In an 8-3 vote, the Minnesota Senate Committee on Energy, Utilities, and Environment approved a bipartisan bill that would prematurely sunset the Low and Moderate-income Accessible Community Solar Garden Program (LMI-Accessible CSG Program) despite vast opposition on March 26.

The bill, Senate File (SF) 2855, will now go before the full Senate for a vote.

More than a dozen organizations testified in opposition of the bill—many describing being blindsided by the fastmoving bill which was already having a hearing less than a week from its initial introduction. Xcel Energy provided the only testimony in support of the bill.

The bill was introduced by Democrat Senators Nick Frentz, D-18, and John Hoffman, D-34, and Republican Senator Bill Weber, D-21, and provided no other details besides amending the statue to sunset the LMI-Accessible CSG Progrm in 2028.

Minnesota’s legacy program opened in 2013 as an uncapped program that allowed projects up to 1 MW. The program was administered by Xcel but following years of interconnection challenges and delay complaints, they were replaced with the Minnesota Department of Commerce as program administrator when the program was revamped in 2023, establishing the LMI-Accessible CSG Program.

While the new program increased individual projects sizes to 5 MW, it added an annual program cap of 100 MW from 2024-2026. The program would then step down to 80 MW for the following four years and again to 60 MW in 2031 ongoing.

During the hearing, Frentz acknowledged that the introduction of the program had been a success—describing the marketplace as “vibrant” and the program creating competitive prices, but he has concerns about costs to non-subscribing ratepayers.

Frentz said there are ratepayers who are not subscribers and developers who are not getting the permission of the non-subscribed ratepayers, and those costs have grown beyond their useful life. Therefore, sunsetting the program in three years would be a smart move to bring down costs.

Frentz went on to highlight Xcel’s most recent fuel clause report, which outlined the amount of money the investor-owned utility (IOU) adds to all ratepayers’ bills to fund different energy technologies. The section devoted to community solar totaled USD 262m, which was about 30% of the USD 900m fuel clause. Yet only 5% of energy is generated by community solar indicating the state is not building solar in the most cost-effective way, Frentz said.

“This basic economic principal guides me to ask you to vote yes to approve this bill and to sunset the program. The cheaper the energy is, the more we will build. The more expensive the energy is, the less we will build,” Frentz said, noting that energy demand in the state is expected to double in the next 25 years. Frentz also argued that there are better ways to help low-income ratepayers.

Rick Evans, director of government affairs for Xcel Energy, began his testimony by noting that while all utilities had the option of implementing a community solar program, Xcel was the only one required to do so.

Evans also noted challenges from the uncapped legacy program which resulted in Xcel receiving “far in excess of the amount of community solar garden projects from what was expected when the bill was passed.” About 60-100 MW of community solar was initially anticipated, according to Evans. Today, there are more than 800 MW.

It also created some inequities, according to Evans, who said that 81% of the benefits go to commercial customers, which includes businesses, schools, and government buildings, and only 16% went to residential customers–the intended targets of the bill.

Another issue according to Evans, is that Xcel’s distribution grid has become “significantly congested with solar gardens.” This has resulted in MISO’s involvement to conduct studies on upgrades needed to accommodate community solar projects as another 145 MW of projects wait in line to interconnect.

Pete Wyckoff, Department of Commerce spokesman, said that ending the program before the “experiment on distributed solar models plays out” will result without the benefit of any real data on the relative cost and benefits of alternative ways to fill the distributed solar niche—”a type of solar that will be needed as part of our optimal mix,” Wyckoff said.

Wyckoff also pointed out that prematurely sunsetting the program could put more than USD 64m of federal Solar for All (SFA) funds at risk.

Program Update

Since the new program launched in January 2024, Commerce approved 81 MW of capacity and almost 10 MW have begun operations, according to Wyckoff. And based on subscription plans for approved projects in the 2024 Program Year, more than 62% of approved capacity will serve low-and-moderate-income households.

Ralph Kaehler, founder of Novel Energy, argued that those saying community solar is expensive, selective, and not in demand is “disingenuous and misleading”.

Kaehler said that issues Evans noted, such as grid congestion, speaks to Xcel’s inefficiency of their management and service. Nobody is forced to subscribe to community solar or to lease their land, yet there continues to be strong demand for both, Kaehler said, “a sign of the program’s success and acceptance.”

