Minnesota Power, one of the state’s major utilities, recently proposed two new community solar gardens. One has a capacity of 1 MW and the other has a capacity of 40 kW. Both are situated along Duluth’s Arrowhead Road. This is the first opportunity that the utility has given for communities to buy into locally-produced solar power. Both homeowners and business are eligible to participate.
The communities the gardens are meant to serve, however, overwhelmingly rejected the community solar proposal when it was introduced. More than 50 organizations and individuals submitted a letter, under the coalition umbrella of Northland Solar, to the Minnesota Public Utilities Commission (PUC). The letter asked the commission to request major modifications to the utility’s proposal. Critics said Minnesota Power was looking after the needs of its bottom line, not the needs of their community. The PUC did approve the deal in June of this year, but with substantial modifications. Minnesota Power consented to work with community organizations and developers on future solar gardens, with an agreed-upon process for proposals to be submitted to the PUC.
“We appreciate the commissioners’ thoughtful analysis of our proposal and the feedback we received from environmental and consumer groups,” Margaret Hodnik, Vice President of Regulatory and Legislative Affairs for Minnesota Power, was quoted as saying. “We’ve seen steadily growing interest in solar energy in our region and based on the success of this pilot program, additional community solar gardens could be offered to our customers in the future.”
Minnesota Power is required to produce 25 percent of its electricity from renewable sources by 2025 and 1.5 percent from solar energy resources by 2020. The company’s own self-imposed EnergyForward strategy aims to achieve a mix of one-third coal, one-third natural gas and one-third renewable energy in the near future.
“The proposal as it stood was completely utility-controlled,” said Allen Gleckner, the Senior Policy Associate of St. Paul-based Fresh Energy, a policy analysis and advocacy organization. Most of the organizations’ chief issue, he noted, was the right to bring forward their own proposals and from entities other than the utility. He believes that as long as organizations follow PUC rules, they should be able to create their own solar gardens.
Fresh Energy has also specified that Minnesota Power should institute a “demand tracking method” for community solar customers. This means that the building of community solar arrays should be based on community demand, not the utility’s profit needs. Gleckner has also advocated for an automatic trigger mechanism that would automatically generate new solar systems in response to demand.
“This is about making it public and transparent, creating a public and actionable target up front so that when the target is met, the utility will simply build another solar garden,” Gleckner said. “The decision would not be up to the utility alone.”
Compensation for SRECs is also an important issue to Gleckner. He maintains that because SRECS have value both to the utility (to meet its renewable energy targets) and to solar garden subscribers, it is unfair for the utility to use them without compensating customers.
“The commission ruled that the utility had to compensate customers, and to determine the amount of compensation, it then had to subject the SRECs to a competitive bidding process to see at what price the SRECs ought to be valued,” he said.
Gleckner has advocated for the “value of solar” methodology for determining how customers are credited for the energy they generate. On June 22, Minnesota became the first state in the nation to adopt the value of solar approach to crediting solar customers.
“We really like that rate, because it’s technical and data-driven,” said Gleckner. “Kind of a readymade way to make sure that it’s fair both to solar customers and customers who do not choose to be part of the solar garden.”
Gleckner said the PUC decision split the difference between what Minnesota Power and stakeholder groups wanted. The decision requires Minnesota Power to issue an RFP for up to 3MW of community solar power. While the utility does not have to accept every proposal, those proposals will be reviewed by the PUC and stakeholders.
Other stakeholders raised different concerns. RREAL (Rural Renewable Energy Alliance), worried that the two projects would price out low-income families. Minnesota Power is offering three pricing options for the energy generated by its proposed solar projects. This energy is purchasable in 1kW blocks through:
- a lump sum payment of $2,132.15 per kilowatt
- a monthly subscription fee of $15.62 a month per kilowatt (average total energy cost = $81/month), or
- a fixed fee of 11 cents per kilowatt-hour (average total energy cost = $95/month).
For the first two options, the customer also receives a monthly credit for the energy generated by his panels. Though the prices shown above are somewhat higher than for fossil fuel-generated power, they can be locked in for the customer over time, offering the potential for savings if and when fossil fuel-generated power rises in price. However, the point at which a locked-in price rate for solar energy becomes net positive depends upon the unpredictable rise of energy prices in the service area over time, and some organizations that protested the utility’s proposal (like Grid Alternatives, whose Supplemental Comments are downloadable here) argued that low-income families, which require constant cash flow, are necessarily less focused on the long-term savings that such rates may one day offer.
RREAL expressed particular concern about the alleged value of so-called “relinquished shares.” A relinquished share occurs when a solar subscriber leaves the area, giving up her subscription to the system. Under Minnesota Power’s proposal, this subscription would become automatically available for low-income customers. But BJ Allen, Special Projects Manager of RREAL, is skeptical that this would have dramatically affected participation.
“RREAL believes that relinquished shares will become available very infrequently, and as such, we do not believe that this strategy will effectively increase low-income participation,” Allen said. “This is basically an afterthought, or a leftover, as opposed to a targeted program to address energy poverty.”
Allen’s organization develops fully low-income shared solar projects. Allen said that under the utility’s proposal, before the PUC’s decision, RREAL’s projects could not have been accepted into Minnesota Power’s program.
Allen said she is now ‘cautiously optimistic’ that the PUC’s ruling will put the utility’s community solar program in a fairer direction.
“Public participation and organization are essential if the public wants community solar programs designed for, and that benefit, the community,” Allen said.