Targeting more green innovation, bill would extend incentives to on-site energy storage

“What do you do when the sun doesn’t shine or the wind doesn’t blow?”

That’s been a common question over the past five years whenever proposed legislation was debated about expanding the use of solar or wind energy. The most frequent answer lately is that, to make these energy sources more consistently reliable, battery storage technology is the next piece of the puzzle.

That’s why HF4402 would create a new incentive program for installing energy storage systems.

Sponsored by Rep. Jamie Long (DFL-Mpls), the bill would extend Xcel Energy’s Solar Rewards incentive program through 2026, and create a $10 million grant program to reduce the cost of purchasing and installing an on-site energy storage system.

On Tuesday, the bill, as amended, was laid over by the House Climate and Energy Finance and Policy Committee for possible inclusion in an omnibus bill. Its companion is SF4119, sponsored by Sen. David Senjem (R-Rochester), which awaits action by the Senate Energy and Utilities Finance and Policy Committee.

The incentive program funding source would be the Renewable Development Account, a state-administered fund designed expressly for the purpose of developing renewable energy sources in Minnesota. Xcel Energy pays into it with annual fees of between $350,000 and $500,000 for each cask of nuclear waste it stores at its Prairie Island and Monticello facilities.

The bill would double the current amount of annual outlays from the Renewable Development Account for Xcel Energy’s Solar Rewards program, which provides per-kilowatt-hour production incentives for 10 years for 40 kilowatt-or-less solar arrays. It would also extend the program to fiscal year 2026 at $10 million annually.

Contractors and subcontractors installing solar and energy storage projects funded under the bill would be subject to the state’s prevailing wage statutes for those projects.

“Solar Rewards has been a bipartisan and broadly supported program,” Long said. “This new and parallel storage rewards program would provide lump sum grants for storage systems under 50 kilowatt hours.

“We’ve heard about the many benefits of storage, including load shifting in order to help move load away from peaks. If integrated with smart technology, this could be aggregated even as a backup power source with utilities. With time-of-day rates, it could reduce costs to consumers. This could also offer resiliency for local customers in the event of an outage.

“So there’s a lot of innovation possible with storage, but the market is just getting started in Minnesota. This will give it a needed boost.”

“By deploying energy storage, we’ll build the grid of the 21st century,” said Logan O’Grady, executive director of MnSEIA, an advocacy organization for the solar energy industry.

Rep. Chris Swedzinski (R-Ghent) asked Michael Allen, president of solar energy developer All Energy Solar, if the solar market would collapse if Xcel’s Solar Rewards program went away.

“No, I don’t believe that,” Allen said. “This provides a relatively small incentive. Would it be a setback? Yes. … But that would be a sign that the state no longer supports meeting its clean energy goals.”