Minnesota regulators voted this week to create the nation’s first value-of-solar tariff.
The 3 to 2 decision from the state’s Public Utility Commission makes a significant statement in the midst of controversy over net metering payments for rooftop solar customers in states from Vermont to Colorado.
While utilities argue that solar customers who are paid the retail rate for the excess power they generate aren’t paying their fair share of grid maintenance, solar advocates claim retail power rates don’t fully compensate solar owners for the benefits they offer the utility and community.
The decision from the Minnesota PUC essentially endorses the argument from solar advocates.
Now that the PUC has approved the value-of-solar tariff, utility companies will have the option to apply it. They will either be able to pay rooftop solar customer the tariff or the retail net metering rate for excess power.
Bill Grant, the Minnesota deputy commissioner for energy said it’s not a “foregone conclusion” that the value-of-solar tariff will be more than the retail rate.
The ideal is that the tariff will be equal to the retail power rate and it won’t matter which formula utilities use to pay solar customers for the excess electricity they generate.
However, to start with, it’s suspected the tariff will be higher. The formula, which designed to be easily applicable for all utilities right away, includes the federal government’s “social cost of carbon.”
That figure values a ton of carbon dioxide emissions at $37. Solar customer will get credit for CO2 emissions they prevent by generating their own renewable energy.
Solar customers will also get credit for preventing the need for investment in new power generation equipment and transmission lines, but will be held accountable for grid maintenance in the formula.
The PUC decision gives solar advocates new ammunition in Minnesota because they can point to the “real value” of solar energy when arguments around net metering emerge.
However, some solar advocates don’t like the idea of using any method of solar valuation other than net metering.
“We already have something that works – it’s called net metering,” Sunrun Vice President of Public Policy Bryan Miller previously told Clean Energy Authority.
Introducing new ways to value solar confuses the market. They’re controversial. Even the members of the Minnesota PUC who voted for this optional tariff disagreed on what figures should be included in the formula.
Now that the formula has been approved, utilities will have the option to use it.
“We believe that the methodology we’ve put in front of you really is plug-and-play,” Grant said.