Minnesota Advances First Statewide Plan to Fairly Value Rooftop Solar

Most people do not typically associate Minnesota with abundant sunshine, but after a landmark decision by the Minnesota Public Utilities Commission (PUC) yesterday the sun is definitely shining on this snow-swept state. The PUC established the first statewide program to fairly value investments in rooftop solar electricity generation. I listened to a portion of the public meeting and oral arguments, which lasted several hours and demonstrated much thoughtful work. Through a refreshingly civil display of democracy and Midwestern hard work, state officials, utilities, and the solar and environmental community were able to hash out a method for valuing solar resources that are key to a clean energy future.

Yesterday’s decision dealt with the ongoing debate over how much solar power is worth to a utility, its ratepayers, society, and the environment. The PUC did not establish a set price for a statewide solar tariff, but rather the method to be followed when utilities calculate how much to pay for electricity generated by rooftop solar systems. Minnesota utilities will now have the option to file tariffs using this method instead of net metering, the more common but controversial and less scalable cousin of the “value-of-solar” (VOS) tariff.

During the proceedings, there was discussion and disagreement among the parties over the value of avoiding greenhouse gas pollution attributable to solar generation. The debate mostly centered on whether the VOS tariff model should include the state-specific or federally established value (i.e., the ‘social cost of carbon’). But the Commission ultimately agreed to go with the current value calculated by the Obama administration and the Environmental Protection Agency.

The Commission’s action, prompted by a Minnesota statute passed last year, is the culmination of an admirable process. A proposal from the Department of Commerce was vetted through a broad stakeholder process with opportunity for input.

Net metering and the value of solar have become highly emotional, politically-charged issues in some states. Minnesota’s initiative was an opportunity to develop a valuation method in a fact-based, collaborative process. This process and the state’s proactive approach to the issue sets Minnesota apart.

With 43 states already operating net metering programs, Minnesota’s decision could signal the next step in solar tariff structures. The VOS tariff concept has been explored in a few other places, including Austin, Texas, where a VOS tariff has been in place since 2012. But Minnesota is the first state to apply the concept to all utilities statewide. There is no doubt that other states considering a solar tariff will be looking to the Minnesota methodology as a model in the coming years. While this decision is only the beginning, it is a positive step forward in that it acknowledges the ever-increasing role that solar can play in the resource mix and advances the thinking on the value it provides.