Developers prepare for Minnesota's revitalized Community Solar Garden program

Minnesota’s Legacy Community Solar Garden (CSG) program will fade away in a few weeks to make way for the Low and Moderate-Income Accessible Community Solar Garden program (LMI-Accessible CSG program) which will begin taking applications on January 1, 2024.

Some of the most notable changes in the new program include the establishment of a distributed generation standard, annual program caps, an increase in project size from 1 MW to 5 MW, a 30 percent LMI component, the removal of contiguous county restrictions, and the replacement of Xcel Energy with the Minnesota Department of Commerce as the new program administrator. The updated program was established in May 2023 following the passage of House File 2310.

“We’ve been preparing for this program by identifying locations—there’s a lot of farmers/landowners interested in hosting community solar in Minnesota,” said Reed Richerson, President of US Solar, in an interview with NPM.

US Solar is a leading developer, owner, and operator of community solar projects in Minnesota. Founded in 2014, the Minneapolis-based greenfield developer has since completed more than 100 projects totaling about 200 MW. They currently have more than 1 GW of projects under development in their pipeline, according to Richerson.

Over the last few years, the developer took what they learned in the state and applied it to some new markets including Illinois, Colorado, New Mexico, and New York. They also expanded their offerings beyond community solar by incorporating small-scale utility and some behind-the-meter projects.

In preparation for Minnesota's new program, Richerson said the new guidance will require different approaches to project submittal, therefore they've begun focused on finding willing landowners in communities that have planning and zoning ordinances that allow for the development of community solar in areas they can interconnect to the utility.

“We’ve been building a portfolio of those sites in order to participate in the new program once it’s ready because there is a level of project maturity that must be met,” Richerson said, noting conditional use permits and interconnection agreements that must be acquired prior.

Richerson said he is particularly happy about the new 30 percent LMI requirement, which coupled with the removal of the continuous county restrictions, will help make it achievable. The Legacy program limited project subscribers to the same county or directly adjacent county.

“It’s great to reinvigorate this community solar program," said Richerson. "The future is bright, and we’re excited about this piece of legislation that passed."

Katie Kavanaugh, Community Solar Manager at DSD Renewables, is also looking forward to moving forward in the state.

"DSD believes that the changes to the Minnesota Community Solar Program will help promote growth within the market and make the benefits of community solar accessible to more households," said Kavanaugh. "DSD has successfully operated community solar projects across the state and is excited to continue to take part in Minnesota’s community solar program in 2024 and beyond."

Nexamp told NPM that they are preparing by working to understand the new program requirements, having attended two information sessions held by the Commerce Department, as well as responding to a Request for Information (RFI) due on December 15th.

According to NPM data, Impact Power Solutions, New Energy Equity, Enterprise Energy, Nokomis Energy, and United Renewables are also active developers in the state.

Background

Minnesota's Legacy CSG program has served as a roadmap for other states since its 2013 inception and had been recognized as the most successful program in the country until 2022 when New York took the lead. The program has yielded about 860 MW of community solar projects across the state. Overall, the state has more than 1.8 GW of solar installed. The new program is estimated to deliver an additional 1.5 GW of community solar and DG project development over the next six years.

Logan O’Grady, Executive Director of Minnesota Solar Energy Industries Association (MnSEIA), a nonprofit advocacy group who did much of the heavy lifting for the new program, told NPM that the state only energized about 30 MW of CSG last year.

“I think we’ve seen a slowdown in development because of a number of reasons, but the biggest reason in the legacy program is the geographic restriction—we’re just running out of space and running out of subscribers,” O’Grady said. “The new program is going to revitalize development because we won’t have that restriction in place anymore.”

O’Grady highlighted the new net-metering rate structure replacing the Value of Solar rate, which will discount customers based on customer class to encourage LMI income subscribers. Projects under the new program require 25 subscribers per megawatt and 55 percent public interest with 30 percent of the 55 to be LMI.

“What we’ve heard from developers is that it’s a great opportunity to maximize a few different things including the IRA and the rate that subscribers are going to get,” O’Grady said.

“We’ve received a lot of feedback for it and the modeling that our members are doing. They’ll at least meet the requirement but, in many cases, they’ll exceed the requirement for public interest and LMI—so that’s good to see,” O’Grady said.

The new DG standard implemented in the bill requires the major investor-owned utilities in Minnesota to procure energy from DG projects to cover a certain percentage of their retail sales.

The state’s largest utility, Xcel Energy, will be required to derive generation equal to 3% of its retail sales from DG projects by 2030 in the new 10 MW space. Minnesota Power, the second largest utility in the state, will also be required to reach 3 percent with some exclusions. Otter Tail Power Company has a 1 percent requirement by 2030.

O’Grady said MnSEIA estimates the standard will yield about 700 MW of DG projects.

“I think we’re going to see really stable development in the new LMI focused CSG program and then we’re really going to see development in this mid-scale market that in Minnesota has been relatively untapped—the 10 MW distributed generation non-subscriber-based program,” O’Grady said.

“I think that we’ll still see a decent amount of development and hopefully see more than we’ve seen the last few years,” O’Grady said. “If we can revitalize this program and get to the 100 MW cap in the first year—that’s going to be more than we’ve seen in recent years. While there are additional requirements, I think developers in Minnesota are eager to meet those requirements and have definitely done so in other markets.”

*This story was originally published exclusively for NPM subscribers last month.


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