HF 1738

Introduction - 94th Legislature (2025 - 2026)

Posted on 03/06/2025 03:56 p.m.

A bill for an act
relating to energy; repealing the renewable development account; making
conforming changes in associated statutes; sunsetting a utility's solar production
incentive program; establishing accounts; appropriating money; amending
Minnesota Statutes 2024, sections 116C.7792; 116J.55, subdivision 5; 216B.1645,
subdivision 1; 216C.377, subdivision 3; 216C.417, subdivision 2, by adding a
subdivision; repealing Minnesota Statutes 2024, sections 116C.779, subdivisions
1, 2; 116C.7791; 216C.41.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2024, section 116C.7792, is amended to read:

116C.7792 SOLAR ENERGY PRODUCTION INCENTIVE PROGRAM.

new text begin Subdivision 1. new text end

new text begin Program operations. new text end

(a) The utility subject to section deleted text begin 116C.779 deleted text end new text begin
216B.1641 new text end shall operate a program to provide solar energy production incentives for solar
energy systems of no more than a total aggregate nameplate capacity of 40 kilowatts
alternating current per premise. The owner of a solar energy system installed before June
1, 2018, is eligible to receive a production incentive under this section for any additional
solar energy systems constructed at the same customer location, provided that the aggregate
capacity of all systems at the customer location does not exceed 40 kilowatts.

(b) new text begin Through 2025, new text end the program is funded by money deleted text begin withheld from transfer to the
renewable development account under section 116C.779, subdivision 1, paragraphs (b) and
(e). Program funds must be placed deleted text end new text begin that the utility deposits new text end in a separate account for the
purpose of the solar energy production incentive program operated by the utility and not
for any other program or purpose.

(c) Funds allocated to the solar energy production incentive program in 2019 and 2020
remain available to the solar energy production incentive program.

(d) The following amounts are allocated to the solar energy production incentive program:

(1) $10,000,000 in 2021;

(2) $10,000,000 in 2022;

(3) $5,000,000 in 2023;

(4) $11,250,000 in 2024; new text begin and
new text end

(5) $6,250,000 in 2025 deleted text begin ; and deleted text end new text begin .
new text end

deleted text begin (6) $5,000,000 each year, beginning in 2026 through 2035.
deleted text end

(e) Notwithstanding the Department of Commerce's November 14, 2018, decision in
Docket No. E002/M-13-1015 regarding operation of the utility's solar energy production
incentive program, half of the amounts allocated each year under paragraph (d), clauses (3),
(4), and (5), must be reserved for solar energy systems whose installation meets the eligibility
standards for the low-income program established in the November 14, 2018, decision or
successor decisions of the department. All other program operations of the solar energy
production incentive program are governed by the provisions of the November 14, 2018,
decision or successor decisions of the department.

(f) deleted text begin Funds deleted text end new text begin Money new text end allocated to the solar energy production incentive program that deleted text begin have deleted text end new text begin
has new text end not been committed to a specific project at the end of a program year deleted text begin remain deleted text end new text begin remains new text end
available to the solar energy production incentive program new text begin , except that the utility's money
that has not been obligated to a specific project by December 31, 2025, must be refunded
to the utility's electric service customers in a manner and according to a schedule determined
by the Public Utilities Commission new text end .

deleted text begin (g) Any unspent amount remaining on January 1, 2028, must be transferred to the
renewable development account.
deleted text end

deleted text begin (h) deleted text end new text begin (g) new text end A solar energy system receiving a production incentive under this section must
be sized to less than 120 percent of the customer's on-site annual energy consumption when
combined with other distributed generation resources and subscriptions provided under
section 216B.1641 associated with the premise. The production incentive must be paid for
ten years commencing with the commissioning of the system.

deleted text begin (i) deleted text end new text begin (h) new text end The utility must file a plan to operate the program with the commissioner of
commerce. The utility may not operate the program until it is approved by the commissioner.
A change to the program to include projects up to a nameplate capacity of 40 kilowatts or
less does not require the utility to file a plan with the commissioner. Any plan approved by
the commissioner of commerce must not provide an increased incentive scale over prior
years unless the commissioner demonstrates that changes in the market for solar energy
facilities require an increase.

