Author: John Farrell and Maria McCoy Published: 9/2/2021 ILSR
Minnesota’s community solar program grew to 811 megawatts of operational capacity in August 2021. The chart above shows the progress of projects through the program since August 2015, and the nearly two-year lag between the program launch in December 2014 and the successful ignition of multiple megawatts of capacity in January 2017. Note: the megawatt sum of projects in the application stage reported by Xcel Energy is a minimum, hence the plus symbol.
The benefits of the program are substantial. Data from Xcel Energy shows that bill credits for all customers totaled more than $2.2 million in February 2018, for 17.3 million kilowatt-hours. Based on the 2018 approved value of solar, the energy was worth at least $2.2 million. According to ILSR’s analysis, all customers (subscribers or not) are seeing financial benefits from community solar. The $2.2 million figure does not include factoring in the distribution capacity value of solar nor the potential volatility of gas prices that are avoided, nor does it include the benefits of shifting wealth from power generation ownership away from a private monopoly and to a broad set of subscribers across the state.
Though Minnesota’s community solar program is the best in its impressive installed capacity, the policy itself lacks consideration for specific groups that have traditionally been left out of the solar energy transition. These include low-income residential subscribers and historically burdened or frontline communities. Minnesota could address these disparities in many different ways. One option, a part of the Illinois community solar policy, is to carve out a portion of program capacity for environmental justice communities.
Read our report on Designing Community Solar Programs that Promote Racial and Economic Equity.
Minnesota’s program could also serve residential subscribers more effectively. Half of U.S. households do not have access to a sunny rooftop. Community solar theoretically provides these households access to the benefits of solar, and yet, it is still out of reach to so many. The Minnesota community solar program could better serve residential subscribers by carving out a portion of the overall program for them, providing resources for project development and technical assistance, or by compensating gardens that serve residential subscribers to offset the higher costs of reaching numerous subscribers.
The Minnesota Public Utilities Commission first introduced the Residential Adder in 2018. The adder boosted compensation rates for residential subscribers by 1.5 cents per kilowatt-hour for projects started in 2019 or 2020. Given the devastating interconnection delays during this same time period, it’s hard to say whether or not the residential adder made much of a difference. The Commission charged Xcel a million dollar fine for the delays and is now considering whether or not to extend the residential adder beyond its two year trial period.
Read ILSR’s 2021 commentary on the Residential Adder, submitted to the Minnesota Public Utilities Commission.
In April 2019, Xcel Energy proposed changes to how it is required to report community solar program information through a new online dashboard that the utility would make available on its website. ILSR signed on to comments to the Minnesota Public Utilities Commission in support of this proposed reporting change, which could help increase transparency and accessibility of community solar data. In addition, such a tool would provide a useful model as a growing number of states pass policies to expand shared renewable programs across the country.
Below is a simplified version of the chart above, showing just projects in the design/construction phase or in operation.
As Xcel Energy publishes data on the mix of subscribers, we can report that more than 20,332 residential customers (84% of all subscriptions) are saving money with a shared solar subscription.
While most of the program’s total capacity continues to serve commercial customers (82%), much of that total capacity notably serves public entities (up from one-third or about 100 megawatts of the total program capacity in March 2018). These public entities include schools, colleges, hospitals, and county and local governments, as outlined in Xcel Energy’s 2018 Annual Operations Report (April 2019).
In other words, community solar helps broaden those who benefit from solar by enabling individuals and public institutions to save money with solar! We’ll continue providing these subscriber spreads annually if Xcel keeps reporting them.
I’ve been asked a lot of questions about Minnesota’s community solar program over the past couple years and it’s time to make one thing clear: Minnesota’s program is the best in the country.
Why? Because there 10 times more community solar projects in the queue—400 megawatts—in Minnesota than have been built in the history of community solar in the United States (40 megawatts).
Minnesota’s program (see infographic) is a comprehensive approach that makes developing community solar projects economically viable and—most importantly—that does not cap the development of community solar projects. The latter is the key.
Colorado’s landmark community solar legislation, for example, caps the program at 6.5 megawatts per utility per year (although there’s hope it may increase in the future). Massachusetts has just revamped their solar renewable energy credit program to make community solar a better investment. No other state has had significant community solar development, despite 11 states that have some form of virtual net metering that allows for sharing electricity output from an off-site solar energy project.
How big is Minnesota’s projected success?
Xcel Energy’s queue for community solar already has 20 times more solar in it than the state had installed at the end of 2014. If it all gets built, it would be enough to rank second in the country in annual solar installations in 2014.
I recently wrote that a state’s solar market can’t really launch without third party ownership—leasing or power purchase agreements that allow home and business owners to install solar with zero upfront cost, hand off maintenance concerns, and save money from day one. Indiana was the only potential exception, due to a (now defunct) feed-in tariff program operated by Indianapolis Power and Light. Minnesota may be the second.
I’m no stranger to community solar programs. I worked closely with advocates in Minnesota on the legislation, as part of a suite of pro-solar policies that passed in 2013. I’ve written extensively on community solar policies, from a 2010 report on the obstacles and opportunities to podcasts with leaders in the community solar movement. I’ve testified on community solar proposals in California and Maryland, and lent my advice in other states.
If the projects develop as expected in Minnesota, there will be no contest. To say it like a local, “Minnesota’s community solar program is not too bad.”