Renewable Energy Standard

Summary

In 2007, Minnesota legislation modified the state's 2001 voluntary renewable energy objective to create a mandatory renewable portfolio standard (RPS). Public utilities (i.e., investor-owned utilities), generation and transmission electric cooperatives, municipal power agencies, and power districts operating in the state are required to have at least 25% of retail electricity sales be generated or procured using eligible renewable sources by 2025, with a higher standard for Minnesota's nuclear utility, Xcel Energy. 

In 2013, H.F. 729 created an additional requirement that all public utilities have 1.5% of retail electricity sales be generated or procured using solar energy by 2020 and set a statewide goal of 10% of retail electric sales from solar by 2030.

In 2023, H.F. 7 was enacted and revised the Renewable Energy Standard for the state. The law revises the "Standard Obligations" for utility generators, requiring 55% of energy sold to come from eligible sources by 2035. 

The bill also created a Carbon-Free Energy Standard which requires electric utilities to generate or procure 80% of their electricity (60% for non-public utilities) from non-carbon-emitting sources by 2030. The requirement increases to 90% in 2035 for all utilities, and 100% in 2040. The Minnesota Public Utilities Commission has the authority to modify or delay these standard obligation changes but must consider the environmental impacts of delay in addition to the rate impacts of compliance.

Eligible Technologies

Electricity generated by solar, wind, hydroelectric facilities less than 100 megawatts (MW), hydrogen generated by another eligible renewable energy, and biomass—which includes landfill gas, anaerobic digestion, municipal solid waste, the organic components of wastewater effluent, and sludge from public treatment plants (excluding waste sludge incineration)—is eligible for meeting RPS requirements.

Requirements

Carbon-Free Standard (introduced in 2023)

In addition to Renewable and Solar Energy Standards, electric utilities must generate or procure sufficient energy from carbon-free technologies to provide the following percentages of the company's retail or whole sales within Minnesota. Non-public utilities have lower requirements for the first compliance requirement, 60% vs 80%, for 2030.

•  80% by 2030 (60% for non-public utilities).
  
•  90% by 2035
• 100% by 2040
  

Renewables Standard for Nuclear Utilities (Xcel Energy)

The RPS standard that applies to Xcel Energy, the state's largest electric utility, requires that the following percentages of retail electricity sales be generated or procured using eligible renewable sources by December 31 of the given year:

• 15% by 2010
• 18% by 2012
• 25% by 2016
• 30% + 1.5% solar by 2020
  
•  55% + 1.5% solar by 2035
  

Standard for Other Public Utilities

The RPS standard for other Minnesota public utilities requires that the following percentages of retail electricity sales be generated or procured using eligible renewable sources by December 31 of the given year:

• 12% by 2012
• 17% by 2016
• 20% + 1.5% solar by 2020
• 25% + 1.5% solar by 2025
  
•  55% + 1.5% solar by 2035
  

Standard for Non-Public Utilities

The standard for other Minnesota utilities requires that the following percentages of retail electricity sales be generated or procured using eligible renewable sources by December 31 of the given year:

• 12% by 2012
• 17% by 2016
• 20% by 2020
• 25% by 2025
•  55% by 2035

Carve-Outs

Solar

In 2013, H.F. 729 was enacted, creating a 1.5% carve-out for solar for public utilities to meet by the end of 2020, 10% of which must be met with photovoltaic (PV) systems that are 20 kilowatt (kW) nameplate capacity or less. In 2018, HF3232 increases the maximum nameplate capacity to 40 kilowatt (kW). For the purposes of the solar standard, only RECs associated with solar installed and generated in Minnesota on or after May 24, 2013, but before 2020 are eligible.

Xcel Energy

In addition to the above solar carve-out, Xcel Energy is required to have at least 25% of retail electricity sales generated by wind energy or solar energy systems by 2020, with solar limited to no more than 1% of this additional requirement. In effect, this means that the wind standard is at least 24% of retail electric sales, the solar standard is 1.5% and may contribute up to another 1%, and the "remaining" 5% may be generated using other eligible technologies.

Compliance

Tradable* renewable energy certificates (RECs) are used by utilities to comply with their RPS requirements. A REC is created for each MWh of renewable energy generated. To comply with the RPS requirement, a utility must retire an associated number of RECs in a given year. 

RECs will have a trading lifetime of 4 years according to the year of generation (e.g., RECs generated during 2008, regardless of the month, expired at the end of 2012). In July 2014, the PUC clarified that the generator of renewable energy owns all RECs for transactions subject to Minn. Stat. §216B.164 (net metering, cogeneration, and small power production) unless state law or a contract specifies a different outcome.

Verification and Reporting

The Minnesota Public Utilities Commission (PUC) approved the Midwest Renewable Energy Tracking System (M-RETS) for tracking RECs and required all utilities to register renewable generation assets by March 1, 2008. RECs imported from the Michigan Renewable Energy Certification System (MIRECS) can also be retired for compliance with the Minnesota RPS. 

Utilities are required to file biennial compliance reports with the PUC by June 1 of even-numbered years that includes information on their retail sales, REC retirements, and REC trading activities. If the PUC finds a utility is non-compliant, the PUC may order the utility to construct facilities, purchase eligible renewable electricity, purchase RECs, or engage in other activities to achieve compliance. If a utility fails to comply, the PUC may impose a financial penalty on the utility in an amount not to exceed the estimated cost of achieving compliance. The penalty may not exceed the lesser of the cost of constructing facilities or purchasing credits, and proceeds must be deposited into a special account reserved for energy and conservation improvements.

Compliance reports from individual utilities are available from the PUC through the E-Docket System. In 2015, the PUC found all 16 utilities subject to RPS requirements were in compliance with their respective standards for year-end 2012 and 2013.

*  Xcel Energy may not sell RECs to other Minnesota utilities for RPS compliance purposes until 2021.