new text begin (i) The utility must operate the program through December 31, 2025. Beginning on
January 1, 2026, the commissioner of commerce must operate the program under this section
in conformance with the orders issued by the Public Utilities Commission in Docket No.
E002/M-13-1015, as applicable.
new text end

new text begin (j) A payment must not be made under this section to an owner of a solar energy system
who did not receive a payment under this section before January 1, 2027.
new text end

new text begin Subd. 2. new text end

new text begin Establishment of account. new text end

new text begin (a) The solar energy production incentive account
is established in the special revenue fund in the state treasury. Money received from the
general fund must be transferred to the commissioner of commerce and credited to the
account. The commissioner of commerce must manage the account.
new text end

new text begin (b) Money in the account may be expended only from January 1, 2026, to December
31, 2036. Any money remaining in the account on December 31, 2036, cancels to the general
fund.
new text end

new text begin (c) The utility subject to this section must advise the commissioner of commerce, on a
schedule determined by the commissioner of commerce, regarding:
new text end

new text begin (1) the total amount required to be withdrawn from the account to pay for solar energy
production incentives; and
new text end

new text begin (2) the amount of payments to be made separately to each program participant due a
payment under this section.
new text end

new text begin (d) Beginning in fiscal year 2027, an amount sufficient is annually appropriated from
the general fund to the commissioner to make the payments under paragraph (c) for projects
that first received payments under this section no later than December 31, 2026.
new text end

new text begin Subd. 3. new text end

new text begin Expiration. new text end

new text begin This section expires April 1, 2037.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2024, section 116J.55, subdivision 5, is amended to read:

Subd. 5.

Grant awards; limitations.

deleted text begin (a) deleted text end A grant awarded to an eligible community
under this section must not exceed $1,000,000 in any calendar year. The commissioner may
accept grant applications on an ongoing or rolling basis.

deleted text begin (b) Grants funded with revenues from the renewable development account established
in section 116C.779 must be awarded to an eligible community located within the retail
electric service territory of the public utility that is subject to section 116C.779 or to an
eligible community in which an electric generating plant owned by that public utility is
located.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 3.

Minnesota Statutes 2024, section 216B.1645, subdivision 1, is amended to read:

Subdivision 1.

Commission authority.

Upon the petition of a public utility, the Public
Utilities Commission shall approve or disapprove power purchase contracts, investments,
or expenditures entered into or made by the utility to satisfy the wind and biomass mandates
contained in sections 216B.169, 216B.2423, and 216B.2424, and to satisfy the renewable
energy objectives and standards set forth in section 216B.1691, including reasonable
investments and expenditures made to:

(1) transmit the electricity generated from sources developed under those sections that
is ultimately used to provide service to the utility's retail customers, including studies
necessary to identify new transmission facilities needed to transmit electricity to Minnesota
retail customers from generating facilities constructed to satisfy the renewable energy
objectives and standards, provided that the costs of the studies have not been recovered
previously under existing tariffs and the utility has filed an application for a certificate of
need or for certification as a priority project under section 216B.2425 for the new
transmission facilities identified in the studies; new text begin or
new text end

(2) provide storage facilities for renewable energy generation facilities that contribute
to the reliability, efficiency, or cost-effectiveness of the renewable facilities deleted text begin ; or deleted text end new text begin .
new text end

deleted text begin (3) develop renewable energy sources from the account required in section 116C.779.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 4.

Minnesota Statutes 2024, section 216C.377, subdivision 3, is amended to read:

Subd. 3.

Establishment of account.

A solar on public buildings grant program account
is established in the special revenue fund. Money received from the general fund deleted text begin and the
renewable development account established in section 116C.779, subdivision 1, deleted text end must be
transferred to the commissioner of commerce and credited to the account. Earnings, including
interest, dividends, and any other earnings arising from the assets of the account, must be
credited to the account. Earnings remaining in the account at the end of a fiscal year do not
cancel to the general fund or renewable development account but remain in the account
until expended. The commissioner must manage the account.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 5.

