Incentives for DevelopingIncentives for DevelopingLocally-owned Wind in MinnesotaLocally-owned Wind in Minnesota

American Public Power AssociationAmerican Public Power Association2006 Business & Financial Conference2006 Business & Financial ConferenceSeptember 19, 2006September 19, 2006

About the SpeakerAbout the Speaker

Asst. Commissioner for Renewable Energy

Fifteen years experience in variety of key staff positions Governor’s Office; MN Dept. of Commerce; MN

Public Utilities Commission; MN Office of Attorney General; MN House of Representatives and MN Senate

Presentation OverviewPresentation Overview

General Comments

REPI Program (1995-2000)

REPI plus Xcel (2000-2004) Standard Offer

C-BED program (2005 to present)

General CommentsGeneral Comments

Minnesota targets incentives towards locally-owned energy projects

These provide the optimum mix of benefits to Minnesotans

Most comprehensive community energy program in the country

Renewable Energy Renewable Energy Production IncentiveProduction Incentive

Established in 1995

Pay 1.5 cents per kwh for 10 years for eligible projects

Energy must produced by locally-owned wind project with a capacity of 2 MW or less

Capped at 100 MW

Only a handful of projects before the year 2000

REPI Plus Xcel Standard OfferREPI Plus Xcel Standard Offer

In 2000, the MN Dept. of Commerce and Xcel Energy developed a standard offer for locally-owned small wind projects

Xcel agreed to pay 3.3 cents per kwh for 20 year contracts

Projects qualified for REPI as well 4.8 cents per kwh for the 1st 10 years 3.3 cents per kwh for the last 10 Plus federal PTC

REPI Plus Xcel Standard OfferREPI Plus Xcel Standard Offer (cont.)(cont.)

100 MW cap met in 2002

Additional 100 MW of REPI authorized in 2003

All 200 MW fully subscribed (with a waiting list) by the end of 2004

Community-Based Energy Community-Based Energy DevelopmentDevelopment

Policy-makers wanted to extend REPI again, but the state had significant budget deficit

Without $$, needed to be creative

Created “C-BED” tariff in 2005

No size limitation

Community-Based Energy Community-Based Energy DevelopmentDevelopment (cont.)(cont.)

C-BED tariff allows the utility to pay a front-end loaded rate

A higher rate in 1st 10 years of a 20-yr contract

In exchange for a lower rate in the later years

Results in a rate similar to REPI plus Xcel standard offer

Governor Pawlenty’s C-BED Governor Pawlenty’s C-BED GoalGoal

800 MW of C-BED wind by 2010

An est. $1.2 billion clean energy investment in our rural communities

Xcel has committed to 500 MW

Governor Pawlenty’s C-BED Governor Pawlenty’s C-BED Goal Goal (cont.)(cont.)

Contracts for ~400 of C-BED wind signed or being negotiated by MN utilities

MN should have a total of ~1500 MW of wind capacity installed by the end of 2007

40% of this total will be locally-owned projects

C-BED Lessons LearnedC-BED Lessons Learned

C-BED projects are much harder to arrange than traditional wind projects But provide more benefits A few utilities are working hard to work

through difficulties Developers are sharing information &

expertiseLooking at policies to address these

issues & get more utilities committed to C-BED

Contact InformationContact Information

Mike BullMike BullAssistant Commissioner Assistant Commissioner Renewable Energy & Advanced TechnologiesRenewable Energy & Advanced Technologies

Minnesota Department of Commerce85 7th Place East, Suite 500St. Paul, MN 55101

651-282-5011 Fax 651-297-7891

Mike.Bull@state.mn.us