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Minnesota PUC Pauses On Value Of Solar

The Minnesota Public Utilities Commission (PUC) has taken the bold step of devising a rate based on a value of solar (VOS) calculation, which aims to take the various practical and societal benefits of solar power into account. When the first case involving a potential VOS-based tariff arose recently, the commission decided - with somewhat less boldness - not to apply it, at least not immediately.

Rather than representing a balk or a blink, legal observers who follow solar tariff policies say the decision was more of a breather. This was because the case involved a proposed additional incentive on top of the VOS rate.

“There is still momentum around setting the VOS right and trying it,” says Sara Bergan, an energy law attorney in the Minneapolis office of Stoel Rives LLP. “It has been such a meticulous, thorough process that it wasn’t the time to just jump in with an additional incentive that hadn’t really been carefully thought through.”

The issue in question involved Xcel’s proposed community solar garden (CSG) program. CSG programs are emerging as an opportunity to make solar power available to businesses and homeowners who are unable to host solar arrays on their own properties. Customers buy subscriptions in a proposed solar project - perhaps on a per-panel or wattage-block basis.

As defined by Minnesota statute, the developer of a CSG project sells subscriptions to utility customers in 200 W allotments. The customer continues to purchase electricity from the grid, but then receives a payment from the utility based on his subscription.

As a result of the PUC decision, Xcel’s CSG program will go forward with subscribers receiving payments based on applicable retail electricity rates - which is to say, business as usual. However, the commission also says that a VOS tariff, possibly plus an incentive, will supersede the applicable retail rate when it is approved.

Andrew Moratzka, a partner at Stoel Rives’ energy development group, says the PUC declined to specify a VOS-plus-incentive rate in this particular case because solar developers came forward saying they could finance construction of CSG arrays in Xcel’s service territory using the applied retail rate. For this reason, the PUC was inclined to defer setting a VOS rate for a while longer.

“And if you set it, there is a statutorily mandated switch from the applicable retail rate to the value of solar rate,” says Moratzka, who represents one of the developers in the CSG proceeding. “The commission previously engaged in an extensive discussion when establishing the applicable retail rate. So, the commission was very careful.”

As Moratzka described the PUC proceedings leading to the most recent decision, solar associations and a group of developers backed a VOS plus an incentive that would equate to a $0.15/kWh levelized rate over the life of a 25-year contract. On the other side, Xcel, a small developer and a large developer - which Stoel Rives represented - said the applicable retail rate could work. This would amount to approximately $0.115/kWh for larger systems subscribed by commercial and industrial customers to $0.15/kWh for smaller systems subscribed by residential customers.

Most agree that Minnesota will set a VOS-based tariff eventually - and sooner rather than later. The PUC is currently seeking comments on the value of solar and what reasonable incentives might look like from concerned parties through Oct. 1.
- Michael Puttré

 

States Lure Solar With Property Tax Abatements

Several states are using property tax abatement programs to sweeten the deal for businesses and homeowners installing solar projects. In fact, 38 states currently offer some type of program aimed at property tax exemption for renewable energy.

According to the Solar Energy Industries Association (SEIA), an exemption typically excludes the added value created by the solar system to property valuations. In fact, the exemption makes it economically feasible for many. Homeowners, as an example, would not choose to install solar if faced with a property tax reassessment necessitated by the installation, notes the association.

“Markets are created when there are strong policies in place that encourage the use of solar energy, such as property tax exemptions,” says SEIA’s Ken Johnson. “When people choose to go solar, property tax exemptions prevent homeowners from being penalized with increased taxes.”

Such tax abatement programs come in many forms. For example, New Jersey exempts solar systems from local property taxes if the system is used to meet on-site electricity, heating, cooling or general energy needs. One tax exemption in Nevada allows businesses to apply for a property tax abatement of up to 55% - for up to 20 years - if solar power is generated on the property.

Given how the tax abatement programs can catalyze installations, some states, such as California, have extended existing programs. For example, in June, Gov. Jerry Brown signed legislation to extend the Solar Property Tax Exclusion until Jan. 1, 2025. As noted by SEIA, the extension of the exclusion does not take funds away from any jurisdictions where taxes are currently being collected, nor does it have an impact on California’s general fund. Further, the exclusion reduces wholesale solar electricity costs for utility customers while, at the same time, reducing barriers to accessing solar for customer-sited projects.

That same month, the New York legislature approved a measure to extend a state property tax abatement program for renewable energy systems, including solar, wind and other energy systems, until Jan. 1, 2025. The bill carries a 15-year property tax exemption for homeowners and residences installing qualified renewable energy systems. However, local governments are permitted to disallow the exemption in their jurisdictions.

The legislation comes at a time when New York’s solar industry is thriving, explains Samuel Scroggins, an associate at law firm Foley & Lardner. In fact, the state installed nearly 69 MW of solar capacity in 2013 - ranking ninth among U.S. states.

If signed by Gov. Andrew Cuomo, the bill will have a positive effect on New York’s residential solar market, explains Scroggins.

“Specifically, the bill will help mitigate the costs of installing solar electric generating systems on residential property,” he says. “Further, by strengthening the existing incentive program, New York will continue to make strides and bolster its reputation as one of the national leaders in the solar energy market.”

The bill is expected to reach Cuomo’s desk by the end of the year.
- Mark Del Franco

 

Trade Issues Threaten
3 GW Of U.S. Large-Scale PV

More than 3 GW of the projects currently in the U.S. photovoltaic project pipeline had been set to use Chinese modules, according to analysis by NPD Solarbuzz. However, with the recent anti-subsidy and anti-dumping rulings proposed by the U.S. Department of Commerce, companies may have to find other suppliers or, potentially, pay higher prices for those modules.

The U.S. solar PV project pipeline is now approaching 50 GW of commercial and utility projects. While such projects generally offer economy-of-scale savings, many could face challenges from the cost increases stemming from the U.S. trade actions, NPD Solarbuzz says.

“Large-scale ground-mount PV installations are particularly vulnerable to cost increases and potential disruption, as many have signed power purchase agreements at aggressive rates,” says Michael Barker, senior analyst at NPD Solarbuzz. “Any increase in cost for the projects could mean renegotiation, delay or even termination.”

 

N.Y. Creates Database
Of 10K Solar Projects

The New York State Energy Research and Development Authority (NYSERDA) has produced a database containing the details of nearly 10,000 solar projects that have participated in the state agency’s open enrollment solar incentive programs over the past 10 years, including the large ramp-up of solar under the NY-Sun Initiative championed by Gov. Andrew Cuomo.

According to NYSERDA, companies in the solar sector use such information to see which areas of the state to target based on where there is room for growth and expansion. In addition, the New York Independent System Operator can use the data to see the impact of solar on the grid by geographic area, solar product manufacturers can use it to understand their market share in the state, and academic researchers can use it for analysis. R