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Minnesota solar developers are lobbying state lawmakers to let customers subscribe to community solar projects built farther from their homes or businesses.
Under the state’s 2013 community solar garden law, customers may only subscribe to shared solar projects that are located in their county or an adjacent one. The rule is beginning to limit growth, developers say, as most prime solar locations in and around the Twin Cities have already been developed.
State Rep. Patty Acomb, a Democrat who represents the western Minneapolis suburbs, introduced a bill (HF 653) last month that would only require a project to be built in the same utility service territory as customers in order for them to be eligible to subscribe. “I think this is an important next step to improve the community solar program,” Acomb said in a statement.
The state’s Republican Party has generally opposed attempts to legislate clean energy expansion. But supporters are hopeful the legislation may have a chance in the GOP-controlled state Senate because of its potential economic benefits in rural areas Republicans tend to represent. In fact, the companion bill in the state senate (SF 1666) includes two Republicans and an independent as co-authors.
The state’s largest utility, however, said that it does not favor removing the geographic restriction. Xcel Energy said development opportunities continue to exist in the current footprint served by community solar. It also reiterated opposition to the program because of its high cost.
When Minnesota included the contiguous-county rule in its law, it was following the lead of Colorado, which passed the nation’s first community solar law in 2010. Lawmakers in Colorado believed that “community” implied that locations should be within subscribers’ geographic area and did not anticipate available land would become an issue.
Colorado dropped its county subscriber rule in 2019 as development space became restrained in and around Denver and other cities, said SunShare Community Solar CEO David Amster-Olszewski. SunShare builds residential community solar projects in both Minnesota and Colorado. Denver’s rapid growth and the rugged confines of mountain towns like Breckenridge left little real estate for solar gardens serving potential subscriber bases, he said.
After Colorado removed the contiguous county rule, SunShare built a 5-megawatt project that attracted subscribers from 13 counties and 40 cities. The story is different in Minnesota. “In Minnesota, we’ve had to turn away people,” Amster-Olsewski said. “We can’t serve anyone in Ramsey or Hennepin [counties] at all. It’s awful.”
The rule may be slowing growth for many developers who depend on signing on subscribers in the Twin Cities region, home to two-thirds of the state’s residents.
“There isn’t actually a cap on the program right now, but there’s sort of a de facto cap because there are only so many places you can put these projects,” said David Shaffer, executive director of the Minnesota Solar Energy Industries Association. With interconnection nodes reaching capacity, solar developers want an opportunity to build in counties with less grid congestion and land for more solar gardens, he said.
Getting rid of the contiguous county rule would open new opportunities for community solar developers, Shaffer said. The change would expand solar access for urban customers and broaden the number of rural landowners and counties benefiting from solar project revenue.
Siting challenges are pushing community solar developers farther from the core and into areas where finding subscribers is more difficult, said Eric Pasi, chief development officer for Impact Power Solutions. The problem is made worse by local restrictions and moratoriums, including in Rice and Carver counties. Xcel Energy’s territory also doesn’t follow county lines, leaving a fraction of residents eligible in some outer-ring counties.
“There’s not enough population out in those areas … to support additional projects,” Pasi said.
Meanwhile, there is more demand in Minneapolis and St. Paul than can be met under the existing law, particularly in the eastern metro area. When the St. Paul Housing Agency sought proposals to subscribe to a second community solar project in 2019, it received no responses because of a lack of capacity in or adjacent to Ramsey County.
Pasi’s company and other developers would like to build more projects targeting low- and moderate-income residents. “We need this fix in order to help facilitate that,” Pasi said. “If this rule gets fixed we’re able to help on that side.”
Clean Energy Economy Minnesota, a nonprofit advocacy group, has projected that removing the rule could lead to another 300 megawatts of community solar, creating as many as 12,000 jobs. A 2018 report from the group estimated Minnesota counties received more than $2 million annually in taxes from community solar projects and landowners can earn $1,000 an acre, on average, every year from leasing property to developers.
Benjamin Stafford, director of government affairs for Clean Energy Economy Minnesota, said that in addition to the potential economic benefits in rural Minnesota, expanding community solar could help make the state’s electric grid more resilient by decentralizing generation.
“If you create centralized sources, you create centralized risk,” Stafford said. “If we’re entering a time where we need more local resilience, that may be something that’s undervalued in this program.”
Xcel Energy argues that there’s plenty of space for community solar even with the contiguous county rule. The territory has a capacity for 150,000 residential subscribers yet only 20,500 currently subscribe to solar gardens, the utility said in a statement. Industrial and commercial customers receive 80% of the power generated by community solar, even though residents make up 84% of the subscriptions. With the rule in place the program still has 500 megawatts under development, it added.
Over the years Xcel has continually criticized community solar for driving up costs for residential customers, who now pay $51 on average annually on their utility bills for the program. It touted its own proposal to add 3,500 MW of utility solar as much less costly than community solar. Customers have better options to support clean energy than community solar, the company said, highlighting its Windsource and Renewable Connect programs.
“Allowing developers to offer subscriptions to non-contiguous counties would also enable them to pursue large commercial subscribers in the metro area, prioritizing them over small business and residential customers in the local and neighboring rural counties,” Xcel said. “The end result would essentially take the ‘community’ out of community solar gardens.”
The legislation was referred to the House and Senate energy committees, chaired by Rep. Jamie Long and Sen. David Senjem.