In 2013, MnSEIA played an instrumental role in the passage of “Value of Solar,” a first-of-its-kind rate designed to be equivalent to the direct benefit that the solar facility provides the utility, its ratepayers, and society generally.
While the Value of Solar Rate (VOS) is generally optional for Minnesota's utilities to adopt, both Xcel Energy and Minnesota Power have calculated and published it. Both have published rates that are similar or higher than their general electric retail rates. The VOS is currently only used in the context of Community Solar Gardens in Xcel Energy's service territory, where it is the general rate paid to Community Solar Garden projects that were deemed complete in 2017 or later.
The rate’s methodology strives to make it value neutral, which is to say compensate solar providers only for the value added to the grid—no more, no less. To that end, the Minnesota Public Utilities Commission oversees that calculation of the VOS based on eight different components. Each year’s calculation is referred to as a “vintage.” Every year, MnSEIA represents the industry at the Commission to ensure that the VOS is accurately calculated.
MnSEIA reviews Xcel’s calculations of the VOS, which has eight components over three basic categories: 1) the avoided costs to the utility, 2) the benefits that solar's distributed nature provide, and 3) the benefits to the environment.
One of those eight components, the distribution capacity component has been the most controversial as of late. In October MnSEIA staff successfully argued for a change to Xcel Energy’s distribution capacity component that would have reduced the valuation by 50%.
Going forward there is a conversation hosted by the Minnesota Department of Commerce around a possible shift away from a system-wide distribution capacity component and toward a new location-specific valuation. This proposal would divide the state into different geographical sectors, and calculate the value of distributed energy resources in each sector—thereby producing many, slightly different VOS rates. MnSEIA found that the first attempt at shifting the distribution capacity component toward the more granular locational component produced inconsistent results that devalued the VOS. Our testimony to that effect steered the Commission back toward the distribution capacity component as it is today, but the conversation around location-specific valuation continues. We expect to work on this element throughout the remainder of the year.
MnSEIA’s oversight of this very complex set of calculations that goes into the VOS has resulted in better rate outcomes for the industry and later implementation dates, so that projects in queue can get the desired VOS vintage year.