- September 15, 2021
- by Nokomis Energy
Now is the time to jump into the clean energy transition. Technologies and equipment have evolved to the point where the economic and environmental benefits of renewable energy resources are available to all, you simply need to get started.
For businesses, residents and municipalities in Minnesota looking to take control of their energy needs, solar provides one of the most convenient solutions. Understanding the available options can seem complicated, but we are here to break it down and demonstrate how each option might apply to your particular situation.
There are three ways you can begin to harness the power of solar
1. Net Metering
- This is the mechanism for electricity customers to generate electricity on their side of the meter and then receive a credit on their bill. As a customer, you can either own the solar system or have a third party own the system and finance the payments.
2. Community Solar
- These types of programs allow solar energy projects to be built by third party developers, or by the utility, and are connected to the utility’s side of the meter, often on their distribution system. Customers can participate either through upfront payments in return for future credits or a no upfront cost pledge to purchase credits as the electricity is generated. This option works especially well for those not able or interested in installing solar panels on their property or facilities.
Learn more about how community solar works: Watch a 3-minute video overview.
3. Renewable Energy Credits (RECs)
- Electric utility customers also have the option of purchasing RECs produced by a variety of renewable energy projects. RECs allow you to make a legal claim to those energy and environmental rights.
These three options are determined by a series of Minnesota state laws passed and refined over the past several decades. The state laws set the goals and framework for how Minnesota’s public utilities – Xcel Energy, Minnesota Power, NWECO and Otter Tail Power – as well as municipal and coop electric utilities, must serve those customers who would like to implement solar energy solutions.
How do they each work?
Let’s find out how each of these options might be applied to provide value for your business, home or municipality.
Net Metering: Build an onsite solar system
For Minnesota’s public utilities, the net metering options are summarized by the following:
- For systems less than 40kWac (or approximately 60,000 kWhs of annual electricity production) and up to 1,000kWac (or approximately 2M kWhs of annual electricity production) the customer is allowed to fully net meter the solar production. Meaning the kWhs produced by the solar system reduce their electricity bill, typically at the same rate as they are being charged to consume electricity provided by the utility’s electric system.
- For systems more than 1,000kWac and up to 10,000kWac, the utility to which the system is connected must purchase all of the energy at its avoided cost rate as determined by either a negotiation between the utility and the solar system owner, directly determined by the PUC, or through an approved competitive bidding process.
For Minnesota’s municipal and coop utilities, the net metering options are summarized by the following:
- For systems less than 40 kWac (or approximately 60,000 kWhs of annual electricity production) the customer is allowed to fully net meter the production. Meaning the kWhs produced by the solar system reduce their electricity bill at the same rate as they are being charged to consume electricity provided by the utilities electric system.
- For systems more than 40kWac, the utility to which the system is connected must purchase all of the energy at its avoided cost rate as determined by either a negotiation between the utility and the solar system owner, directly determined by the PUC, or through an approved competitive bidding process.
Beyond these laws, there are programs and policies that individual utilities can implement to expand beyond the state’s requirements. For example, some municipal and coop utilities have increased the net metering limit from 40kWac to 100kWac voluntarily to encourage larger systems and some utilities offer additional incentives on top of the net metering rate.
Do you think your property may be a good candidate for an onsite solar system? Request an onsite solar proposal from Nokomis Energy.
Community Solar: No changes to your facilities, simply subscribe
Community solar is known by a number of names (Community Solar Access/CSA, Virtual Net Metering) in various geographies but the basic principles are always the same. Community solar programs allow for Utilities or non-Utility participants to build and connect solar projects to the utility’s grid and receive credits in exchange for the electricity provided to the utility that can then be sold to the utility’s customers.
With community solar, the solar project, often called a community solar garden, is installed in a strategic location (often on several acres of unproductive farmland). The electric utility customers within a geographically defined area are then invited to subscribe to the garden and receive credits on their existing energy bill.
In Minnesota, community solar is most commonly associated with Xcel Energy’s Solar*Rewards Community program. This program was created by a state law passed in 2013 that set up the major framework and the program has deployed more than 800MWs of solar to date. There are a variety of private developers building community solar projects within this program, with varying offers available to Xcel customers to save on their electricity bills.
In addition to the Solar*Rewards program, a number of other utilities have created programs of their own, including Wright Hennepin Coop’s community solar program which started in 2015 and quickly sold out.
Does community solar seem like it may be solution for your needs? Check your eligibility and subscribe to a Nokomis Energy solar garden.
Renewable Energy Credits (RECs): Legally claim renewable energy sources
RECs are certificates that correspond to the environmental attributes of energy produced from renewable sources. They were created as a mechanism to track a State, Organization or Utility’s progress relative to Renewable Portfolio Standards (RPS).
- One REC is generated when 1 MWh of electricity is produced by a qualified renewable energy source. RECs are primarily used by Utilities to show compliance with their relevant RPS, but utility customers can also purchase RECs from a variety of sources, allowing them to legally claim a percentage of electricity usage that comes from renewable sources.
Many corporations and municipalities use RECs in order to meet their internal goals regarding renewable energy. Minnesota’s RPS set a 2025 goal for non-nuclear power supplied utilities to source 25% of their electricity from renewable sources and for nuclear power supplied utilities to source 30% from renewable resources.
Some utilities are well ahead of schedule and are selling the excess RECs they generate to their customers and some are behind and are looking for sources of RECs. Xcel Energy and Great River Energy Coop offer a few ways for their customers to purchase RECs directly through their utility bill.
TIP: When choosing a clean energy developer to work with, choose one who has expertise in your particular region.
Clean energy laws and incentives can vary widely, so be sure your developer knows the specifics that will apply to you.
What is your next step?
The energy transition continues to gain momentum and now is the time for businesses, citizens and municipalities to get involved and begin to realize the benefits.
As you’ve seen, Minnesotans have three options to choose from when deciding how to harness solar energy. We have provided some resources and ideas to get you started but one thing to keep in mind is that the options available can also be combined to fit your exact situation.
While some businesses or municipalities have internal teams that are able to evaluate the possible configurations, most turn to a trusted local, clean energy developer to help review the specific needs. This allows you to evaluate and make decisions based on your own financial and sustainability goals, with the advisement of experienced clean energy professionals.
Let’s work together! Contact us to discuss how your business or organization can make the most of the energy transition.
Nokomis Energy is a clean energy developer based in Minneapolis, Minnesota. Our mission is to identify opportunities to create clean, low-cost energy projects for the people, businesses and communities of the Upper Midwest. We work directly with our customers and partners to implement and build clean energy solutions that work for your specific needs.