You might think that a northern state like Minnesota wouldn’t be a hot market for solar energy, but, in fact, solar can work well in northern and colder climates. To capture that solar potential, Minnesota recently enacted several policies and incentives to inspire more Minnesota businesses, municipalities, non-profits, and residents to install solar and reduce their energy costs.
The main driver behind Minnesota’s solar push is the state’s Renewable Portfolio Standard (RPS), which requires the state’s investor owned utilities to generate around 30% of their total retail electricity sales from wind, solar, and other renewable sources by 2020. On top of that, 10% of utility retail electric sales are required to come from solar by the year 2030.
To meet these goals, the state and its major utilities have created several programs targeting both large and small installations:
Growing Community Solar Gardens
Community solar gardens, sometimes known as “shared solar,” lets developers create large solar farms and allow individual “subscribers” to invest in a portion of the farm. By purchasing a subscription, each subscriber gets to offset their utility bill with their portion of the solar power generated by the solar installation.
The program is a huge benefit for those who have homes or businesses that can’t go solar because of shading issues, or because they lease their property, or because there are location or utility interconnection issues.
As for the incentive, solar garden subscribers receive a payment based on their solar power generated. Currently, Minnesota regulators have set an interim rate of about 12 cents kilowatt-hour (kWh), but that rate may be replaced when Minnesota’s Value of Solar Tariff (VOST) is set. (See below.)
Taking Advantage of the Extra Made in Minnesota Solar Incentive
In addition to the above incentives, small commercial, non-profit, and government solar installations up to 40 kW in size may receive an additional production incentive for 10 years when the installer uses officially designated “Made in Minnesota” solar panels. The annual payment will vary based on solar production, the solar panel brand and model, and whether it’s a business or government or non-profit installation. Another requirement is that the solar installation has to be within the territories of Xcel Energy, Minnesota Power, Alliant Energy, or Ottertail Power utilities.
Depending on the solar panel chosen, businesses can receive 13 to 18 cents/kWh, and non-profit and government entities can receive 20 cents to 27 cents/kWh generated.
As an example, a business that installs a 30 kW commercial array of Made in Minnesota-certified modules and generates 42,516 kWh in the first year would be paid $5,527.07 (42,516 kWh x .13/kWh). If the panels produce the same number of kWh in each of the following 9 years, the business would receive a total of $55,270! For another Minnesota solar panel brand that qualifies for the 18 cents/kWh incentive rate, that payment could be $7,652 per year or $76,528 after 10 years!
While specific program details are still being worked out, it is important for interested parties to get involved early to ensure they are ready once these programs go live; new solar incentives tend to reach capacity quickly.
Ben Peters is the Director of Solar Finance and Policy at REC Solar, providing strategic guidance on the commercial and utility sectors. Ben is responsible for managing RECSolar’s economic and policy analysis group and creating effective strategies to develop projects based on relevant regulatory and market dynamics, including rate tariff modification proposals, new incentive programs, integration of storage technology and bill credit mechanisms.
