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On May 23, Minnesota Gov. Mark Dayton signed into law a bill requiring the state's investor-owned utilities (IOUs) to procure 1.5% of their electricity from solar energy by 2020.

The legislation signed by the governor was a compromise. On May 7, the Minnesota House passed a bill with a 4% by 2025 solar carve-out. Three days later, the Minnesota Senate passed companion legislation with a 1% by 2025 goal. The reconciled version of the bill passed the legislature May 16.

The state's IOUs, including Otter Tail Power Co., Minnesota Power and Xcel Energy, have expressed concern that the solar carve-out may prove too costly.

According to a StarTribune report, Otter Tail Power Co. estimates the new law will increase its rates by 3% to 5%, and Xcel CEO Ben Fowke said, “It doesn’t mean that we don’t support renewables, but at least today, solar is quite a bit more expensive than other alternatives.”

Among the provisions of the new law is a requirement that at least 10% of the 1.5% carve-out must come from PV systems rated at 20 kW or less. According to the legislation, this is intended to prompt utilities to encourage ratepayers to install their own solar systems, as electricity generated by them is included in the 1.5% target. The utilities are also required to fund solar energy incentive programs for retail customers to the tune of $5 million a year for five years.

The law includes provisions for community "solar gardens" to enable consumers whose homes or locations are individually unsuitable for solar power to participate in utility incentive programs. In addition, the law includes a "Made in Minnesota" incentive to help spur local sourcing of solar photovoltaic products.

Electricity consumed by the state's mining and paper producers are not counted in the retail sales totals, and those customers are exempt from any rate increases that may be imposed by utilities in the course of satisfying solar power requirements.

The law also states it is Minnesota's goal that 10% of electric retail sales be generated by solar energy by 2030, although there were no provisions for enforcing that target.

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