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Saturday January 21, 2017
Posted: Apr 10, 2014

Business news “from away”: Minnesota pioneers a new way to pay for solar energy

Commercial Confidential — Business and economics news for greater Portland

Last week, Kennebec Journal reporter Paul Koenig covered a brewing debate between Central Maine Power and solar power advocates. CMP, which owns and maintains the lines that deliver electricity in southern and central Maine, wants to levy a new fee against customers who own solar panels. They also want to shift more of its charges to fixed monthly fees, and away from variable fees that are proportional to how much energy a customer uses.

Environmentalists point out that these changes will diminish consumers' financial incentives to conserve energy or generate their own clean power with solar panels (see Beth Nagusky's op-ed in today's paper). They argue that customers who use more electricity ought to pay a higher share of the cost to maintain the lines that deliver power.

CMP has a different point of view. Paul's story quoted Gail Rice, a CMP spokeswoman: “When customers self-generate, our cost to serve them does not change, and when they pay less to CMP for their delivery service, other customers have to pay more.” In other words, CMP is arguing that green-minded customers need to pitch in more for maintaining the power grid — regardless of how little electricity they take from it. 

Lots of other states and utilities are navigating similar issues, of course, and today (via Grist) I learned of an interesting new solution from Minnesota called "value of solar" pricing.

Minnesota regulators, environmentalists and utilities all agreed that locally-made solar power actually offers a lot of benefits to the companies that own and maintain power plants and power lines: solar panels generate more power right where it's used, thus saving capacity on long-distance wires, and solar also generates more power on hot, sunny days when blackouts are otherwise more likely to happen. Here's a chart of how they added up solar power's benefits:

This "value of solar" — 14.5 cents per kilowatt hour — is then used as a basis for reimbursement for customers who generate their own solar power.

Because the value of solar generated and used at home is greater than the cost of electricity delivered from far away on the power grid, customers with solar panels save more under the new system than they did in the old pricing scheme.

Meanwhile, utilities pay a certain, market-based price that's based on the actual value they receive from solar energy.

Learn more about the new policy from the Institute for Local Self-Reliance.


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