As the penetration of distributed PV has increased, concern over cross-subsidization has grown as fewer customers are available to pay for fixed infrastructure costs (e.g., transmission and distribution costs). In 2013, Minnesota passed legislation allowing investor-owned utilities to offer a Value of Solar (VOS) tariff as an alternative to net metering which compensates excess PV-generated electricity at full retail rates. On March 12, 2014, the Minnesota Public Utilities Commission voted 3-2 to approve the specific methodology for calculating the value of distributed solar generation.
The VOS tariff is emerging as a potential replacement to net-metering policies. If successful, the VOS rate will create a rate that “will account for the real value of the PV-generated electricity, and the utility and its ratepayers [will] be indifferent to whether the electricity is supplied from customer-owned PV or from comparable conventional means.” Regulators, utilities, and the solar industry will be closely watching Minnesota’s implementation to understand the impact and effectiveness of VOS tariffs.
Full Methodology: http://bit.ly/1ie7J5x
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