Minnesota’s Solar Rewards Program
Launched in 2019, the Solar Rewards program is offered by the private utility Xcel Energy and overseen by the Minnesota Commerce Department Division of Energy Resources.
The program offers a solar production incentive of 7 cents per kWh produced by its customers, for systems up to 40 kW or 120% of on-site consumption, for all single family households over a period of ten years after installation. A low income segment of the program offers an upfront installation incentive of $2,000 per kW for qualifying low income households. Eligibility as low income is based on the home owner being qualified for the federal Low Income Energy Assistance Program (households with income at or below 50% of the state median income) or for the federal Low Income Weatherization Assistance Program (households with income at or below 200% of the federal poverty line).
The program is funded via Xcel’s Renewable Development Fund which in turn is funded by an added surcharge on the electrical rates paid by customers. Solar Rewards is authorized by the state legislature to spend $10 million in 2019 and 2020, and $5 million in 2021, with 10% specifically earmarked for low income projects. However, this year the program plans to target 20% of the budget used for low income projects. Xcel Energy receives all Renewable Energy Credits produced by solar panels enrolled in the program, which it uses to help meet its obligations under the state’s Renewable Energy Standard.
Unlike other programs, Solar Rewards does not keep a list of vetted installers, but does require certain standards in order for households to be enrolled in the program. Enrollment is on a first come first serve basis with payout not occurring until after the installation is completed. In most cases, the installer submits the application on the behalf of the customer.
Our take on the Solar Rewards Program
Though many Minnesota utilities have similar incentive programs, Xcel Energy’s Solar Rewards program is the only one currently using a portion of that incentive to specifically target lower income households. Though it is difficult to assess the effectiveness of the program given that it was launched in this year, as of June 24, it has allocated 26% of its overall 2019 budget to projects and 36% of its low income budget.
Overall, Solar Rewards has many things going for it. By utilizing a public-private partnership, it ensures that costs stay in line with the open market and that all involved parties are properly incentivized to support, promote, and utilize the program. Also, by basing low income eligibility on enrollment in existing programs, it likely will also keep administrative costs low.
However, one concern with the program is that the size of the incentive may not be enough to attract the low income households most in need, specifically those facing capital or credit barriers. These same households are likely not able to advantage of other benefits either, such as the Federal Income Tax Credit.
Another concern with Minnesota as a whole is that there is no comprehensive state programs, but rather each individual power provider is allowed to create its own programs as it sees fit. Though still overseen by the state, this has created a confusing mish-mash of programs, each with their own incentives and eligibility requirements.
Last modified: August 9, 2019