Value of Solar Tariff

Summary

Note: Xcel Energy and Minnesota Power have adopted the VOST as their DG compensation tariff.

Enacted in 2013, H.F. 729 required the Minnesota Department of Commerce (DOC) to develop a distributed solar value methodology. Minnesota investor-owned utilities are permitted to use the approved methodology in applications for a Value of Solar Tariff (VOST) that would be used in lieu of a net metering billing mechanism. Under a VOST, customers are billed for all electricity usage under their existing applicable tariff and are credited for the solar electricity they produce under the approved VOST.

Methodology

The DOC was required to consult with stakeholders in order to develop the methodology for calculating a VOST. DOC was required to take into account the value of energy and its delivery, generation capacity, transmission capacity, transmission and distribution line losses, and environmental value. The DOC was also permitted to consider the cost or benefit of solar operation to the utility, credit for locally manufactured or assembled energy systems, and systems installed at high-value locations on the grid.

The DOC's final report is available here. The Minnesota Public Utilities Commission (MPUC) approved the DOC's methodology in April 2014 (link to Docket). 

Implementation

Investor-owned utilities may to apply to MPUC for a VOST as an alternative to net metering; As of November 2024, Xcel Energy and Minnesota Power have adopted the VOST.

If a utility chooses to offer a VOST, it is required to recalculate the VOST on an annual cycle and file the recalculated VOST with MPUC for approval. The VOST rate cannot be less than the retail rate used for net metering until 3 years after the MPUC approves the utility tariff. A utility must enter into a contract with an owner of a photovoltaic system for a term of at least 20 years. The owner will be compensated at the same rate per kilowatt-hour for the duration of the contract. Excess credits accumulated during a monthly billing period carry forward and expire on the last day of February each year. Customers entering into a VOST must still meet interconnection requirements and existing net metering size limitations apply.

Community Solar Gardens

Under Minnesota's previous community solar garden (CSG) program, subscribers were compensated at the VOST rate. However, under Minnesota's newer (non-legacy) CSG program, subscribers are instead compensated at fractions of the applicable retail rate (ARR).