Minneapolis Proposal for 100% Renewable Energy Leads the Way for Minnesota

As with many things, Minnesota already does well in renewable energy, even as it strives to do better. Two years ago we reported that the state was officially on track to meet its Renewable Portfolio (RPS) goal of 25% renewable by 2025. The state agency that monitors utility compliance with two-year-old data confirms that we are still on track. A new report even suggests that Minnesota’s utilities might be ahead of the schedule. But what if the schedule—from 2007, a lifetime ago in terms of renewable technology and cost—needs an update?

Because our state has no fossil fuels or uranium deposits, home-grown energy—and the jobs that follow—must come from its breezes, sunshine, and flowing waters. And its biggest city prepares to lead the charge with its own kind of RPS.

Minneapolis, like many cities across the world, is moving forward with a pledge to consume only 100% renewably-generated electricity. Some of you might wonder: What does that mean, exactly? If you read a recent North Star piece, you may wonder how the city could promise that all electric power will be renewable—doesn’t power flow continent-wide?

What is a REC, and why is it important?

The renewable energy certificate, or REC (“rěk”) is an item of intangible personal property that denotes one megawatt hour (MWh)—one thousand kilowatt hours (kWh)—of renewable energy generated and delivered to the grid. It’s your gold star sticker. The price for a REC fluctuates with the market. Roughly 10 RECs would cover the annual electricity of the average US household.

Every business you’ve seen (credibly) claim to be “powered by 100% renewable energy” purchases RECs, or else retains ones generated by its own renewable electricity. Xcel Energy, the footprint of which covers many Minnesotans, offers the Renewable*Connect program to sell RECs to ratepayers of all stripes, including city governments.

RECs may be bundled with the sale of electricity, or purchased separately. Non-profit organizations track and certify RECs throughout the United States and much of North America; right here in Minnesota you can find M-RETS, which uses production data from the Midcontinent Independent System Operator (MISO) to track the credits.

Minnesota’s energy mix

Minnesota is a net energy importer, by about 6 billion kWh, or 6TWh—a smidge over 10% of the state’s annual consumption. Over the last four years, renewable sources have grown 1.6GW in capacity. That growth, along with that of natural gas, has displaced coal generation to the tune of 7% of the state’s generation.

Minnesota’s electricity generation mix by technology

Excerpted from Bloomberg New Energy Finance State energy factsheet: Minnesota,” which notes that “2017 values are projected, accounting for seasonality, based on the latest monthly values from EIA [U.S. Energy Information Administration].

As you can see, the renewable portion of the mix in the state has hit the general 25% by 2025 mark eight years early. These top-line figures do not tell the whole story, however, as the RPS varies for each utility within Minnesota; Xcel must reach 31.5% by 2020. Some climate hawks have theorized that 100% continent-wide is possible. Could Minneapolis—or other cities— help Minnesota push the envelope?

The road ahead for Minneapolis

As of August, 2017, the city estimated that 18.2% of its electricity in 2018 would be generated by renewable sources. To get to 100% in the next five years, the city laid out a plan in October of last year. The plan presents three parallel strategies: purchase of RECs through Renewable*Connect and other regional sources; generation by city-owned solar facilities; and, Community Solar Garden subscriptions to pay for the RECs.

The city, for operations of its buildings, purchased 17.8 million kWh worth of RECs through Xcel’s Renewable*Connect program last June, which maxes out what Xcel can provide, as stipulated by the Minnesota Public Utilities Commission (PUC). Xcel Energy has requested that the PUC expand the maximum amount of RECs that a single customer may purchase, so that Minneapolis might purchase an additional 50 million kWh worth, which would ratchet up renewable sources to 70% of the city’s consumption.

The city owns several solar arrays, largely on the rooftops of its properties, like the Convention Center. These—and potentially new arrays—generate electricity directly for the facilities; associated RECs similarly flow directly to the city, and do not count toward Xcel Energy’s RPS requirements, which are higher than those of other Minnesota utilities. The city estimates that these systems could produce over 8 million kWh of solar electricity a year, pay for themselves within 11 years, and have a lifetime net present value of more than twice the initial capital outlay.

The city has also explored the possibility of purchasing Community Solar Garden (CSG) subscriptions to help offset the cost of REC purchases. Subscriptions to CSGs add two new transactions to the city’s electric bills: 1) a monthly credit from Xcel against charges incurred for kWh consumed; 2) monthly payments to the CSG operator. The net result is an annual savings in energy cost, with typically little to no upfront costs. By PUC order, RECs generated by the CSGs accrue to Xcel, not the city. So, while CSG subscriptions will help Xcel meet its RPS standards, they will not do the same for Minneapolis—even if they help save the city money.

City of Minneapolis plan for 100%

From the City of Minneapolis, “Blueprint for Powering Minneapolis Municipal Operations with 100% Renewable Electricity by 2022

Implications for Minnesota

This Minneapolis plan will spur demand for new renewable energy generation right here in the Gopher State. That demand means more local economic development, and more jobs in one of the fastest growing industries in America.

Minnesota ranked sixth in the nation for wind power as of 2016, at 17.7% of generation. The solar industry, despite new national pressures on the horizon, has also succeeded in typical Minnesotan, above-average fashion. Jobs in the Minnesota solar industry grew 48% in 2017, more than any state other than Delaware; the state now ranks 16th nationally in total and per capita solar jobs.

The city’s stated goals for this program include the expansion of Xcel’s renewable portfolio beyond current levels—so-called “additionality”—and the creation of local and regional jobs in renewable energy. Because much of the new renewable capacity in solar and wind farms will grow on land outside the boundaries of Minneapolis, the city’s investments will necessarily support economic growth in Greater Minnesota.

Even if the state does not hold itself to a higher standard of renewable generation, its largest city might.