Minnesota legislators propose changes to solar garden program, EV rebates

While Gov. Tim Walz's proposal for 100% carbon-free electricity by 2050 has made headlines, there's a raft of other significant energy legislation floating about the State Capitol.

And not surprisingly, there's a big divergence between the Republican-led Senate and the DFL-controlled House on everything from the state's community solar-garden program to electric-vehicle subsidies to Xcel Energy's longstanding nuclear-waste payments.

The Senate passed its omnibus jobs and energy bill earlier this week, while the House did the same the previous week. Now, a conference committee will hash out what proposals will make it to DFL Gov. Walz.

Walz and DFL legislators have pushed to boost Minnesota's current goal of 80% carbon-free electricity production by 2050 to 100% by the same date (2045 for Xcel). The proposal passed the House, but it didn't even get a hearing in the Senate so its chances don't look good.

Changes to the state's pioneering community solar-garden program may be in the offing, but it's hard to tell what.

"We have these super bipolar bills on community solar, so it will be interesting to see what comes out of the conference committee," David Shaffer, executive director of the Minnesota Solar Energy Industries Association, said this week at the Midwest Solar Expo in Minneapolis.

The House has backed an "aggressive" community-solar program, while the Senate "has not taken kindly to [it]," he said.

The program is aimed at residents, businesses and governments that want solar energy without setting up their own solar panels.

Solar gardens are developed, marketed and owned by independent energy companies. By state mandate, Xcel buys power from the gardens and administers the program.

After a slow start, the program took off in 2017 and 2018, and is now the nation's largest community-solar initiative. It includes 192 separate solar gardens that can produce up to 547 megawatts of power when the sun is shining.

Xcel, however, in recent months has been objecting to the higher costs of electricity generated by solar gardens, particularly compared to large solar farms commissioned by the utility itself.

The Senate bill would pose restrictions for the program, including limiting the number of annual applications for new solar gardens.

The House legislation would expand the program, including by increasing the maximum size of an individual solar garden from the current 1 megawatt to 3 megawatts.

To encourage the adoption of electric vehicles (EVs), the House bill establishes rebates of $2,500 and $500 to buyers of new and used EVs, respectively. The House bill calls for a $10.4 million appropriation in fiscal 2020 for the rebates.

The House would also appropriate $2.5 million in fiscal 2020 for a grant program aimed at creating electric vehicle charging stations in public places.

And in another energy measure, the House bill calls for the appropriation of $5 million over the next two years to the Prairie Island Indian Community to develop renewable energy systems.

Money for Prairie Island and the EV programs would come from the state's Renewable Development Fund, a pot of around $70 million (in fiscal year 2020) for clean-energy projects.

The Renewable Development Fund was effectively created by the Legislature in 1994 as a condition of allowing Xcel to store nuclear waste at its Prairie Island power plant. Xcel contributes to the fund annually.

The Senate's ideas for the fund are considerably different from the House's. Its energy bill would appropriate $20 million from the account in 2020 to the Prairie Island Indian Community, and $11.2 million over the following for years. The money would go to reducing carbon emissions to zero.

At the same time, the Senate bill would reduce Xcel's annual contributions to the Renewable Development Fund in 2022 and thereafter until the power plant closes in the mid-2030s. It's a move that Xcel, not surprisingly, endorses.

The Senate bill also would take $40 million from the fund to compensate Minnesota businesses that were economically harmed by the closure of three biomass plants. A similar legislative measure failed last year.

In 2017, the Legislature allowed Xcel to get out of its contracts with high-cost biomass power producers many years before they were to expire. But loggers and other businesses that supplied the biomass plants lost out with the closures.

The Senate has no provisions for electric vehicle-related rebates or grants. However, the Senate would appropriate $1.5 million in fiscal 2020 for an EV charging station revolving loan fund.

Lastly, the Senate bill would abolish Minnesota's longtime prohibition on new nuclear-power plants, which are a source of carbon-free energy.

Still, Xcel, operator of the state's three atomic reactors, has shown no inclination to build any new nuclear plants given the tremendous costs involved.

Mike Hughlett • 612-673-7003