Early in the 2023 session, Senate DFLers passed an historic piece of legislation to establish a carbon-free energy standard for the state’s electric utilities. After its passage, we then spent the remainder of the session crafting an Energy budget that would provide the necessary resources to help achieve the carbon-free standard, through infrastructure upgrades and funding opportunities for clean energy projects. Our budget will position the state to maximize the amount of federal IIJA and IRA climate money we can receive for clean energy programs and projects; our local governments, businesses, and utilities will have state assistance to put forward competitive proposals, and Minnesotans across the state will benefit from the resulting high-quality jobs. Our work in Energy this session proves that we can back up our ambitious proposals with the investments necessary to achieve them.
100% Carbon-Free Electricity by 2040
The 100% carbon-free goal was originally announced by Governor Walz in 2019 with the target year of 2050. In 2021, the governor announced he would accelerate his plans by moving the goal up a decade – to achieve 100% carbon-free electricity by 2040. While Senate DFLers have been carrying this bill for several sessions now, 2023 was the first time the bill was heard in the Senate, and after years of stakeholder engagement and input, we passed the bill into law by early February.
The 100% by 2040 bill contains a new regulatory framework for the state’s electric utilities, which will reduce carbon emissions and help the state in its goal to become carbon neutral. Renewable energy sources are those like solar, wind, hydroelectric facilities, hydrogen, and biomass. Carbon-free energy is electricity produced without emitting carbon dioxide, which includes non-renewable sources like nuclear energy.
In addition to these new energy emissions standards, we are also bringing environmental justice considerations into the statues for utility regulatory processes for the first time by directing the PUC to consider the impacts their decisions would have on areas of environmental justice concern. In addition, the framework directs the PUC to maximize the benefits of renewable energy projects for all Minnesotans to experience, but especially communities impacted by the closure of fossil fuel facilities.
SUPPORTING NEW CLEAN AND RELIABLE ENERGY INFRASTRUCTURE
State Competitiveness Fund
Passed in April, the State Competitiveness Fund serves as a source of matching funds for federal energy grant funds under the Infrastructure Investment and Jobs Act (2021) and the Inflation Reduction Act (2022). The $115 million of funding within this bill will help Minnesota projects to compete for a federal match, and DFL engagement with energy and consumer advocates also ensured that this funding can be used to provide grant writing and technical assistance to groups and organizations who may benefit from extra expertise.
The projects funded with these dollars will help the state meet its new clean energy goals under the 100% by 2040 framework by investing in new renewable energy deployment, grid resiliency work, and energy conservation and efficiency improvements.
Grid Resiliency Grants and Distributed Energy Upgrade Program
Two new programs would help make significant upgrades to grid infrastructure through resiliency improvements and improvements to enable the interconnection of distributed energy projects. Within the general fund spending for the energy budget, $5.3 million is allocated for grid resiliency grants, and $10.25 million from the Renewable Development Account is allocated for distributed energy upgrade grants.
High Voltage Transmission Line To North Dakota
This funding would be used to provide a $15 million grant to Minnesota Power to serve as the match requirement for a project seeking IIJA funding. This combined state and federal funding would facilitate upgrades to the utility’s 465-mile High-Voltage Direct-Current (HVDC) transmission line connecting northeastern Minnesota with North Dakota.
Minnesota Climate Innovation Finance Authority, aka Green Bank
Though the framework was included in the omnibus Jobs bill, this Energy proposal would establish a public corporation to stimulate the development of clean energy and greenhouse gas emissions reduction projects by using innovative financing tools to leverage private and public capital to overcome the market barriers that inhibit the financing of these projects. A total of $45 million was appropriated for the Minnesota Green Bank between the Jobs and Energy budgets.
Negotiated Extension for Monticello Nuclear Waste Storage
Senate DFLers worked with the House, Governor, Xcel Energy, Prairie Island, and other stakeholders to negotiate the final terms of an agreement between the utility and the Tribe over the storage of nuclear waste from Xcel’s nuclear facility in Monticello.
Under this agreement, which was ratified in the 2023 Energy budget omnibus provisions, the utility will pay Prairie Island an additional $7.5 million (for a total of $11 million) annually for as long as the nuclear plant continues to operate. The agreement also includes an increased fee for every cask of spent nuclear waste that is stored there.
This sign off from the Legislature will assist with the 20-year extension Xcel is seeking for their nuclear facility. The extension of this existing facility will help the utility as it builds out its plans for meeting the carbon-free requirements under the 2040 framework.
