In a first for the nation, the US state of Minnesota has created a ‘value-of-solar’ formula designed to calculate how much customer-generated solar power is worth.
The formula was approved by the state’s utility regulators last week.
As well as the dollar value of the excess electricity sold back to utilities by customers with on-site solar photovoltaic installations, the formula takes into account the environmental and social costs of carbon emissions from fossil fuel power generation, using the federal government’s so-called social cost of carbon estimate.
Agreement on the formula comes after several years of debate, with utilities calling the retail rate under net metering an unfair subsidy for on-site solar, and solar groups arguing that it undervalued the power they generated.
Under Minnesota law, subscribers to so-called community solar gardens – solar installations that provide power to participants who buy in – will receive the value-of-solar rate. Application of the rate to other customers is voluntary for investor-owned utilities.