MINNESOTA’S VALUE OF SOLAR

C A N A N O R T H E R N S TA T E ’ S N E W S O L A R P O L I C Y D E F U S E D I S T R I B U T E D G E N E R A T I O N B A T T L E S ?

John Farrell Director of Democratic Energy

April 9, 2014

VA L U E O F S O L A R

C O N C E P T

A transparent and market-based price for solar energy

VA L U E FA C T O R S

• Avoiding the purchase of dirty energy

• Avoiding the need to build additional power plant capacity

• Providing energy for decades at a fixed price

• Reducing wear and tear on the electric grid, including power lines, substations, and power plants

$0.00

$0.03

$0.06

$0.08

$0.11

$0.14

Brown energy replacement

Avoided transmission losses

Environmental (RPS compliance)

Avoided transmission access

Local capacity value

(per kWh)

Minnesota Value of SolarUtilities value DG

14.5¢*

*preliminary

N E T M E T E R I N GC O M PA R I S O N T O

N E T M E T E R I N G VA L U E O F S O L A R

C U S T O M E R E A R N S B I L L C R E D I T S C U S T O M E R E A R N S B I L L C R E D I T S

C R E D I T VA L U E = R E TA I L E L E C T R I C I T Y R AT E

C R E D I T VA L U E = VA L U E O F S O L A R R AT E

C R E D I T VA L U E F L U C T U AT E S W I T H R E TA I L P R I C E

VA L U E O F S O L A R L O C K E D I N O N 2 5 - Y E A R C O N T R A C T

S O L A R P R O D U C T I O N C A N N O T E X C E E D 1 2 0 % O F O N - S I T E A N N U A L

C O N S U M P T I O N

S O L A R P R O D U C T I O N C A N N O T E X C E E D 1 2 0 % O F O N - S I T E A N N U A L C O N S U M P T I O N

N E T E X C E S S G E N E R AT I O N PA I D AT R E TA I L R AT E ( F O R < 4 0 K W ) O R

AV O I D E D C O S T R AT E ( F O R < 1 M W )

N E T E X C E S S G E N E R AT I O N F O R F E I T T O U T I L I T Y

A S I M P L E M E N T E D I N M I N N E S O TA

I M P O R TA N T N O T E

Minnesota will allow utilities to replace net metering with

value of solar

I T C O U L D H A V E B E E N A N O P T I O N

W H AT I S V S . W H AT M I G H T H AV E B E E N

A D O P T E D P R O P O S E D

C U S T O M E R E A R N S B I L L C R E D I T S C U S T O M E R I S PA I D F O R S O L A R E N E R G Y I N A S E PA R AT E T R A N S A C T I O N

S O L A R P R O D U C T I O N C A N N O T E X C E E D 1 2 0 % O F A N N U A L O N - S I T E

C O N S U M P T I O N

S O L A R P R O D U C T I O N I S N O T L I M I T E D B Y O N S I T E C O N S U M P T I O N

N E T E X C E S S G E N E R AT I O N I S F O R F E I T T O U T I L I T Y

C U S T O M E R I S PA I D F O R A L L S O L A R E N E R G Y P R O D U C T I O N , R E G A R D L E S S O F

O N - S I T E E L E C T R I C I T Y U S E

U T I L I T Y C H O O S E S W H E T H E R T O A D O P T VA L U E O F S O L A R O R K E E P N E T

M E T E R I N G

U T I L I T Y M U S T O F F E R VA L U E O F S O L A R , B U T C U S T O M E R M AY C H O O S E B E T W E E N

I T A N D N E T M E T E R I N G

U T I L I T Y A U T O M AT I C A L LY O B TA I N S S R E C , W I T H Z E R O C O M P E N S AT I O N T O

C U S T O M E R

S O L A R C U S T O M E R R E TA I N S S O L A R R E N E W A B L E E N E R G Y C R E D I T ( S R E C )

0¢

4¢

8¢

12¢

16¢

2014 2016 2018 2020 2022 2024 2026 2028 2030

Market-based value of solar

Production-based incentive

P R O P O S E D : S O L A R F E E D - I N TA R I F F

N O T A D O P T E D

A D O P T E D

W I L L I T W O R K ?F O R S O L A R P R O D U C E R S

I S VA L U E O F S O L A R E N O U G H ?

0¢

5¢

10¢

15¢

20¢

25¢

30¢

(preliminary) MN Value of Solar Residential - $4/W Commercial - $3/W

With 30% ITC

No subsidy

2 5 - Y E A R L E V E L I Z E D C O S T

¢ per kWh

W I L L I T W O R K ?F O R C U S T O M E R S

Jane and John Doe Golden Valley, MN !ELECTRICITY USE Monthly usage (kWh): 2,000 Cost per kWh: $0.115 Total cost of electricity consumption: $230 !!SOLAR PRODUCTION (5 kW) Monthly solar production (kWh): 542 Value of solar rate: $0.145 Total value of solar compensation: $79 !!Net electricity bill: $151

Jane and John Doe Golden Valley, MN !NET ELECTRICITY USE Monthly usage (kWh): 2,000 Cost per kWh: $0.115 !!!SOLAR PRODUCTION (5 kW) Monthly solar production (kWh): 542 Net usage (kWh): 1,458 Cost of net electricity consumption: $168 !!Net electricity bill: $168

N E T M E T E R I N GVA L U E O F S O L A R

W I L L I T W O R K ?F O R U T I L I T I E S

A N N U A L B I L L C R E D I T PAYA B L E

$0

$250

$500

$750

$1,000

(preliminary) MN Value of Solar Net Metering

$932

$748

$943

2014 2019

P R O J E C T E D R AT E S

$0.00

$0.10

$0.20

$0.30

$0.40

2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038

Retail (net metering) Rate VOST Escalated VOST Flat

U T I L I T Y S A V I N G S Z O N E

C A N I T H E L P ?

F R E E D O M T O G E N E R AT E U N D E R F I R E

States facing challenges to distributed generation

Sources: Renewable Energy World, Greentech Media, IREC, Vote Solar and many more

3/19/14

www.ilsr.org

D O W N L O A D T H E F U L L R E P O R T