Minnesota Statutes 2024, section 216C.417, is amended by adding a subdivision
to read:

new text begin Subd. 1a. new text end

new text begin Account established; account management; appropriation. new text end

new text begin A "Made in
Minnesota" solar energy production incentive account is established as a separate account
in the special revenue fund in the state treasury. Earnings, including interest, dividends, and
any other earnings arising from account assets, must be credited to the account. Money
remaining in the account at the end of a fiscal year cancels to the general fund. The
commissioner of commerce must manage the account.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 6.

Minnesota Statutes 2024, section 216C.417, subdivision 2, is amended to read:

Subd. 2.

Appropriation.

deleted text begin (a) Unspent money remaining in the account established under
Minnesota Statutes 2016, section 216C.412, on July 1, 2017, must be transferred to the
renewable development account in the special revenue fund established under section
116C.779, subdivision 1.
deleted text end

deleted text begin (b) deleted text end new text begin (a) new text end There is annually appropriated from the deleted text begin renewable development account in the
special revenue fund established in section 116C.779 deleted text end new text begin general fund new text end to the commissioner of
commerce money sufficient to make the incentive payments required under Minnesota
Statutes 2016, section 216C.415. Any deleted text begin funds deleted text end new text begin money new text end appropriated under this paragraph that
deleted text begin are deleted text end new text begin is new text end unexpended at the end of a fiscal year deleted text begin cancel deleted text end new text begin cancels new text end to the deleted text begin renewable development
account deleted text end new text begin general fund new text end .

deleted text begin (c) deleted text end new text begin (b) new text end Notwithstanding Minnesota Statutes 2016, section 216C.412, subdivision 1, none
of this appropriation may be used for administrative costs.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 7. new text begin DISPOSITION OF REMAINING FUNDS.
new text end

new text begin Any money remaining in the renewable development account established under Minnesota
Statutes, section 116C.779, as of the effective date of this act must be remitted to the utility
subject to Minnesota Statutes, section 216B.1641, subdivision 1, to refund the utility's
electric service customers in a manner and according to a schedule determined by the Public
Utilities Commission.
new text end

Sec. 8. new text begin APPROPRIATION.
new text end

new text begin $5,000,000 in fiscal year 2026 is appropriated from the general fund to the commissioner
of commerce to pay for solar energy production incentives under Minnesota Statutes, section
116C.7792. This is a onetime appropriation.
new text end

Sec. 9. new text begin REVISOR INSTRUCTION.
new text end

new text begin In each section of Minnesota Statutes referred to in column A, the revisor of statutes
must delete the reference in column B and insert the reference in column C. The references
in column C may be changed by the revisor of statutes to the section in Minnesota Statutes
in which the bill sections are compiled.
new text end

new text begin Column A new text end	new text begin Column B new text end	new text begin Column C new text end
new text begin 16B.87 new text end	new text begin 116C.779 new text end	new text begin 216B.1641, subdivision 1 new text end
new text begin 116C.776 new text end	new text begin 116C.779 new text end	new text begin 116C.778 new text end
new text begin 216B.1641 new text end	new text begin 116C.779 new text end	new text begin 216B.1691, paragraph (a), clause (1) new text end
new text begin 216C.375 new text end	new text begin 116C.779 new text end	new text begin 216B.1641, subdivision 1 new text end
new text begin 216C.378 new text end	new text begin 116C.779 new text end	new text begin 216B.1641, subdivision 1 new text end
new text begin 216C.379 new text end	new text begin 116C.779 new text end	new text begin 216B.1641, subdivision 1 new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 10. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2024, sections 116C.779, subdivisions 1 and 2; 116C.7791; and
216C.41, new text end new text begin are repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

APPENDIX

Repealed Minnesota Statutes: 25-03733

116C.779 FUNDING FOR RENEWABLE DEVELOPMENT.

Subdivision 1.

