Net Metering Policy Development and Distributed Solar Generation in Minnesota: Overview of Trends in Nationwide Policy Development and Implications of Increasing the Eligible System Size Cap

Abstract

The goal of the Minnesota net metering policy is to give the maximum possible encouragement to distributed generation assets, especially solar electric systems (MN 2008). However, according to a published set of best practices (NNEC 2008) that prioritize the maximum development of solar markets within states, the Minnesota policy does not incorporate many of the important best practices that may help other states transform their solar energy markets and increase the amount of grid-connected distributed solar generation assets. Reasons cited include the low system size limit of 40kW (the best practices document recommends a 2 MW limit) and a lack of language protecting generators from additional utility fees. This study was conducted to compare Minnesota's policies to national best practices. It provides an overview of the current Minnesota policy in the context of these best practices and other jurisdictions' net metering policies, as well as a qualitative assessment of the impacts of raising the system size cap within the policy based on the experiences of other states.The report finds that increasing the cap may move the state toward its goal of providing the maximum possible encouragement to distributed generation assets, including a larger average size of solar PV systems and a broader array of stakeholders. Quantitative evaluation of the policy changes are necessary to better understand the quantitative impacts on all interested parties (e.g. utility, rate payers, project developers). The report also finds, however, that most states that have increased the size limits have not developed such cost/benefit studies before raising the limit. Reasons cited include the increase being a legislative action and/or the lack of data and financial resources to perform such a study. Program implementers in these states do not report negative impacts on ratepayers as result of the increase in system size limit. This is likely the result of the small relative impact of the systems on the larger utility grids. Implementers cite the lack of data, resulting from the changes in net metering being recent at this stage, as a limitation in quantifying the benefits and costs of expanded net metering system size caps.ii

Smart grid governance: An international review of evolving policy issues and innovations

“…Net metering rules are often updated by policy makers to meet the needs and priorities of the market. In general, the trend is to increase the system capacity cap, as in the cases in New York and Massachusetts and to broaden the eligible renewable resources (Doris, Busche, & Hockett, 2009). There have been concerns about net metering consumers not paying their part for maintaining grid infrastructure and connection, and that net metering subsidies are unfair for those who do not own distributed generation resources (Johnson et al, 2017;Lydersen, 2017).…”

Risk Management Methods Applied to Renewable and Sustainable Energy: A Review

“…As a result, the issues of charging additional fees on net metering which punishes customers for choosing a more energy efficient appliance should be addressed. For example, a safe harbor provisions has been imposed in Minnesota so as to eliminate the disincentive conditions [97]. Concerning the impact of profitability of utility companies, business diversification strategy is a way to reduce the associated policy risk.…”

Smart‐grid policies: an international review

“…Net metering rules are often updated by policy makers to meet the needs and priorities of the market. In general, the trend is to increase the system capacity cap, as in the cases in New York and Massachusetts and to broaden the eligible renewable resources …”