Perspectives

Sunny prospects

Why new rules on solar energy mean opportunities for small and midsize businesses

By John Farrell
Tuesday, June 24, 2014

For most businesses, energy is just another expense. But new rules and falling costs for solar energy may shift how Minnesota businesses think about their rooftops and energy bills.
 
The turning point for Carolyn Faacks, owner of Nokomis True Value Hardware in Minneapolis, was reached last summer. The high cost of energy for air conditioning made reducing energy costs an imperative, but new equipment and energy efficiency had their limits. A lease-to-own option for a rooftop solar array made solar a cost-effective option from day one — an opportunity too good to pass up. Now, the 75 panels atop her store make a big dent in her summer electricity bills.
 
Faacks may be joined in solar adoption by a host of other Minnesota businesses, if last year’s solar energy legislation rolls out as intended (the regulatory rule-making should be finished by summer’s end). 
 
The Solar Energy Jobs Act — drafted and passed through the efforts of the Institute for Local Self-Reliance and many others — requires the state’s investor-owned utilities (e.g. Xcel Energy) to obtain 1.5 percent of their power from solar energy by 2020, and also introduces new ways, available shortly, for home and business owners to take part in clean energy.
 
The law means that businesses like Nokomis True Value Hardware will be among many who install solar in Minnesota. Over the next five years, the number of solar installations in Minnesota will expand nearly 50-fold due to the new law, according to the Institute for Local Self-Reliance. 
 
Businesses in other states with burgeoning solar markets (New Jersey, California, Missouri) have already tapped into the energy-savings potential, thanks to similar legislation.  
 
Minnesota’s solar laws do more than create a market where businesses can slash their energy bills by producing their own power. They also require a full accounting of the value of solar energy for the utility and all electric ratepayers. For the first time, the advantages of solar power — such as having no fuel cost and producing electricity locally, without long-distance “shipping and handling fees” — will be included in the compensation businesses receive for using solar energy. 
 
Preliminary estimates of this aptly named “the value of solar” policy predict a significant increase in such compensation, helping businesses drive down their energy costs. As of this writing, it remains to be seen whether investor-owned utilities, having been given the choice by the solar law, will opt to offer “value of solar” in lieu of the existing “net metering.”
 
Businesses not ready to join the solar rooftop revolution for themselves may be able to take advantage of Minnesota’s new solar legislation in other ways.  The law requires Xcel Energy specifically to adopt a “community solar gardens” program, allowing a group of people to invest in a solar array in their community and use a portion of its energy to reduce their own energy bills. Businesses with a sunny roof can host solar panels for these solar gardens that will be owned by investors in their community — and share in the savings. (Find out how at mncommunitysolar.com.)
 
For example, Minneapolis-based Northern Sun Merchandising, which sells T-shirts, buttons, posters, and the like, has already laid plans for hosting a community solar project. Company owner Scott Cramer will receive $800 to $1,000 per year in lease payments from the 40-kilowatt project’s local investors, offsetting his own energy costs (note: larger projects will have proportionally larger lease payments). While not as much as he’d save from owning the solar array himself, he’ll have a visible symbol of his commitment to clean energy on his roof; meanwhile, neighborhood residents and businesses will form a stronger connection to his company because they use his rooftop to offset their own energy bills.
 
Minnesota businesses have a burgeoning opportunity to reduce their own energy costs, and to keep more of the state’s energy dollars at home. More than $20 billion per year is sent by Minnesota energy users out of state to import mostly fossil-fuel energy. A solar array can substitute Minnesota sunshine for Colorado coal, keeping more money in the local economy and leaving more profit on the bottom line.  

Bio

John Farrell directs the Democratic Energy initiative at the Minneapolis-based Institute for Local Self-Reliance. He is best known for his vivid illustrations of the economic and environmental benefits of local ownership of decentralized renewable energy.

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