Renewable development account.

(a) The renewable development account is established as a separate account in the special revenue fund in the state treasury. Appropriations and transfers to the account shall be credited to the account. Earnings, such as interest, dividends, and any other earnings arising from assets of the account, shall be credited to the account. Funds remaining in the account at the end of a fiscal year are not canceled to the general fund but remain in the account until expended. The account shall be administered by the commissioner of management and budget as provided under this section.

(b) On July 1, 2017, the public utility that owns the Prairie Island nuclear generating plant must transfer all funds in the renewable development account previously established under this subdivision and managed by the public utility to the renewable development account established in paragraph (a). Funds awarded to grantees in previous grant cycles that have not yet been expended and unencumbered funds required to be paid in calendar year 2017 under paragraphs (f) and (g), and sections 116C.7792 and 216C.41, are not subject to transfer under this paragraph.

(c) Except as provided in subdivision 1a, beginning January 15, 2018, and continuing each January 15 thereafter, the public utility that owns the Prairie Island nuclear generating plant must transfer to the renewable development account $500,000 each year for each dry cask containing spent fuel that is located at the Prairie Island power plant for each year the plant is in operation, and $7,500,000 each year the plant is not in operation if ordered by the commission pursuant to paragraph (i). The fund transfer must be made if nuclear waste is stored in a dry cask at the independent spent-fuel storage facility at Prairie Island for any part of a year. The total amount transferred annually under this paragraph must be reduced by $3,750,000.

(d) Except as provided in subdivision 1a, beginning January 15, 2018, and continuing each January 15 thereafter, the public utility that owns the Monticello nuclear generating plant must transfer to the renewable development account $350,000 each year for each dry cask containing spent fuel that is located at the Monticello nuclear power plant for each year the plant is in operation, and $5,250,000 each year the plant is not in operation if ordered by the commission pursuant to paragraph (i). The fund transfer must be made if nuclear waste is stored in a dry cask at the independent spent-fuel storage facility at Monticello for any part of a year.

(e) Each year, the public utility shall withhold from the funds transferred to the renewable development account under paragraphs (c) and (d) the amount necessary to pay its obligations under paragraphs (f) and (g), and sections 116C.7792 and 216C.41, for that calendar year.

(f) If the commission approves a new or amended power purchase agreement, the termination of a power purchase agreement, or the purchase and closure of a facility under section 216B.2424, subdivision 9, with an entity that uses poultry litter to generate electricity, the public utility subject to this section shall enter into a contract with the city in which the poultry litter plant is located to provide grants to the city for the purposes of economic development on the following schedule: $4,000,000 in fiscal year 2018; $6,500,000 each fiscal year in 2019 and 2020; and $3,000,000 in fiscal year 2021. The grants shall be paid by the public utility from funds withheld from the transfer to the renewable development account, as provided in paragraphs (b) and (e).

(g) If the commission approves a new or amended power purchase agreement, or the termination of a power purchase agreement under section 216B.2424, subdivision 9, with an entity owned or controlled, directly or indirectly, by two municipal utilities located north of Constitutional Route No. 8, that was previously used to meet the biomass mandate in section 216B.2424, the public utility that owns a nuclear generating plant shall enter into a grant contract with such entity to provide $6,800,000 per year for five years, commencing 30 days after the commission approves the new or amended power purchase agreement, or the termination of the power purchase agreement, and on each June 1 thereafter through 2021, to assist the transition required by the new, amended, or terminated power purchase agreement. The grant shall be paid by the public utility from funds withheld from the transfer to the renewable development account as provided in paragraphs (b) and (e).

(h) The collective amount paid under the grant contracts awarded under paragraphs (f) and (g) is limited to the amount deposited into the renewable development account, and its predecessor, the renewable development account, established under this section, that was not required to be deposited into the account under Laws 1994, chapter 641, article 1, section 10.

