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Solar Options for the Roof Challenged

November 01, 2012 By Will Nissen, Fellow

There are many factors that can prevent a person or business from installing solar panels on a home or building in Minnesota that have nothing to do with public policy. The roof may not face south to capture enough energy from the sun to make the project economically feasible. There may be structural limitations on a roof that can’t support a rooftop array, or surrounding buildings or trees may block the sun at key times during the day.

Building features aside, the individual or business may not be able to afford the upfront costs of installing a solar array. And beyond that, if one doesn’t own the unit they occupy they may not have any choice or influence on the matter. There is the possibility of a ground-mounted solar array that does not require a feasible rooftop, but this option presents other land-use and zoning issues, upfront costs, and works best in rural areas with open spaces not surrounded by imposing structures.

There is, however, a public policy tool that can overcome these significant barriers preventing a larger uptake of solar installations in Minnesota: virtual net metering. Essentially, virtual net metering allows customers to invest in and reap the benefits of solar-generated electricity without hosting or maintaining the solar array.

This is accomplished through adjustments in utilities’ billing software. A customer pitches in to buy a portion of a solar array on the roof or property of a neighbor, business or church. The utility simply credits that customer for her share of the electricity the entire array produces.

This type of project has already been done here in Minnesota. The Wright-Hennepin Electric Cooperative, based in Rockford, MN, recently partnered with the Colorado-based company Clean Energy Collective to build an initial 40kW solar array at their Rockford headquarters. Wright-Hennepin will sell individual panels to customers, and credit their utility bills with the electricity produced and fed into the portion of the grid that Wright-Hennepin manages.

Rather than having to invest $15,000 or more for a residential rooftop solar array, customers can now purchase individual panels in the Wright-Hennepin project for $869 a piece, and still enjoy savings over time on their electricity bills. That investment will pay for itself in 20 years through those energy savings.

The Wright-Hennepin solar array is being praised as Minnesota’s first “community solar” project, and shows great promise as a means of opening up our state’s solar market to a large number of people who currently cannot access solar energy due to the constraints mentioned above.

While utilities are certainly in a good position to host these types of projects, they are not the only entities that can do so. Businesses, churches and neighbors could host solar arrays, recruit other individuals or businesses who want to invest in the project, and work with the utility to make sure proper billing credits are dispersed.

Leading solar states like California, Colorado and Pennsylvania have explicitly allowed virtual net metering through state legislation or regulatory decisions, and are seeing significant solar growth. In Minnesota, however, our laws do not address the issue of virtual net metering. It is neither prohibited, as seen in the Wright-Hennepin project, nor is it explicitly allowed. This lack of clarity creates uncertainty for a developer, a project manager like Clean Energy Collective, or any party interested in pursuing a community solar project through virtual net metering. As I’ve written before, uncertainty is not appreciated in the business world.

Utilities that don’t host virtual net metering projects may say that they are left covering the transmission activities and costs associated with the project, because the meters receiving credits for the solar-generated electricity don’t reside at the generation source.

While this is true, this argument fails to account for the benefits distributed solar generation brings to the grid and utilities. Solar panels produce the most electricity at times that overlap with peak demand on the electricity grid. Producing electricity at peak demand hours is very expensive because utilities are ramping up generation stations to get a small boost in supply for a short amount of time. Distributed solar electricity helps reduce demand during peak hours, and can even provide electricity back to the grid during those hours.

In addition, as our electricity generation, transmission and distribution system changes, utilities will likely need to restructure their business models away from being the sole provider of electricity, and towards a more services-based approach inherent in the virtual net metering concept.

If we want to reap the full benefits of solar energy here in Minnesota, we need to open the market up to consumers who cannot host their own solar array but who want to invest in solar energy. Virtual net metering is one key to opening that market, and policymakers should pass legislation explicitly allowing virtual net metering in Minnesota.

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