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Expanding opportunities for solar collaboration in Minnesota — and at SEPA

By Julia Hamm

Earlier this month, I traveled to Minnesota to do something that, in my more than 10 years as CEO of the Solar Electric Power Association (SEPA), I had never done before — testify at a state legislative hearing.

Hamm Headshot
In fact, it was the first time that anyone from SEPA had given testimony at a legislative session of any kind. Throughout our 23-year history, our standing policy has been to provide no testimony or comments that would be part of the official record of any government or regulatory proceeding. Rather, as an educational nonprofit with both utility and solar industry members, we have resolutely tried to stay on the middle ground in the many, often contentious issues at the heart of our work.

But the fact that I was there reflects the increasingly rapid transitions underway in the utility and solar industries, the resulting challenges for policy makers and SEPA’s own evolution to stay in front of these changes.

Let me first clarify that the hearing I spoke at was not a hearing related to pending legislation, but an educational session set up for the Minnesota House of Representatives’ Job Growth and Energy Affordability Policy and Finance Committee, This body has a membership as varied as its name, some of whom have little experience on energy or solar issues, and the hearing drew a full, equally varied audience of utility and solar industry representatives.

I was one of three panelists at the session speaking about the current state of net metering and distributed generation issues. I started off with an overview of utilities’ solar activities across the country, utility-scale programs as well as rooftop and other distributed solar.

A second expert spoke from the utility perspective, focusing largely on concerns related to the potential economic impacts of net metering on nonsolar customers. The third was a representative of the local solar industry who educated the committee on the solar legislation Minnesota passed in 2013. After our individual presentations we sat together — me, literally and appropriately, in the middle — to answer questions.

Download a recording of the Feb. 4 committee hearing that Julia Hamm spoke at here.

A bit of background is needed here. Although known more for its development of wind energy — which provides about 15 percent of the state’s power — Minnesota is in the early stages of developing a robust solar market. But, like many other states, it is also trying to look ahead and expand the sector with smart and equitable policies.

The law passed in 2013 required the state’s investor-owned utilities to provide 1.5 percent of their power from solar by 2020 and increased the allowable project size for net metering from 40 kilowatts to one megawatt. It also made Minnesota the first state in the country to adopt a “value of solar” (VOS) policy, under which solar owners could receive compensation for their excess generation at a rate based on a range of benefits, from lower utility costs for fuel and transmission to a cleaner, healthier environment. Another piece of the law is aimed at promoting community solar projects.

While progressive, these initiatives have hit bumps. Under the law, utilities can decide whether or not to adopt VOS compensation rates or stick with net metering. So far, none have gone with VOS largely due to uncertainties over details in the methodology for calculating the rate. Another factor is Minnesota’s average electric rate, which according to figures from the Energy Information Administration, is 11.83 cents per kilowatt hour.

The community solar program could also have unintended consequences, according to Xcel Energy’s recent filing with the state’s public utilities commission. Instead of the smaller community-based arrays for residential customers the law is intended to foster, officials at the state’s largest utility said, many of the hundreds of applications they have received are for installations that would serve large, commercial customers.

Read Xcel Energy’s Feb. 10 filing on its community solar program here.

As they prepare to tackle these issues, some of the lawmakers at the hearing I spoke at were understandably skeptical. They want to do the right thing, but their questions focused on who would end up paying for these solar programs and what the benefits would be.

What is heartening, in Minnesota and other states, is the trend toward developing collaborative processes for working on these issues, trying to learn from what other jurisdictions are doing and involving all stakeholders — utilities, solar companies, and consumer and clean energy representatives.

SEPA has always encouraged such collaborative approaches, and we are dedicated to providing unbiased education to policy makers, such as the committee members in Minnesota.

Search SEPA’s library of reports and publications here.

We have also expanded our own activities to take a more active role in fostering such processes, serving as a facilitator for the complex, sometimes uncomfortable discussions that need to happen between stakeholders in specific states or regions. One recent example is our role facilitating the Tennessee Valley Authority’s (TVA’s) year-long Distributed Generation-Integrated Value process in 2014, bringing together a range of stakeholders, from distribution utilities to solar installers to environmental groups.

This collaborative process resulted in an agreed-upon method for valuing distributed generation for the Tennessee Valley. It will be used as the basis for new programs for residential and small commercial solar and other distributed generation the TVA will roll out in 2016.

SEPA is also helping to shape the future of customer transactions for distributed energy resources through our 51st State Initiative. Launched at Solar Power International in Las Vegas in 2014, this initiative uses a blank-slate approach aimed at sparking the full creativity and innovation available across our industry to come up with practical market designs and business models that work for all parties involved. We are currently soliciting submissions on how sustainable energy markets with robust solar sectors could be created in a hypothetical 51st State with no market structures or policies in place.

Our goal is not to identify one outcome but rather to find multiple frameworks that resonate and provide a platform for all stakeholders to participate in the evolution of the energy industry together. With Environmental Protection Agency’s Clean Power Plan to reduce carbon emissions from power plants on the horizon, successful identification of new frameworks becomes increasingly critical and urgent.

Certainly, we expect to see more change in the utility industry in the next 10 years than we saw in the past 100, and SEPA and its members must be ready to stay open to new perspectives and new options for leadership that may take us places we have not been before.

Julia Hamm is the President and CEO of the Solar Electric Power Association. She can be reached at [email protected].