(i) After discontinuation of operation of the Prairie Island nuclear plant or the Monticello nuclear plant and each year spent nuclear fuel is stored in dry cask at the discontinued facility, the commission shall require the public utility to pay $7,500,000 for the discontinued Prairie Island facility and $5,250,000 for the discontinued Monticello facility for any year in which the commission finds, by the preponderance of the evidence, that the public utility did not make a good faith effort to remove the spent nuclear fuel stored at the facility to a permanent or interim storage site out of the state. This determination shall be made at least every two years.

(j) Funds in the account may be expended only for any of the following purposes:

(1) to stimulate research and development of renewable electric energy technologies;

(2) to encourage grid modernization, including, but not limited to, projects that implement electricity storage, load control, and smart meter technology; and

(3) to stimulate other innovative energy projects that reduce demand and increase system efficiency and flexibility.

Expenditures from the fund must benefit Minnesota ratepayers receiving electric service from the utility that owns a nuclear-powered electric generating plant in this state or the Prairie Island Indian community or its members.

The utility that owns a nuclear generating plant is eligible to apply for grants under this subdivision.

(k) For the purposes of paragraph (j), the following terms have the meanings given:

(1) "renewable" has the meaning given in section 216B.2422, subdivision 1, paragraph (c), clauses (1), (2), (4), and (5); and

(2) "grid modernization" means:

(i) enhancing the reliability of the electrical grid;

(ii) improving the security of the electrical grid against cyberthreats and physical threats; and

(iii) increasing energy conservation opportunities by facilitating communication between the utility and its customers through the use of two-way meters, control technologies, energy storage and microgrids, technologies to enable demand response, and other innovative technologies.

(l) A renewable development account advisory group that includes, among others, representatives of the public utility and its ratepayers, and includes at least one representative of the Prairie Island Indian community appointed by that community's tribal council, shall develop recommendations on account expenditures. The advisory group must design a request for proposal and evaluate projects submitted in response to a request for proposals. The advisory group must utilize an independent third-party expert to evaluate proposals submitted in response to a request for proposal, including all proposals made by the public utility. A request for proposal for research and development under paragraph (j), clause (1), may be limited to or include a request to higher education institutions located in Minnesota for multiple projects authorized under paragraph (j), clause (1). The request for multiple projects may include a provision that exempts the projects from the third-party expert review and instead provides for project evaluation and selection by a merit peer review grant system. In the process of determining request for proposal scope and subject and in evaluating responses to request for proposals, the advisory group must strongly consider, where reasonable:

(1) potential benefit to Minnesota citizens and businesses and the utility's ratepayers; and

(2) the proposer's commitment to increasing the diversity of the proposer's workforce and vendors.

(m) The advisory group shall submit funding recommendations to the public utility, which has full and sole authority to determine which expenditures shall be submitted by the advisory group to the legislature. The commission may approve proposed expenditures, may disapprove proposed expenditures that it finds not to be in compliance with this subdivision or otherwise not in the public interest, and may, if agreed to by the public utility, modify proposed expenditures. The commission shall, by order, submit its funding recommendations to the legislature as provided under paragraph (n).

(n) The commission shall present its recommended appropriations from the account to the senate and house of representatives committees with jurisdiction over energy policy and finance annually by February 15. Expenditures from the account must be appropriated by law. In enacting appropriations from the account, the legislature:

(1) may approve or disapprove, but may not modify, the amount of an appropriation for a project recommended by the commission; and

(2) may not appropriate money for a project the commission has not recommended funding.

(o) A request for proposal for renewable energy generation projects must, when feasible and reasonable, give preference to projects that are most cost-effective for a particular energy source.

(p) The advisory group must annually, by February 15, report to the chairs and ranking minority members of the legislative committees with jurisdiction over energy policy on projects funded by the account for the prior year and all previous years. The report must, to the extent possible and reasonable, itemize the actual and projected financial benefit to the public utility's ratepayers of each project.

(q) A project receiving funds from the account must produce a written final report that includes sufficient detail for technical readers and a clearly written summary for nontechnical readers. The report must include an evaluation of the project's financial, environmental, and other benefits to the state and the public utility's ratepayers. A project receiving funds from the account must submit a report that meets the requirements of section 216C.51, subdivisions 3 and 4, each year the project funded by the account is in progress.