“This sunset is an attempt by government to take away a functioning, voluntary, opt-in opportunity from middle class residents and businesses to give additional profit to the utility who just doesn’t like to share,” Kaehler said.

Kaehler went on to accuse Frentz of skewing and inflating numbers in favor of Xcel and suggested that sunsetting the program would only strengthen their monopoly status on consumers.

“If we need to get a different program, we can talk but sunsetting this is absolutely the wrong way for government to interfere with a successful program,” Kaehler said.

David Watts, US Solar VP of project development, noted that it can take three-to-six years to develop and construct a community solar project, therefore projects that got to work on day one of the program may not have finished the development life cycle when the new expiration would occur. Watts also noting that Xcel further delayed the process by not opening its interconnection portal until May 2024.

“Local businesses like US Solar paid attention to the long-term nature of the LMI-Access CSG bill and we made hiring and investment decisions with that in mind,” Watts said. “This bill would create real financial losses because many of those investments would not get through the project development lifecycle before this proposed expiration.”

In written testimony submitted by Kristen Fornes ofENGIE, urging Senators to reject the bill, highlighted millions of dollars ENGIE invested in the state “in good faith and in reliance on established law,” which designed a program with a 25-year tenure.

“Make no mistake, the impact of this bill would irreparably harm ENGIE’s investments made in Minnesota to date. ENGIE’s customers–municipalities, school districts, houses of worship, small and large businesses alike–all signed long-term contracts with ENGIE with the expectation that these projects will deliver the savings and system benefits outlined in existing Minnesota law, regulations, tariffs, and contracts. These Minnesota entities will also be harmed should this bill become law. Now, multiply those losses across all Minnesota CSG investors, owners, operators, customers, and landowners,” Fornes wrote.

ENGIE currently has 42 MW of operational community solar projects in Minnesota that have been online since 2017 and are developing additional projects in the new LMI-CSG Program, according to Fornes.

Brianna Fiorillo, Lightstar Renewables Midwest senior policy manager, also submitted written testimony stating that sunsetting the program would hinder its ability to bring current projects to fruition and invest in Minnesota beyond 2028.

Cost Allocation

Since community solar developers bear all costs associated with grid infrastructure upgrades necessary to interconnect these projects, community solar is the only way private investment pays for much-needed grid infrastructure upgrades, and without this injection of private capital to the utility grid, ratepayers will be responsible for these costs when upgrades are unavoidable, Fiorillo said.

To put it in perspective, Fiorillo said Lightstar typically invests about USD 800,000-1.2m for interconnection alone for the average 5 MW community solar project.

Opposing testimony was also submitted by Nokomis Energy, the Coalition for Community Solar Access (CCSA), Solar Landscape, Institute for Local Self-Reliance (ILSR), Clean Energy Economy Minnesota (CEEM), and Rewiring America.

In support of the bill, Republican Senator Glenn Gruenhagen, D-17, accused the “green energy side” of “manipulating” and “fudging” numbers to try and make it look good for the environment when “windmills and the solar panels have huge anti-environment waste when they go kaput.”

Gruenhagen also noted that the Committee should also look at a national level and take into account the new president who has “very different ideas” as his predecessor, which will likely result in federal subsidies and tax credits disappearing.

Also in support, Republican Senator Jason Rarick, R-Pine City, pointed out that many who testified, testified in their own self-interest, but his role is to look out for the interest of all Minnesotans and how to best “thread this needle” to get to a cleaner energy future in a reliable and affordable way.

Rarick questioned if developers could find a way to run a program without the government interfering.

“I think many of us can agree, if you are forced to do something then you’re probably not doing it in the most efficient and economical way because you have to take whatever’s coming,” Rarick said, referring to Xcel’s requirement to participate in the program.

Rarick also suggested that since community solar is mandated, it keeps other forms of solar out of the market.

“Some of these other types of solar that are cheaper would have a much bigger market share if they were on equal ground as community solar gardens—but they’re not,” Rarick said.

Democrat Senator Jennifer McEwen, D-8, opposed the bill, stating that many of her constituents, who in contrast would like to see the program expanded, are upset and blindsided by the bill.

“I’ve heard from a number of my constituents who are really upset about this bill and feel frankly, quite blindsided by it,” said McEwen, adding that “this is not threading the needle—this is taking away the program.”