The Minnesota Public Utilities Commission (MPUC) in a close decision approved a formula for determining the value of electricity from solar photovoltaic (PV) generation, in other words, what the utility will pay customers for the power generated by rooftop solar PV panels. The Value of Solar methodology includes avoided fuel cost, avoided plant and O&M cost, avoided generation cost, avoided reserve capacity cost, avoided transmission capacity cost, avoided distribution capacity cost, and avoided environmental cost.
It also includes the cost of carbon as estimated by the Federal Government as the social cost of carbon (SCC), whch is an estimate of the economic damages associated with an of one metric ton in carbon dioxide (CO2) emissions in a year. The SCC is meant to be a comprehensive estimate of climate change damages including changes in net agricultural productivity, human health, and property damages from increased flood risk.
The MPUC ruling is not binding on Minnesota's investor owned utilities, but offers an alternative to net metering. According to an Xcel Energy filing which uses the new formula, solar PV is valued at 14.5 cents/kWh which is higher than the current retail electricity rate for residential customers in Minnesota of 11.3 cents/kWh. MPUC's value of solar is remarkably close to the 14 cents/kWh above which Solar City says it can offer a competitive solar option.
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