(r) Final reports, any mid-project status reports, and renewable development account financial reports must be posted online on a public website designated by the commissioner of commerce.

(s) All final reports must acknowledge that the project was made possible in whole or part by the Minnesota renewable development account, noting that the account is financed by the public utility's ratepayers.

(t) Of the amount in the renewable development account, priority must be given to making the payments required under section 216C.417.

(u) Construction projects receiving funds from this account are subject to the requirement to pay the prevailing wage rate, as defined in section 177.42 and the requirements and enforcement provisions in sections 177.27, 177.30, 177.32, 177.41 to 177.435, and 177.45.

Subd. 2.

Renewable energy production incentive.

(a) Until January 1, 2021, $10,900,000 annually must be allocated from available funds in the account to fund renewable energy production incentives. $9,400,000 of this annual amount is for incentives for electricity generated by wind energy conversion systems that are eligible for the incentives under section 216C.41 or Laws 2005, chapter 40.

(b) The balance of this amount, up to $1,500,000 annually, may be used for production incentives for on-farm biogas recovery facilities and hydroelectric facilities that are eligible for the incentive under section 216C.41 or for production incentives for other renewables, to be provided in the same manner as under section 216C.41.

(c) Any portion of the $10,900,000 not expended in any calendar year for the incentive is available for other spending purposes under subdivision 1. This subdivision does not create an obligation to contribute funds to the account.

(d) The Department of Commerce shall determine eligibility of projects under section 216C.41 for the purposes of this subdivision. At least quarterly, the Department of Commerce shall notify the public utility of the name and address of each eligible project owner and the amount due to each project under section 216C.41. The public utility shall make payments within 15 working days after receipt of notification of payments due.

116C.7791 REBATES FOR SOLAR PHOTOVOLTAIC MODULES.

Subdivision 1.

Definitions.

For the purpose of this section, the following terms have the meanings given.

(a) "Installation" means an array of solar photovoltaic modules attached to a building that will use the electricity generated by the solar photovoltaic modules or placed on a facility or property proximate to that building.

(b) "Manufactured" means:

(1) the material production of solar photovoltaic modules, including the tabbing, stringing, and lamination processes; or

(2) the production of interconnections of low-voltage photoactive elements that produce the final useful photovoltaic output by a manufacturer operating in this state on May 18, 2010.

(c) "Qualified owner" means an owner of a qualified property, but does not include an entity engaged in the business of generating or selling electricity at retail, or an unregulated subsidiary of such an entity.

(d) "Qualified property" means a residence, multifamily residence, business, or publicly owned building located in the assigned service area of the utility subject to section 116C.779.

(e) "Solar photovoltaic module" means the smallest, nondivisible, self-contained physical structure housing interconnected photovoltaic cells and providing a single direct current of electrical output.

Subd. 2.

Establishment.

The utility subject to section 116C.779 shall establish a program to provide rebates to an owner of a qualified property for installing solar photovoltaic modules manufactured in Minnesota after December 31, 2009. Any solar photovoltaic modules installed under this program and any expenses incurred by the utility operating the program shall be treated the same as solar installations and related expenses under section 216B.241.

Subd. 3.

Rebate eligibility.

(a) To be eligible for a rebate under this section, a solar photovoltaic module:

(1) must be manufactured in Minnesota;

(2) must be installed on a qualified property as part of a system whose generating capacity does not exceed 40 kilowatts;

(3) must be certified by Underwriters Laboratory, must have received the ETL listed mark from Intertek, or must have an equivalent certification from an independent testing agency;

(4) may or may not be connected to a utility grid;

(5) must be installed, or reviewed and approved, by a person certified as a solar photovoltaic installer by the North American Board of Certified Energy Practitioners; and

(6) may not be used to sell, transmit, or distribute the electrical energy at retail, nor to provide end-use electricity to an offsite facility of the electrical energy generator. On-site generation is allowed to the extent provided for in section 216B.1611.

