Reforming Residential Solar Rates: Ensuring a Sustainable, Equitable and Modern Energy Future for Minnesota

As new technologies and the transition to cleaner resources rapidly change our electric grid, some of Minnesota’s energy policies, including our antiquated net metering laws, remain ineffective. Minnesota’s net metering policy allows residents and businesses with distributed energy systems, like solar panels, to generate their own electricity and require the cooperative to pay more for excess power sent to the grid than it would normally pay for power. This policy is outdated, expensive and inequitable and must be reformed to be effective in the modern world.

First off, the policy is outdated. Minnesota’s net metering policy was established when solar technology was in its infancy and no longer addresses the modern energy landscape. Comprehensive reform is needed to reflect current realities and capabilities, including storage. As the first state to implement net metering back in 1984, Minnesota played a pioneering role in promoting solar energy, but it is now time to update this policy to align with today’s realities. Given the state law mandating carbon-free electricity by 2040, the environmental incentive for maintaining costly net metering policies is obsolete.

Second, net metering is expensive. With Minnesota’s mandate for carbon-free electricity by 2040, net metering incentives have become redundant. Utilities are already charged with reducing carbon emissions; there is no reason to keep expensive incentives to achieve the same goal. Net metering is also ineffective since it forces cooperatives to pay retail rates for energy they could purchase at cheaper wholesale prices. Additionally, generating electricity from small distributed solar systems is more costly than from larger utility-scale projects, resulting in less carbon reduction for the same investment. Utility-scale systems offer a faster, more cost-effective means of decarbonizing the electrical grid, making net metering an inefficient tool for achieving environmental goals.

Finally, net metering is inequitable. It leads to cost-shifting, where those without distributed systems end up paying more to cover the costs of maintaining the grid. Those who can afford these systems are generally wealthier, leaving poorer members to face the brunt of the cost increases. Studies show that in Minnesota, this disparity is growing, with affluent households increasingly dominating solar installations. Reform is essential to prevent financial strain on those least able to bear it.

The current model is unsustainable and unnecessarily drives up the electric bills of most co-op member-owners. Reforming net metering can enhance grid stability and reliability, ensuring that both traditional and renewable energy sources are effectively integrated and managed.

By taking a balanced approach to reforming our outdated net metering policies, Minnesota has the potential to become a national leader in renewable energy policy and ensure a fair, sustainable and modern energy future for all Minnesotans. Embracing reform will support renewable energy growth and facilitate the connection of solar sized to load for those who want it. Minnesota’s electric cooperatives stand ready to support these necessary reforms, advocating for policies that benefit all cooperative members and advancing our collective goal of a reliable, affordable and sustainable energy future.