Minnesota Approves "Value of Solar" Method for Setting Rates for PV Power Creators and Users

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Attorney Sara Bergan authored an article in pv magazine titled “Spring in Minnesota.” The article discusses the adoption by the Minnesota Public Utilities Commission of a method for calculating rates for electricity generated by utility customers with solar self-generation systems that will take into account the underlying benefits and costs of solar power for the customers, the utility and society.

The traditional approach for billing customers who generate some of their own power has been by net-metering, in which a customer’s energy input into and out of the grid is tallied on a monthly basis to determine his bill. The Value of Solar (VOS) approach was designed to take into account the benefits of avoided generation, capacity, fuel, distribution, transmission and environmental costs as well as the cost increases of distributed solar generation infrastructure incurred by the utilities.

Bergan points out that the VOS tariff is optional for Minnesota utilities, who are likely considering whether it is a positive step for their businesses in an era of weak sales and rapidly growing distributed generation. However, Xcel Energy is required to use a VOS rate for its new Community Solar Garden program (a shared solar program), making it the first testing ground for the state’s new approach.

Read “Spring in Minnesota,” published on March 28, 2014. (Subscription required.)

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