In March 2014, Minnesota became the first state to adopt a “value of solar” policy. It may fundamentally change the financial relationship between electric utilities and their energy-producing customers. It may also serve as a precedent for setting a transparent, market-based price for solar energy. This presentation explains the origins of value of solar, the compromises made to get the policy adopted in Minnesota, and the potential impact on utilities and solar energy producers.

1. MINNESOTA’S VALUE OF SOLAR
C A N A N O R T H E R N S TA T E ’ S N E W S O L A R P O L I C Y D E F U S E
D I S T R I B U T E D G E N E R A T I O N B A T T L E S ?
John Farrell
Director of Democratic Energy
April 9, 2014

2. VA L U E O F S O L A R

3. C O N C E P T
A transparent and market-
based price for solar energy

4. VA L U E FA C T O R S
• Avoiding the purchase of dirty energy
• Avoiding the need to build additional power plant
capacity
• Providing energy for decades at a fixed price
• Reducing wear and tear on the electric grid,
including power lines, substations, and power plants

5. $0.00
$0.03
$0.06
$0.08
$0.11
$0.14
Brown energy replacement
Avoided transmission losses
Environmental (RPS compliance)
Avoided transmission access
Local capacity value
(per kWh)
Minnesota
Value of SolarUtilities value DG
14.5¢*
*preliminary

6. N E T M E T E R I N G
C O M PA R I S O N T O

7. N E T M E T E R I N G VA L U E O F S O L A R
C U S T O M E R E A R N S B I L L C R E D I T S C U S T O M E R E A R N S B I L L C R E D I T S
C R E D I T VA L U E = R E TA I L E L E C T R I C I T Y
R AT E
C R E D I T VA L U E = VA L U E O F S O L A R R AT E
C R E D I T VA L U E F L U C T U AT E S W I T H R E TA I L
P R I C E
VA L U E O F S O L A R L O C K E D I N O N 2 5 - Y E A R
C O N T R A C T
S O L A R P R O D U C T I O N C A N N O T E X C E E D
1 2 0 % O F O N - S I T E A N N U A L
C O N S U M P T I O N
S O L A R P R O D U C T I O N C A N N O T E X C E E D
1 2 0 % O F O N - S I T E A N N U A L C O N S U M P T I O N
N E T E X C E S S G E N E R AT I O N PA I D AT
R E TA I L R AT E ( F O R < 4 0 K W ) O R
AV O I D E D C O S T R AT E ( F O R < 1 M W )
N E T E X C E S S G E N E R AT I O N F O R F E I T T O
U T I L I T Y
A S I M P L E M E N T E D I N M I N N E S O TA

8. I M P O R TA N T N O T E
Minnesota will allow utilities
to replace net metering with
value of solar
I T C O U L D H A V E B E E N A N O P T I O N

9. W H AT I S
V S .
W H AT M I G H T H AV E B E E N

10. A D O P T E D P R O P O S E D
C U S T O M E R E A R N S B I L L C R E D I T S
C U S T O M E R I S PA I D F O R S O L A R E N E R G Y
I N A S E PA R AT E T R A N S A C T I O N
S O L A R P R O D U C T I O N C A N N O T E X C E E D
1 2 0 % O F A N N U A L O N - S I T E
C O N S U M P T I O N
S O L A R P R O D U C T I O N I S N O T L I M I T E D B Y
O N S I T E C O N S U M P T I O N
N E T E X C E S S G E N E R AT I O N I S F O R F E I T
T O U T I L I T Y
C U S T O M E R I S PA I D F O R A L L S O L A R
E N E R G Y P R O D U C T I O N , R E G A R D L E S S O F
O N - S I T E E L E C T R I C I T Y U S E
U T I L I T Y C H O O S E S W H E T H E R T O A D O P T
VA L U E O F S O L A R O R K E E P N E T
M E T E R I N G
U T I L I T Y M U S T O F F E R VA L U E O F S O L A R ,
B U T C U S T O M E R M AY C H O O S E B E T W E E N
I T A N D N E T M E T E R I N G
U T I L I T Y A U T O M AT I C A L LY O B TA I N S
S R E C , W I T H Z E R O C O M P E N S AT I O N T O
C U S T O M E R
S O L A R C U S T O M E R R E TA I N S S O L A R
R E N E WA B L E E N E R G Y C R E D I T ( S R E C )

11. 0¢
4¢
8¢
12¢
16¢
2014 2016 2018 2020 2022 2024 2026 2028 2030
Market-based value of solar
Production-based incentive
P R O P O S E D : S O L A R F E E D - I N TA R I F F
N O T A D O P T E D
A D O P T E D

12. W I L L I T W O R K ?
F O R S O L A R P R O D U C E R S

13. I S VA L U E O F S O L A R E N O U G H ?
0¢
5¢
10¢
15¢
20¢
25¢
30¢
(preliminary) MN Value of Solar Residential - $4/W Commercial - $3/W
With 30% ITC
No subsidy
2 5 - Y E A R L E V E L I Z E D C O S T
¢ per kWh

14. W I L L I T W O R K ?
F O R C U S T O M E R S

15. Jane and John Doe
Golden Valley, MN
!
ELECTRICITY USE
Monthly usage (kWh): 2,000
Cost per kWh: $0.115
Total cost of electricity consumption: $230
!
!
SOLAR PRODUCTION (5 kW)
Monthly solar production (kWh): 542
Value of solar rate: $0.145
Total value of solar compensation: $79
!
!
Net electricity bill: $151
Jane and John Doe
Golden Valley, MN
!
NET ELECTRICITY USE
Monthly usage (kWh): 2,000
Cost per kWh: $0.115
!
!
!
SOLAR PRODUCTION (5 kW)
Monthly solar production (kWh): 542
Net usage (kWh): 1,458
Cost of net electricity consumption: $168
!
!
Net electricity bill: $168
N E T M E T E R I N GVA L U E O F S O L A R

16. W I L L I T W O R K ?
F O R U T I L I T I E S

17. A N N U A L B I L L C R E D I T PAYA B L E
$0
$250
$500
$750
$1,000
(preliminary) MN Value of Solar Net Metering
$932
$748
$943
2014 2019

18. P R O J E C T E D R AT E S
$0.00
$0.10
$0.20
$0.30
$0.40
2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038
Retail (net metering) Rate VOST Escalated VOST Flat
U T I L I T Y
S A V I N G S Z O N E

19. C A N I T H E L P ?

20. F R E E D O M T O G E N E R AT E U N D E R F I R E
States facing challenges to distributed generation
Sources: Renewable Energy World, Greentech Media, IREC, Vote Solar and many more
3/19/14

21. www.ilsr.org
D O W N L O A D T H E F U L L R E P O R T