Minnesota, now blanketed in snow, is preparing for a sun-filled spring.
Pro-solar legislation has led to an explosion of solar development in the state, leading Xcel Energy to dramatically revise its future investment plans. The utility now expects to get 10 percent of its power from the sun by 2030. But market developments suggest that number may be conservative.
While Minnesota has a long history of progressive energy policy, the state's solar story really began in 2013, when the Minnesota legislature passed the “Solar Energy Jobs Act.” The act had a bundle of solar policies promoting both distributed and utility-scale solar. It mandated that solar provide 1.5 percent of energy sales by 2020 and set a voluntary goal of 10 percent by 2030. It also established the first statewide “value-of-solar” tariff policy, and created programs for community-owned “solar gardens.”
Community solar allows customers who can’t or don’t want to put solar panels on their homes or businesses to buy power from a solar array of 1 megawatt or less located elsewhere in the community. Customers buy a subscription to the garden and receive credits on their Xcel Energy bills.
Before the new solar law, Xcel Energy, the largest utility in the state, serving almost half of all demand, was already subject to an RPS of 30 percent by 2020. Wind power has made up almost all of the renewables required to meet the standard. The solar mandate boosts the total RPS to 31.5 percent by 2020 for Xcel, but does not apply to municipal and cooperative utilities, or to large manufacturers.
But Xcel is already offering to go beyond what is required. In its current integrated resource plan filing, the utility announced plans to reduce carbon emissions 30 percent below 2005 levels by 2020 and 40 percent by 2030. Xcel's renewables portfolio would grow from 15 percent now to 35 percent by 2030, made up of 25 percent wind and 10 percent solar. This means adding 1,800 megawatts of wind and almost 1,900 megawatts of large-scale solar, while integrating an expected 500 megawatts of consumer-driven solar.
“We are able to achieve a 30 percent CO2 reduction in 2020 merely by the addition of approximately 400 MW of wind to our system in 2020, although we note that our Preferred Plan proposes to add 600 MW of wind by 2020 to smooth our transition to the 40 percent CO2 reduction by 2030," writes the utility in its plan.
Advocates are proposing legislation to expand and extend the RPS to 40 percent by 2030, as well as boosting the energy efficiency resource standard to 2 percent savings per year.
Legislation from last year directs the state energy office to study the feasibility of moving to a 100 percent renewable energy economy, covering electricity, transportation and heat. But appropriations are proving to be difficult. With Republicans now in charge of the Minnesota House, a key committee rejected a proposed $1 million in funding this week. Rocky Mountain Institute is expected to lead the study. Supporters expect the Democrat-controlled Senate to approve funding.
But the most dramatic change in Minnesota is the coming solar boom.
Last March the PUC ruled that an innovative 100-megawatt project from Geronimo Energy was more cost-effective than new gas turbines, and directed Xcel to negotiate a PPA with the Edina-based developer. The Aurora project is intended to be a series of two dozen different 2 MW to 10 MW ground-mounted projects located in 16 counties around the state.
But last fall, Xcel held a competitive solar procurement that resulted in more than 100 project bids totaling 2,100 megawatts. Of those bids, 15 projects totaling 630 megawatts offered contracts at or below Xcel’s price screen of $85 per megawatt-hour.
Xcel asked the commission to scrap the Aurora project and instead approve 187 megawatts of new projects with NextEra, juwi and Community Energy Resources. If the commission keeps the Aurora project, the 100-megawatt Community Energy Resources project may be dropped instead. A decision is expected in February.
Distributed solar is a wildcard for Xcel. While the utility's long-range plans include 500 megawatts of distributed solar by 2030, community solar developers submitted applications for 427 projects totaling 420 megawatts in the first week that applications were accepted in December, according to John Farrell of the Institute for Local Self-Reliance. He expects to see projects cleared for construction by mid-March.
Ken Bradley, director of business development for SunShare, a community solar developer active in Minnesota and Colorado, says the organization has a “significant” number of projects in the queue. “The projects Xcel got on the first day of applications would meet its entire  solar mandate,” he said.
The solar gardens legislation has no cap on the amount of projects. Projects receive an extra payment based on renewable energy credit values, which are currently 3 cents per kilowatt-hour for projects under 250 kilowatts, and 2 cents per kilowatt-hour for larger projects.
Michael Noble, executive director of Fresh Energy, a Saint Paul-based advocacy group, is enthusiastic about community solar's prospect in the state.
The biggest community solar play to date is Ecolab, with 2,500 employees in Minnesota and 45,000 worldwide. On January 12, Ecolab announced a deal with SunEdison to supply all of its Minnesota facilities with 16 megawatts of solar. The Fortune 500 company sells hygiene, energy and water technologies to businesses around the world.
Sam Youneszadeh, a managing director at SunEdison, told the Minneapolis Star Tribune that the deal with Ecolab is the first stage of plans to build 200 megawatts of solar gardens on 15 to 20 sites in the Twin Cities area. Ecolab will serve as the “anchor tenant” for the gardens, and expects other companies will follow its lead.
Geronimo Energy has also moved into community solar, announcing a project on January 30 with the Saint Paul Public Housing Authority (SPPHA). Geronimo’s project will supply roughly 90 percent of SPPHA's electricity usage at 16 high-rise buildings, comprising 2,554 housing units, as well as the main office facility in Saint Paul. Over the life of the contract SPPHA will save more than $4 million in electricity expenses, and offset more than 25,000 metric tons of CO2 emissions each year.
Meanwhile, Mortenson Construction has teamed up with SunShare to build community solar projects in the state. Mortenson, one of the largest construction companies in America, is the No. 1 wind contractor and the third-largest firm for utility-scale solar.
Minnesota incentives for in-state manufacturing have started delivering results. The “Made in Minnesota” program has a budget of up to $15 million a year for 10 years, including $250,000 per year for solar thermal rebates. Incentives for solar PV are performance-based, established by a system’s energy production, and paid over 10 years. Systems of less than 40 kilowatts are eligible.
Initially crafted for the existing companies tenKsolar in Bloomington and Silicon Energy in Mt. Iron, it has succeeded in attracting new companies, as well. On January 22, Ontario-based Heliene announced plans to start production at a facility in St. Paul, partnering with online solar distributor SimpleRay. It will be adding 12 to 20 employees, and will be the first solar manufacturer in the Twin Cities.
To learn more about how Minnesota is addressing future challenges of distributed generation, read Ben Paulos' report, Regulating the Utility of the Future.