ST. PAUL, Minn. (Minnesota Reformer) — The Legislature passed a bipartisan energy bill during the special session June 9 without two provisions that Minnesota solar power advocates said would have threatened thousands of local jobs and limited consumer choice as the state transitions to 100% carbon-free electricity by 2040.
“At the end of the day, clean energy goals don’t really mean anything if you don’t have a solar industry to develop projects,” said Logan O’Grady, executive director of the Minnesota Solar Energy Industries Association.
Supporters of the discarded measures to sunset Minnesota’s popular community solar gardens program and reduce utility payments to rural and small-town solar customers said they were needed to keep power affordable during the clean power transition.
“These provisions are birds of a feather that both attempt to reduce the cost ratepayers pay for clean energy,” said Sen. Nick Frentz, DFL-North Mankato, chair of the Senate Energy, Utilities, Environment, and Climate Committee and chief Senate author of the 2023 clean power law.
Frentz did not directly commit to bringing up the measures again next session. But his committee “will do the same thing that I think all committees should do, looking at where we are as a state and deciding what we should prioritize,” he said.
Earlier this year, Frentz’s committee voted 9-2 to advance a version of the 2025 energy omnibus with the net metering and community solar changes. A House version that did not include those provisions ultimately won out in special session negotiations.
Under current Minnesota law, community solar subscribers — including residential customers as well as businesses, nonprofits and government entities — pay solar garden operators a discounted rate for the power produced by their shares in the small arrays that dot fields and roofs around the state. They receive corresponding utility bill credits that can significantly reduce or offset the cost of electricity supplied by the utility.
The community solar program has grown dramatically since its 2014 launch, meaning Xcel Energy now pays subscribers hundreds of millions of dollars in credits annually. After years of legal wrangling, state regulators last year reduced the value of those credits in a move they said would save Xcel Energy up to $41 million per year. The ruling also expanded community solar eligibility to Minnesota customers outside Xcel territory.
Without the proposed changes, the average residential Xcel customer would have paid $7 per month in 2024 to support community solar subscribers. In 2023, Xcel estimated that community solar represented 20.5% of its electric fuel costs while providing about 3.8% of its electricity in Minnesota.
Frentz said this “cost shift” unfairly burdens regular utility ratepayers to benefit community solar subscribers, who make up a small minority of all Minnesota customers. A similar dynamic plays out between customers with onsite solar arrays, which receive “net metering” payments from local utilities that are generally much higher than the price utilities pay for power, he said.
“It’s around twice the cost that is then passed onto (customers) who did not agree to it and for the most part did not know about it,” Frentz said.
Solar proponents say that’s not the full picture.
The cost shift is a “myth,” said Bobby King, Minnesota executive director for Solar United Neighbors, pointing to a 2024 Minnesota Department of Commerce study that said community solar would deliver nearly $3 billion in net benefits over 30 years.
In any case, last year’s Minnesota Public Utility Commission ruling and state legislation passed in 2023 went a long way toward addressing calls to reform the program, O’Grady said.
The legislation, in particular, represented a hard-fought compromise between the solar industry and Minnesota utilities, ratepayer advocates and other groups, he said. It shifted responsibility for the program from Xcel to the Minnesota Department of Commerce; set declining annual caps on new statewide community solar capacity; significantly increased the maximum size of individual installations; and established carveouts for low- and moderate-income subscribers.
“The changes the Senate wanted to see already happened,” O’Grady said. “We didn’t love them all, but we agreed to them because we heard the message that they were needed.”
Further changes to community solar and net metering would constrain choices for customers who want alternatives to their local utility, he added. Reducing net metering payments lengthens the payback period for people who install solar on their properties, making those investments less appealing.
Frentz argued this session’s debate was about leveling the playing field for all clean electricity sources in all parts of the state, rather than continuing to put a thumb on the scale for smaller-scale solar installations that today mostly serve Xcel customers. The promise of fairness and flexibility helped quell rural electric cooperatives’ and municipal utilities’ opposition to the 2023 carbon-free power law, he said.
Right now, the lowest-cost path to a carbon-free grid involves lots of large-scale wind, solar and battery power. But that could change as technological breakthroughs drive down the cost of other forms of power, like geothermal, Frentz said.
“Flexibility is the selling point,” he said.
Another threat: Republicans in Washington
Whether that flexible clean energy future comes to pass in time for Minnesota’s 2040 deadline depends to some extent on what happens in Washington, D.C. this summer.
On May 22, the Republican-controlled House passed a sweeping budget that would rapidly phase out federal tax credits for wind, solar, geothermal and other carbon-free power sources. President Donald Trump urged the Senate “as soon as possible” to ratify the bill, which independent analyses say could dramatically reduce new clean energy deployments and add $33 billion to consumers’ annual energy bills by 2035.
Days later, Trump took executive action to force at least two aging, expensive coal- and oil-fired power plants to remain open past their scheduled retirement date, citing the “national energy emergency” he declared in the opening hours of his second term.
If enacted, the Republican budget “would eviscerate our industry…we could see 75% of our members go out of business or get acquired by others,” O’Grady said. “To me, this is an anti-jobs bill.”
O’Grady’s focus right now is “putting names to faces” for GOP legislators whose votes could be decisive. A meeting between staff from top-ranking House Republican Rep. Tom Emmer and a dozen MnSEIA members representing about 2,000 jobs was cause for cautious optimism, and MnSEIA is encouraging members who do business in other GOP-leaning areas to engage with local representatives, O’Grady said.
No matter how the federal fight turns out, Minnesota’s solar industry is gearing up for another state policy bout in 2026.
“We fully anticipate this issue will be brought up next year and we will fight it,” O’Grady said.
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