Value of Solar Tariff

January 31, 2014

Summary

Note: This program is only available to customers of one of the state's investor-owned utilities (Alliant, Minnesota Power, Otter Tail Power Company, Xcel Energy). Customers of a municipal utility or rural electric cooperative are ineligible for this program.

By January 31, 2014, the Minnesota Department of Commerce (DOC) must develop a distributed solar value methodology and submit it to the Public Utilities Commission (PUC) for approval. The DOC must consult with stakeholders in order to develop the methodology, which must take into account: the value of energy and its delivery; generation capacity; transmission capacity; transmission and distribution line losses; and environmental value. The DOC may also consider: the cost or benefit of solar operation to the utility; credit for locally manufactured or assembled energy systems; and systems installed at high-value locations on the grid.

Once the tariff methodology is approved by the PUC, affected utilities may offer either the Value of Solar Tariff (VOST) or Net Metering.* The utility must apply for PUC approval, and the PUC may only approve the tariff if it:

  1. Appropriately applies the DOC methodology;
  2. Includes a mechanism to allow recovery of the cost to serve customers receiving the alternative tariff rate;
  3. Charges the customer for all electricity consumed by the customer at the applicable rate schedule;
  4. Credits the customer for all electricity generated by the solar photovoltaic device at the VOST rate;
  5. Applies all charges and credits to a monthly bill, and excess credits carry forward and expire on the last day of February each year;
  6. Complies with net metering size limitations;
  7. Complies with interconnection requirements;
  8. Complies with standby charge requirements.

The tariff rate cannot be less than the retail rate used for net metering until three years after the PUC approves the utility tariff.

*Utilities that offer a Community Solar Garden program (see Minnesota's Net Metering law) must compensate systems at the VOST rate. Because Xcel is required to offer a Community Solar Garden program, they will be required to offer a VOST.

Program Overview

Implementing Sector: State
Category: Financial Incentive
State: Minnesota
Incentive Type: Performance-Based Incentive
Web Site: http://mn.gov/commerce/energy/topics/resources/energy-legislation-initiatives/value-of-solar-tariff-methodology%20.jsp
Administrator: Minnesota Department of Commerce
Start Date: 2014
Eligible Renewable/Other Technologies:
  • Solar Photovoltaics
Incentive Amount: To be determined by the Department of Commerce
Rates are locked in for the full 20-year contract
Terms: 20-year contract between utility and system owner
Eligible System Size: Up to 1 MW
Ownership of Renewable Energy Credits: Utility

Authorities

Name: H.F. 729
Date Enacted: 05/23/2013

Contact

Name: Commerce Energy Information Line
Organization: Department of Commerce
Address:
MN
Phone: (800) 657-3710
Email: solar.help@state.mn.us

This information is sourced from DSIRE; the most comprehensive source of information on incentives and policies that support renewables and energy efficiency in the United States. Established in 1995, DSIRE is operated by the N.C. Clean Energy Technology Center at N.C. State University.