Minnesota Solar Power Rebates, Tax Credits, and Incentives

Maple Springs MN, at Lake Pepin

Solar Legislator Score:

Some unhappy campers have said that Minnesota has only two seasons: winter and the 4^th of July. However, that’s not quite true. The state has four distinct seasons, even though it isn’t uncommon to see snowfall during three of them. Nevertheless, sunny skies are not in short supply. In fact, Minnesota has a solar resource equivalent to that of Houston or Miami.

STATE LEGISLATION

At the end of 2006, the Minnesota House of Representatives passed a renewable energy bill signed into law by Governor Tim Pawlenty. State Bill 4 requires all utility providers to generate at least 25% of their total energy from wind, solar, geothermal, and other renewable energy sources by the year 2025. The state’s largest utility provider, Xcel Energy is held to an even higher standard, and must produce at least 30% of its power from renewable energy sources by 2025, of which 25% must be wind power.

From the Governor’s website:

“Minnesota has led the nation in developing and implementing innovative energy policies. In February 2007, Governor Pawlenty signed into law a “25 by ‘25” renewable energy standard. In May 2007, the Governor signed legislation that shifts the focus of the state’s Conservation Improvement Program from a spending requirement to an energy savings goal and sets aggressive goals to reduce greenhouse gas emissions. The state was also the first in the nation to require ethanol in its gasoline.”

On November 14, 2007, Governor Pawlenty joined the leadership of nine other Midwestern states in signing a Greenhouse Gas Reduction Accord. While not specifically addressing solar power issues, the accord is another step by Minnesota in demonstrating its focus on clean energy.

STATE INCENTIVE PROGRAMS, UTILITY REBATES, UTILITY LOANS, and UTILITY INCENTIVES

Minnesota residents can avail themselves of a number of incentives to go solar. First, a Solar Choice Program is offered by several local utility companies as noted below, applying to photovoltaic systems (PV) in virtually all sectors and providing incentive payments based on electricity produced. Program details and conditions, including some pending changes in individual utility offerings, can be found at the following links.

Austin Public Utilities

Owatonna Public Utilities

Rochester Public Utilities

The Minnesota Department of Commerce administers a PV Rebate Program funded by Xcel Energy. This absorbs some of the up-front costs of solar-electric (PV) systems connected to the utility power grid. Rebates of $2 per Watt DC up to $20,000 per system are available to all grid-connected electrical customers. Larger systems may be negotiated, project funding is limited, and other conditions should be noted. The program is described in detail here.

It should also be noted that numerous Minnesota public utility companies offer dozens of incentive programs which reward commercial and residential energy efficiency and conservation efforts.

Participating utilities and their respective rebate programs are listed here

Net Metering, in effect in Minnesota since 1981, is available on PV up to a 40kW capacity. Your utility will compensate you for net excess generation (NEG) at essentially the same rate you’re charged for electricity. This is pretty generous, as with the exception of Wisconsin, ratepayers in other states can generally expect less. Details on the program here. MN State Bill 4, which provides the net metering laws is detailed here.

Solar easements are covered under a law enacted in 1978 and amended in 2007. Check out the revised bill here.

A Mandatory Utility Green Power Option was initiated in 2001 (Minnesota Statute 216B.169), requiring electric utilities to offer customers the option of purchasing “green power”. This is power the utility company derives from sun and other renewable sources.

Under the 2007 Community-Based Energy Development Tariff, public utilities are required to file with the state Public Utilities Commission to create a 20-year power purchase agreement (PPA) for community-owned renewable energy projects. The tariff is applies to utilities generating electricity from solar thermal, pv, as well as some other renewables. Further info here

Solar energy systems installed in Minnesota are also exempt from property taxes! Provisions of the statute are here.

Similarly, when you purchase a solar installation, home and businessowners are eligible for a state sales tax exemption. Check the nitty gritty on Minnesota solar sales tax exemptions here

An energy investment loan program is available to schools, hospitals, and local governments. The loans are meant to encourage investment in solar water heat, solar space heat, solar thermal process heat systems. Under the program, Minnesota will buy down up to 50% of the loan principal to 0% interest for any specific renewable energy, energy efficiency or energy conservation “capital improvement” measure with a simple payback of 10 years or less in an existing building. The maximum loan amount is $500,000 with limited funding; $8 million is available. Check out some details here of the loan program. If only the same type of loan were made available to homeowners, there would be a ton of installed solar here!

Minnesota has established design requirements for state funded buildings which emphasize the use of solar heating and cooling systems. This is covered under SB 538.

A similar program, “Sustainable Building Guidelines for New State Construction”, applies more broadly to passive solar space heat, solar water heat, and PV.The guidelines are described here at the UMN website , and furtherdetails are here.

Solar Energy Incentives is published by the Minnesota Department of Commerce. They also provide other consumer information on solar energy systems here.

EXAMPLE RESIDENTIAL SOLAR INSTALLATION

Almost 60% of Minnesota’s five million people live in the Minneapolis-St. Paul “Twin Cities” area and use about 9,840 kWh/year of electricity – the state’s average residential consumption. A photovoltaic solar installation to produce 50% of the electrical needs of the average Minneapolis household requires a roof area of 400 square feet. System and installation costs, assuming a mid-range figure, will be approximately $36,000. After applying the $2,000 federal tax refund and an expected state rebate of $6,480, the net installation cost is $27,520. The benefits:

• Estimated increase in property value – $6,380
• Estimated 25-year utility savings – $13,386
• Estimated reduction in greenhouse gases (CO2) – 101 tons

CONSENSUS

Minnesota prides itself on being a leader “in developing and implementing innovative energy policies”, and judging by the number of solar and renewable energy programs available to its residents, they are living up to their promise. The fact that Minnesota is among the top ten states in both green pricing and net metering customers further suggests their efforts are being well received. Kudos to both the state’s elected officials and to participating utility companies.

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