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Minnesota Approves
‘Value Of Solar’ Metric

The Minnesota Public Utilities Commission (PUC) took a step toward quantifying the societal benefits of distributed generation solar power when it approved a standard methodology for calculating the value of solar (VOS), developed by the state’s Department of Commerce.

The ruling, approved on March 12, gives public utilities in Minnesota the option of constructing a net-energy metering (NEM) program for customers with solar power systems under 1 MW or proposing an alternative tariff based on the VOS methodology. Under the latter scheme, utility customers with approved solar power systems would essentially buy all of their electricity from their local distribution utility at the approved rate and then sell all of their PV generation under that utility’s approved VOS tariff.

Public utilities have 30 days from the date of the PUC order to submit a plan based on NEM or one based on the approved VOS methodology for ratepayers with applicable solar power systems. Xcel Energy officials have already committed to using the VOS methodology in the company’s proposal to develop its Community Solar Garden program.

Sara Bergan, an energy law attorney in the Minneapolis office of Stoel Rives LLC, says the VOS methodology is designed to capture the societal value of PV-generated electricity that is nearly always absent from the proposals utilities submit to state regulators. She says the benefit of the VOS approach is that all ratepayers - solar and non-solar alike - will be paying bills according to the accepted rate structure.

This would eliminate the oft-stated utility objection to NEM that customers with solar power are receiving the benefits of solar power at the expense of non-solar ratepayers.

The adoption of a standard VOS methodology in Minnesota was driven by a May 2013 law setting ambitious solar power standards for the state - one of the provisions of which required the establishment of an alternative tariff mechanism to NEM. The statute says the distributed solar value methodology established by the PUC must, at a minimum, “account for the value of energy and its delivery, generation capacity, transmission capacity, transmission and distribution line losses, and environmental value.”

Bergan says the Minnesota Department of Commerce settled on a federal social cost of carbon for the avoided carbon dioxide emissions associated with solar generation as the basis for assessing the environmental value of solar power. Even this relatively narrow VOS component was not without controversy. The motion passed the PUC by a 3-2 vote, with dissenters hung up on the use of the federal carbon figures.

In passing the VOS methodology, the PUC issued an attending clarification that the ruling was not intended to have the weight of precedence on future decisions. Nevertheless, Minnesota is now on record with a standard definition of solar’s value, and many will be watching to see the value in this approach.

- Michael Puttré

 

Legislators Seek
To Modify ITC

If several recently introduced legislative bills give any indication, Congress has heard the call from solar energy advocates to modify the investment tax credit (ITC).

The ITC, which expires Dec. 31, 2016, currently pays a credit of 30% for qualifying projects. If no changes are made, the credit shrinks to 10% in 2017.

In recent months, both the House and Senate have introduced legislation that not only calls for an ITC extension but also stipulates that solar projects should qualify for the tax incentive based on when they start construction, as opposed to when they are placed into service.

On Feb. 6, Sens. Dean Heller, R-Nev., and Michael Bennett, D-Colo., co-sponsored the Renewable Energy Parity Act of 2014, which would allow developers to qualify for the ITC if projects are under construction before the credit’s expiration date, rather than having to wait until those projects are completed and in service.

In a March 11 letter to Senate leadership, Sen. Jeff Merkley, D-Ore., along with 27 U.S. senators, wrote, “Many solar projects are already unable to make use of the ITC, even though it expires almost three years from now. That is because completing the planning, development, permitting and construction of larger projects takes many years.”

The senators also note that utility-
scale solar energy projects often require four to six years from start to finish; therefore, there may not be ample time left before the ITC expires.

According to the Solar Energy Industries Association (SEIA), applying the “commence construction” standard across the renewable energy sector would lead to the installation of an additional 4 GW of solar capacity in 2017 and 2018, and would create tens of thousands of additional domestic jobs.

A similar change in definition status was added last year when the production tax credit was retroactively extended on Jan. 2, 2013. The tweak, which allows wind projects to qualify for a $0.023/kWh tax credit for electricity generated from wind farms that started construction before Dec. 31, 2013, is believed to have buttressed wind energy development.

Similar legislation has already been introduced in the House of Representatives.

In August, Rep. Paul Clark, R-Calif., introduced H.R. 3017, the Renewable Energy Construction and Investment Parity Act of 2013, which also extends the energy tax credit to solar energy, fuel cell, microturbine, combined heat and power systems, small wind energy, and thermal energy properties - the construction of which begins before Jan. 1, 2017.

Last November, the House introduced H.R. 2502, The Renewable Energy Parity Act of 2013, which would change the current placed-in-service requirement for the section 48 ITC to a commence-construction standard, allowing for a more efficient utilization of the ITC. - Mark Del Franco

 

Vermont Raises
Net Metering Cap

Vermont Gov. Peter Shumlin has signed self-generation and net-energy metering (NEM) legislation (H.702) into law. The new law raises the 4% cap utilities had been using as the limit on their NEM programs to 15% of peak load.

The law applies to grid-connected renewable energy generation systems smaller than 500 kW that are intended primarily to offset the customer’s own electricity. A provision allows for the community solar gardens, including those in third-party locations, to qualify for NEM.

Supporters say the politically popular measure, which passed by a vote of 136-8 through the Vermont House and unanimously in the Senate, will be a boon for solar, wind and small-hydro energy.

 

Pew Finds Policies
Stall Clean Energy

The U.S. clean energy sector continues to be buffeted by policy uncertainty, with 2013 investment down 9% from 2012 to $36.7 billion, according to research released by The Pew Charitable Trusts. The annual report, using data compiled and reviewed by Bloomberg New Energy Finance, found that steep declines in the installation of wind overshadowed a record annual deployment of 4.4 GW of solar.

In the U.S. marketplace, solar technology prices have declined 60% since 2011, the report observes, and new financing models have spurred more than $17 billion in investment, a 7% increase from 2012. The U.S. continued to garner world-leading financing in the biofuels and energy-efficient/low-carbon technology subsectors, Pew says. It also remained the dominant recipient of public market and venture capital/private equity investment, attracting $6.8 billion and $2.2 billion, respectively.

Although wind investment was relatively stable at $14 billion, U.S. wind installations in 2013 were down more than 90% - from more than 13 GW in 2012 to less than 1 GW last year, Pew reports. When the production tax credit was renewed in early 2013, slight changes in the law precipitated deferrals in deployment of new wind capacity into this year, when a strong rebound in capacity additions is forecast.

By comparison, China deployed 12.1 GW of solar and 14.1 GW of wind capacity last year, the report says. China remained the leading regional and global market, attracting $54.2 billion, with the U.S. in second place. Japan was third with $28.6 billion.

Globally, clean energy investment fell 11% in 2013 to $254 billion. Investment in G-20 countries accounted for more than 95% of the global total. S