Dive Brief:

• The Minnesota Public Utilities Commission (PUC) unanimously decided not to use its value of solar (VOS) methodology to calculate community solar garden rates and to instead establish applicable retail rates (ARR) of between $0.11 per kilowatt-hour and $0.15 per kilowatt-hour to reimburse solar garden subscribers.
• The VOS is $0.12 cents per kilowatt-hour and is fixed for the 25 year contract while the ARR is presently higher but will fluctuate with power plant fuel costs and, because those are uncertain but likely to rise steadily, there was disagreement among solar advocates about which method of return was preferable.
• Xcel Energy and some solar installers backed the ARR plan while clean energy advocates Fresh Energy and its supporters proposed an alteration to the VOS that would raise it to the $0.15 per kilowatt-hour level, a proposal backed by the Minnesota Solar Energy Industries Association.

Dive Insight:

The PUC has asked stakeholders to submit commentary in anticipation of an October 1 meeting on the VOS methodology.

During the PUC hearing at which the rate decision was reached, one commissioner asked if any of the stakeholders present expected power plant fuel costs to go any direction but up. None did.

Some solar installers and advocates say the uncertainty on solar garden returns is discouraging financing for projects and argue this PUC decision has added to the uncertainty. Others argue the PUC had to make a decision so projects now in development can proceed and also say the debate showed that Minnesota continues to be a key player in distributed generation.