(b) To be eligible for a rebate under this section, an applicant must have applied for and been awarded a rebate or other form of financial assistance available exclusively to owners of properties on which solar photovoltaic modules are installed that is offered by:

(1) the utility serving the property on which the solar photovoltaic modules are to be installed; or

(2) this state, under an authority other than this section.

(c) An applicant who is otherwise ineligible for a rebate under paragraph (b) is eligible if the applicant's failure to secure a rebate or other form of financial assistance is due solely to a lack of available funds on the part of a utility or this state.

Subd. 4.

Rebate amount and payment.

(a) The amount of a rebate under this section is the difference between the sum of all rebates described in subdivision 3, paragraph (b), awarded to the applicant and $5 per watt of installed generating capacity.

(b) Notwithstanding paragraph (a), the amount of all rebates or other forms of financial assistance awarded to an applicant by a utility and the state, including any rebate paid under this section, net of applicable federal income taxes applied at the highest applicable income tax rates, must not exceed 60 percent of the total installed cost of the solar photovoltaic modules.

(c) Rebates must be awarded to eligible applicants beginning July 1, 2010.

(d) The rebate must be paid out proportionately in five consecutive annual installments.

Subd. 5.

Rebate program funding.

(a) The following amounts must be allocated from the renewable development account established in section 116C.779 to a separate account for the purpose of providing the rebates for solar photovoltaic modules specified in this section:

(1) $2,000,000 in fiscal year 2011;

(2) $4,000,000 in fiscal year 2012;

(3) $5,000,000 in fiscal year 2013;

(4) $5,000,000 in fiscal year 2014; and

(5) $5,000,000 in fiscal year 2015.

(b) If, by the end of fiscal year 2015, insufficient qualified owners have applied for and met the requirements for rebates under this section to exhaust the funds available, any remaining balance shall be returned to the account established under section 116C.779.

216C.41 RENEWABLE ENERGY PRODUCTION INCENTIVE.

Subdivision 1.

Definitions.

(a) The definitions in this subdivision apply to this section.

(b) "Qualified hydroelectric facility" means a hydroelectric generating facility in this state that:

(1) is located at the site of a dam, if the dam was in existence as of March 31, 1994; and

(2) begins generating electricity after July 1, 1994, or generates electricity after substantial refurbishing of a facility that begins after July 1, 2001.

(c) "Qualified wind energy conversion facility" means a wind energy conversion system in this state that:

(1) produces two megawatts or less of electricity as measured by nameplate rating and begins generating electricity after December 31, 1996, and before July 1, 1999;

(2) begins generating electricity after June 30, 1999, produces two megawatts or less of electricity as measured by nameplate rating, and is:

(i) owned by a resident of Minnesota or an entity that is organized under the laws of this state, is not prohibited from owning agricultural land under section 500.24, and owns the land where the facility is sited;

(ii) owned by a Minnesota small business as defined in section 645.445;

(iii) owned by a Minnesota nonprofit organization;

(iv) owned by a tribal council if the facility is located within the boundaries of the reservation;

(v) owned by a Minnesota municipal utility or a Minnesota cooperative electric association; or

(vi) owned by a Minnesota political subdivision or local government, including, but not limited to, a county, statutory or home rule charter city, town, school district, or any other local or regional governmental organization such as a board, commission, or association; or

(3) begins generating electricity after June 30, 1999, produces seven megawatts or less of electricity as measured by nameplate rating, and:

(i) is owned by a cooperative organized under chapter 308A other than a Minnesota cooperative electric association; and

(ii) all shares and membership in the cooperative are held by an entity that is not prohibited from owning agricultural land under section 500.24.

(d) "Qualified on-farm biogas recovery facility" means an anaerobic digester system that:

(1) is located at the site of an agricultural operation; and

(2) is owned by an entity that is not prohibited from owning agricultural land under section 500.24 and that owns or rents the land where the facility is located.

(e) "Anaerobic digester system" means a system of components that processes animal waste based on the absence of oxygen and produces gas used to generate electricity.

