Minnesota Governor Mark Dayton signed into law today an Omnibus Energy Bill that includes a series of provisions directed at encouraging investment, development and use of solar energy in Minnesota.

1.5% Solar Power Mandate

The new law requires all investor-owned utilities in the state to provide at least 1.5% of their retail sales from solar power by 2020. This requirement is expected to raise Minnesota's current solar output from 13 megawatts to approximately 450 megawatts. Excluded from retail sales subject to this requirement are sales to iron mining extraction and processing facilities, paper mills, wood products manufacturers and certain related facilities.

Incentives for Small Solar Installations

At least 10% of the mandated solar power must be generated by small solar projects—systems of 20 kilowatts or less—and the bill provides incentives for such installations. For the next five years, Xcel Energy is required to use $5 million annually from the renewable development account it funds to incentivize qualifying small solar projects. The incentives will be paid for ten years once a qualifying system comes online.

Incentives for Solar Equipment "Made in Minnesota"

The bill creates an additional performance-based incentive for systems that use solar photovoltaic modules manufactured in Minnesota. Each year for the next ten years, $15 million will be used to provide incentive payments to owners of grid-connected solar installments that generate less than 40 kilowatts.

The incentive amount will be set for each qualifying manufacturer by the Minnesota Department of Commerce, and is intended to allow owners of a solar module to realize a reasonable return on the investment. Qualifying solar installations will receive a static payment for ten years once approved.

Raising the Net Metering Cap

Residential customers and businesses will also find it easier to generate their own electricity under the new law. Subject to certain limitations, the bill generally increases the net metering limit from 40 kilowatts to 1,000 kilowatts and allows owners of solar installations and other distributed generation to receive credit for excess electricity produced and sent back to the grid. Small facilities under 40 kilowatts will receive the utility's retail rate, while larger systems will be subject to different rate schedules. The Public Utilities Commission will also create an alternative tariff specifically for solar installations.