In addition to adding funding for the already popular Solar for Schools and State Colleges programs and Xcel Energy’s Solar Rewards program, Senate DFLers passed several new policy changes and funding mechanisms to aid in the deployment of small-scale renewable energy projects across the state.
Restricting HOA’s Ability to Ban Solar Energy Projects
Under previous law, HOA’s were able to outright ban the installation of solar panels on owners’ homes. This year’s changes would restrict an HOA’s ability to outright prohibit these projects while retaining some authority over certain requirements that would need to be met.
Solar on Public Buildings
Similar to the Solar for Schools program, this establishes a program in the Department of Commerce to award grants to local units of government for the purchase and installation of solar energy generating systems on public buildings. Because the $5 million of funding in this bill is from the RDA, this program is only available to public buildings within Xcel’s service territory.
Community Solar Gardens
New changes to the state’s community solar program seek to expand access for low- and moderate-income subscribers. Going forward, there will be a capacity cap on the program, which starts at 100MW through 2026 and phases down from there; the rationale for this change is to help keep costs down for non-subscribing ratepayers. And in another move to keep rates down for consumers, utilities will now pay for solar energy generated using the lower average retail price instead of the higher value of solar.
There will be new priorities for approving projects that best benefit the community and subscribers, and a new subscription model will ensure that at least 30% of solar garden subscribers are low- or moderate-income Minnesotans.
Tribal Advocacy Council on Energy
After nearly passing in 2022, we prioritized bipartisan legislation to authorize the Department of Commerce to provide technical support and expertise to a Tribal Advocacy Council on Energy, if one were to be established by any of the 11 federally recognized Tribes in Minnesota. The language passed does not obligate the Tribes to establish a council, nor is any Tribe compelled to participate in the council or implement any of its decisions should one be established by other Tribal governments; but by providing operational funding and Department expertise, the state is prepared to partner with Tribes to pursue any of the energy policies or projects they have identified as priorities.
SUPPORTING EMISSIONS REDUCTIONS AND LOWER ENERGY COSTS
This year’s budget included over $38 million for pre-weatherization assistance and weatherization workforce training grants. These funds will help households throughout Minnesota by building on the existing weatherization assistance program, allowing Minnesota to serve more homes and help households that may have otherwise been denied weatherization assistance services. The training grants authorized under this language will also help bolster the workforce to ensure we have quality, trained workers prepared to take on these jobs.
Weatherization helps to reduce energy consumption and therefore reduce consumer energy bills. Heavy investments at the state and federal levels will aid low-income households by lowering their costs and will further reduce carbon emissions in the energy sector by reducing energy usage.
Electric Vehicle and School Bus Deployment
Within this year’s Energy budget are two programs designed to accelerate the electric vehicle market in Minnesota. The first part of the program offers $2 million for auto dealers seeking their electric vehicle certification, to sell EV models. The second part of the program offers $15.72 million for consumer rebates for purchasing or leasing new or used electric vehicles. New vehicles that are $55,000 or less are eligible for a $2,500 rebate, and used vehicles that are $25,000 or less are eligible for a $600 rebate.
And in addition to passing new policies supporting EV adoption by Minnesota consumers, businesses, and the state fleet, this year’s budget also includes $13 million for a statewide electric school bus deployment program.
Residential Electric Panel Upgrade Grants and Heat Pump Rebates
Two new consumer programs will assist homeowners in electrifying their homes. The first provides $6.5 million for grants of up to $3,000 for single family homes and $50,000 for multifamily homes; by upgrading these panels, homes will have added capacity needed for the building’s energy needs to be met solely by electricity.
The second program provides $13 million in consumer rebates of up to $4,000 for purchasing and installing a cold climate rated air-source heat pump in their home. Heat pumps use electricity to transfer heat from a cool space to a warm space, providing both heating and cooling options.
Updating The State’s Greenhouse Gas Emissions Reductions Goals
Last updated in 2008, the new goals – which are based on 2005 emissions levels – would bring the state to net zero emissions by 2050. These reduction goals cross all sectors, and Minnesota is currently on track to meet our existing 2025 goal for the first time. In total, the goals are as follows:
- 15% reduction by 2015
- 30% reduction by 2025
- 50% reduction by 2030 (new this year)
- Net zero reduction by 2050 (new this year)