MINNESOTA SOLAR STANDARD MOVES AHEAD

The Making of a Midwestern Solar Energy Standard

John Farrell, March 14, 2013 (Institute for Local Self-Reliance)

“…[The Minnesota state legislature House Energy Policy Committee] voted 8-6 to approve a 4% by 2025 solar energy standard, with an innovative new approach to financing solar power. It’s a powerful first step for what would be one of the more robust policies to support distributed, local solar power in the country…

…[The] Solar Standard…sets a timeline for utilities to add solar to their electricity mix…0.5% of electricity sales by 2016…2.0% of electricity sales by 2020…4.0% of electricity sales by 2025…And, an “objective” of 10% solar by 2030…[but it] is not a carve-out of the existing 25% by 2025 renewable energy standard…”

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“…[T]he legislation [also] requires utilities to mimic the VOS calculation popularized by Austin Energy in Texas, essentially setting a market price for solar power (per kilowatt-hour) on the basis of its value [in seven ways] to the grid…Line loss savings from avoided electricity imports on the transmission and distribution grid…[S]avings from avoiding upgrades to transmission and distribution…[S]avings from reducing wholesale energy purchases…[S]avings from offsetting the need for new (peak) capacity…Fuel price hedge value from a zero fuel cost…Environmental benefits…Economic benefits from the growth of the state’s solar industry…”

“The VOS price will be combined with a production-based incentive (PBI) to offer solar energy generators a price sufficient to provide a reasonable return…Utilities must develop and use a standard [20 year] contract…This dramatically simplifies the financing and development of distributed solar…[growing] a diversity of utility-scale and distributed solar…[The standard] promises to deliver over 2,100 megawatts of solar power…create over 8,000 jobs and…[add] $5.8 billion in the state’s economy in the next decade….[at] a forecast blended cost per kilowatt-hour (for the incentive) of just 2.7¢ per kWh…”

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