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Minnesota pushes solar power; mines, mills off the hook

The Minnesota Legislature appears poised to enact landmark state energy policy in coming days requiring, for the first time, that big utilities make electricity from the sun.

The solar energy mandate will mean cleaner energy, less coal burned and probably higher utility bills for many Minnesotans who get their electricity from large utilities like Minnesota Power and Xcel Energy. But the legislation won’t affect Northeastern Minnesota’s taconite mines and paper mills because of exemptions secured by the region’s legislative delegation.

The Senate version, which passed Friday, requires 1 percent of large utility power to be solar by 2025.

The House version, which passed Tuesday, includes a mandate for large, investor-owned utilities to make 4 percent of their electricity by solar by 2025 — above and beyond the 25 percent renewable energy requirement by 2025 that has been on the books since 2007.

The two versions now will go to a conference committee, where a compromise bill will be hashed out in the final week of the legislative session before going to Gov. Mark Dayton to be signed into law.

Both bills exempt taconite operations, recycled iron ore “scram” mining operations and wood products plants from any rate increase attributed to the solar energy mandate. But lesser known are provisions in the House bill that also exempt all rural electric cooperatives and municipal utilities. All told, nearly one-third of the state would be exempted.

The DFL-sponsored bill passed the House by a slim, 70-63 margin. Had the northern Minnesota industry carve-outs not been included, it’s likely Iron Range lawmakers would have sided with Republicans and voted against the bill, making it unlikely to pass.

Minnesota Power experts estimate that a 4 percent solar mandate would raise electric bills for taconite plants 10 to 15 percent.

“It would be a game changer for taconite and paper if they had to absorb the increase for those solar mandates,” said Rep. Tom Anzelc, DFL-Balsam Township, chairman of the Iron Range delegation of lawmakers. “These are industries that have to compete globally ... and that’s the kind of cost increase that could push them out of competitiveness.”

Solar support

The solar mandate is seen by renewable energy supporters as critical to pushing the state into new energy sources and away from carbon-spewing coal that’s blamed for global climate change and mercury pollution. Supporters also say the mandate will help create jobs in the solar energy sector, bolstering Minnesota’s only solar producers, Silica Energy in Mountain Iron and TenKsolar in Bloomington, but also creating jobs installing and servicing solar systems.

In addition to the solar mandates, the bills also include incentives for home and business owners to install solar panels and continue a state subsidy for Minnesota-made solar panels.

According to supporters, Minnesota would become the 17th state to pass solar mandates for utilities.

But critics, including most Republicans in the House and Senate, say the bill will raise energy prices for most Minnesotans, and they cite the need to exempt industry in DFL-dominated areas like the Iron Range as an indication the legislation is probably bad for business in all areas of the state.

For northern industries that gobble up huge amount of electricity, energy costs already were an issue before the solar mandates. Energy costs have been blamed as one reason so many Minnesota wood products mills have closed in recent years.

“When Minnesota Power looked at this, they found the increase would have meant $10 million per year for two of the (taconite) companies. That’s $10 million for each of them, and that’s just the increase,” said Craig Pagel, executive director of the Iron Mining Association of Minnesota industry trade group. “Iron Range legislators realized that kind of cost increase is too much for an industry that’s facing global competition, when the price of iron ore is settling and when the cost to produce iron ore is going up.”

Those two companies are apparently Minnesota’s largest taconite producers: U.S. Steel, which operates the Minntac and Keetac plants, and Cliffs Natural Resources, which operates NorthShore Mining, United Taconite and Hibbing Taconite.

The House legislation specifically says that the energy used by exempted industries and small utilities won’t be included as part of the total from which the 4 percent solar requirement is figured. In addition, the amount of energy used by the exempted industries won’t be included in the total regional energy use “so other customers will not have to pay for the mining industry not being included,” Pagel noted.

Higher bills for others

But even with about 60 percent of Minnesota Power’s total customer load exempted under the legislation, adding solar for the other 40 percent of us — about 150 megawatts under the 4 percent mandate — will be a big, expensive task, said Julie Pierce, manager of long term resource planning for the Duluth-based utility.

Each megawatt of solar panels requires about an acre of land, and 150 megawatts would mean 2,250 acres of solar panels.

Pierce said the overall price of solar remains many times higher than other renewable energy costs. For example, Minnesota Power is producing energy from North Dakota wind turbines for about $20 per megawatt hour with federal incentives, or about $50 without, when the cost of buying and installing the turbines and transmission lines is averaged over their lifetimes. That compares to an estimated cost of $200 per megawatt hour for solar.

Solar is getting better and cheaper as advancements are made in photovoltaics “but it’s still a very costly option to implement at a utility scale,” Pierce said.

While the 2007 legislation requiring 25 percent renewable energy by 2025 gave utilities the option of which power sources to use, the new law forces solar.

“We have looked at this and studied it and it still comes back to the fact that solar is far more expensive than other renewables,” Pierce said.

James Hietala of Duluth, a member of a local Sierra Club clean energy committee, says the cost will be worth it to reduce the amount of coal that Minnesota Power burns. He said the heavy industry exemptions weren’t popular among environmental groups but were seen as necessary for the bills to pass.

“It’s a big trade off. These carve-outs for some big industries are disappointing,” Hietala said. “But the sense was just to get anything passed was a big step this year. This (solar mandate) is an important first step, and I guess something is better than nothing.”

But Chisholm mining critic Elanne Palcich said taconite companies should be required to pay a little more for cleaner energy just like other Minnesotans are.

“Mining companies are the ones using the greatest amount of energy at the same time that they are degrading the environment for future generations,” she said. “They should be held to a higher standard. Instead we keep lowering the standards while subsidizing mining.”

Article written by John Myers of the Forum News Service

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