Minnesota Policies to Support Clean Energy

The adoption of clean energy in Minnesota boosts the economy, creates jobs, and helps create a more sustainable future for the state. To assist with the clean energy transition, lawmakers have enacted legislation to assist this emerging industry. As these industries mature, there are several policies currently in play at the Capitol that would be beneficial to businesses as clean energy markets adapt to lower electricity prices and new issues arise. Today, we are breaking down a brief history of Minnesota’s policy leadership, the current state of clean energy legislation, and how new proposals will help transition Minnesota to a decarbonized, clean energy economy.

History of MN Clean Energy Legislation

To truly understand the legislation that can support clean energy in 2020, we must take a look back at the policies that have been put in place in Minnesota in the past. In the early 2000’s, Minnesota was following a nation-wide trend of adding Renewable Portfolio Standards. At the time, these standards were boosting the industry.

2001: Minnesota Renewable Energy Objective

In 2001, the Minnesota Legislature first enacted the Minnesota Renewable Energy Objective (REO). Initially, the REO Statute required utilities to “make a good faith effort” to obtain 10 percent of their Minnesota retail energy sales from eligible energy sources by 2015, and to obtain 0.5 percent of their renewable energy from biomass technologies. Under this same Statute, Xcel Energy was required to meet a 10 percent renewable energy standard.

2007: Minnesota Renewable Energy Standard

During the 2007 Legislative session, the REO Statute was amended to create a Renewable Energy Standard (RES) with specified mandated renewable energy goals beginning in 2010. Other amendments to the REO Statue included revising the definition of eligible energy technology to accommodate new clean energy technologies, requiring the Minnesota Public Utilities Commission (PUC) to establish a trading system for renewable credits and established criteria for the PUC to waive or extend the deadlines to hit the RES targets.

2007: Next Generation Energy Act

The Next Generation Energy Act, signed by Governor Tim Pawlenty in 2007, had bipartisan support in the state legislature and requires the state to reduce greenhouse gas emissions by 80% between 2005 and 2050. This Act supports clean energy, energy efficiency, and supplements other renewable energy standards in Minnesota. Benchmarks were set as well: a 15% reduction by 2015, and a 30% reduction by 2025.

When the act was signed in 2007, Minnesota was a leader in passing aggressive reductions in GHG emissions. Minnesota continues to be a leader when it comes to emissions reductions and continues to work to develop effective policies that further reduce emissions, support the state’s economy, and protect and preserve human health and the environment.

A 2016 report from the Climate Solutions and Economic Opportunities Initiative (CSEO) suggests that we are still not on track to meet our climate goals. To help meet those goals, the Initiative’s report suggested that Minnesota should “increase energy efficiency and renewable energy, strengthen efforts when it comes to land use and mass transit, address agricultural production issues that affect carbon storage, and invest in protecting Minnesota’s wetlands, forests, prairies, and other native habitats.”

2013: Minnesota Community Solar Gardens

State lawmakers created the community solar garden program in 2013 to give ratepayers who don’t have access to solar energy on their own properties a chance to participate. Lawmakers wanted to make Minnesota attractive to solar development and create new jobs. Ninety-eight percent of Minnesota’s solar capacity has been installed since 2013 when this bill was passed and the number of jobs in solar energy has doubled. Community solar gardens are built by independent developers, who build small solar installations that residents or businesses subscribe to. The subscribers then get credits on their utility bills for the power the solar garden produces.

Today, Minnesota is the national leader in community solar garden capacity. Operated by Xcel Energy, the program has 705 MW installed across their territory, which is more than double the closest competitor’s capacity. A further 349 MW are in the application process to boost Minnesota’s numbers even higher in the coming years. Falling solar panel prices and stable solar pricing contribute greatly to the success of the program which serves about 12,000 Minnesota subscribers.

Current Minnesota Clean Energy Legislation

Conservation Improvement Program (CIP)

The major bill at play in today’s clean energy world is the Conservation Improvement Program (CIP) — a major program helping with energy efficiency and energy waste reduction in Minnesota. This program focuses on conserving energy, reducing carbon dioxide emissions, and lessening the need for new utility infrastructure. The Minnesota Department of Commerce, Division of Energy Resources (DER) oversees CIP and ensures ratepayer dollars are used effectively and that accurate energy savings are reported.

Benefits of CIP include:

• Improved awareness and adoption of energy-efficient technologies
• Reduced energy costs for Minnesota households and businesses
• Increased profitability for Minnesota companies and industries
• Deferred costly utility infrastructure investments
• Decreased carbon dioxide emissions
• Conserved resources

2021: Energy Conservation and Optimization Act (ECO)

The ECO Act includes improvements to Minnesota’s Conservation Improvement Program (CIP). This legislation is the first major update to CIP since 2007. ECO passed with bipartisan legislative support for two main reasons:

• It requires no spending out of the state’s general revenue fund;
• It will spur economic development through local jobs and investment in clean energy.

The main features of ECO include allowing cost-effective, carbon and energy-saving fuel-switching, and updating language that encourages programs that shift energy consumption to less costly or low-carbon times.

The Future of Clean Energy Legislation in Minnesota

As the economics of clean energy have fundamentally changed, the need for new and updated legislation is paramount. There are two major efforts regarding clean energy that have yet to be passed in the Minnesota legislature: the 100% Clean Energy Bill and Clean Energy First.

Clean Energy First

This proposal is to change how regulators on the Public Utilities Commission (PUC) make decisions about utility proposals. To approve utility proposals under this bill, the commission would need to consider whether the new energy projects are in the public interest and if they would help meet Minnesota’s goal for reducing greenhouse gas emissions.

Clean Energy First also updates the definitions of clean energy to include energy storage systems and power-efficiency technology. It also lets utilities meet energy needs with a combination of means.

2019 100% Clean Energy Bill

Introduced in 2019 as part of Governor Walz’s ‘One Minnesota Path to Clean Energy’, 100% Clean Energy is a new measure that would require electric utilities to make the switch to 100% carbon-free resources by 2050. In this proposal, one of the most ambitious on the table today, utilities are allowed to choose how and when they meet the standard, as long as it is complete in the next 30 years. Governor Tim Walz and Lieutenant Governor Peggy Flanagan came out in strong support of this measure in 2019 and remain strong advocates for clean energy and the transition to a zero-carbon economy.