating clarity and reducing risk for subscribers. It is also expected to reduce financing costs for community solar development and increase low- and moderate-income subscriber access. Finally, because the community solar compensation rate is set at the value of the solar installations, its adoption should put to rest concerns about cost fairness between community solar subscribers and other utility customers.

Since serving as the key architect of Minnesota’s community solar law in 2013, Fresh Energy has continued to play a key role in moving Xcel’s program forward in a way that provides solar options for all Minnesotans, no matter what income or tax appetite. Most recently, Fresh Energy was successful in moving a value of solar process forward as part of the creation of a utility owned community solar program through Minnesota Power.

In 2014, Minnesota became the first state in the country to decide on a value of solar methodology and small solar tariff option – creating a comprehensive calculation for how solar projects impact a utility and its customers. Today’s decision marks the first time that rate will be adopted, accounting for the avoided generation, transmission, and distribution costs and added capacity and environmental value that solar provides.

 

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