Subd. 2.

Incentive payment; appropriation.

(a) Incentive payments must be made according to this section to (1) a qualified on-farm biogas recovery facility, (2) the owner or operator of a qualified hydropower facility or qualified wind energy conversion facility for electric energy generated and sold by the facility, (3) a publicly owned hydropower facility for electric energy that is generated by the facility and used by the owner of the facility outside the facility, or (4) the owner of a publicly owned dam that is in need of substantial repair, for electric energy that is generated by a hydropower facility at the dam and the annual incentive payments will be used to fund the structural repairs and replacement of structural components of the dam, or to retire debt incurred to fund those repairs.

(b) Payment may only be made upon receipt by the commissioner of commerce of an incentive payment application that establishes that the applicant is eligible to receive an incentive payment and that satisfies other requirements the commissioner deems necessary. The application must be in a form and submitted at a time the commissioner establishes.

(c) There is annually appropriated from the renewable development account under section 116C.779 to the commissioner of commerce sums sufficient to make the payments required under this section, in addition to the amounts funded by the renewable development account as specified in subdivision 5a.

Subd. 3.

Eligibility window.

Payments may be made under this section only for:

(a) electricity generated from:

(1) a qualified hydroelectric facility that is operational and generating electricity before December 31, 2011;

(2) a qualified wind energy conversion facility that is operational and generating electricity before January 1, 2008; or

(3) a qualified on-farm biogas recovery facility from July 1, 2001, through December 31, 2017; and

(b) gas generated from a qualified on-farm biogas recovery facility from July 1, 2007, through December 31, 2017.

Subd. 4.

Payment period.

(a) A facility may receive payments under this section for a ten-year period. No payment under this section may be made for electricity generated:

(1) by a qualified hydroelectric facility after December 31, 2021;

(2) by a qualified wind energy conversion facility after December 31, 2018; or

(3) by a qualified on-farm biogas recovery facility after December 31, 2017.

(b) The payment period begins and runs consecutively from the date the facility begins generating electricity or, in the case of refurbishment of a hydropower facility, after substantial repairs to the hydropower facility dam funded by the incentive payments are initiated.

Subd. 5.

Amount of payment; wind facilities limit.

(a) An incentive payment is based on the number of kilowatt-hours of electricity generated. The amount of the payment is:

(1) for a facility described under subdivision 2, paragraph (a), clause (4), 1.0 cent per kilowatt-hour; and

(2) for all other facilities, 1.5 cents per kilowatt-hour.

For electricity generated by qualified wind energy conversion facilities, the incentive payment under this section is limited to no more than 200 megawatts of nameplate capacity.

(b) For wind energy conversion systems installed and contracted for after January 1, 2002, the total size of a wind energy conversion system under this section must be determined according to this paragraph. Unless the systems are interconnected with different distribution systems, the nameplate capacity of one wind energy conversion system must be combined with the nameplate capacity of any other wind energy conversion system that is:

(1) located within five miles of the wind energy conversion system;

(2) constructed within the same calendar year as the wind energy conversion system; and

(3) under common ownership.

In the case of a dispute, the commissioner of commerce shall determine the total size of the system, and shall draw all reasonable inferences in favor of combining the systems.

(c) In making a determination under paragraph (b), the commissioner of commerce may determine that two wind energy conversion systems are under common ownership when the underlying ownership structure contains similar persons or entities, even if the ownership shares differ between the two systems. Wind energy conversion systems are not under common ownership solely because the same person or entity provided equity financing for the systems.

Subd. 5a.

Renewable development account.

The Department of Commerce shall authorize payment of the renewable energy production incentive to wind energy conversion systems that are eligible under this section or Laws 2005, chapter 40, to on-farm biogas recovery facilities, and to hydroelectric facilities. Payment of the incentive shall be made from the renewable energy development account as provided under section 116C.779, subdivision 2.

Subd. 6.

Ownership; financing; cure.

(a) For the purposes of subdivision 1, paragraph (c), clause (2), a wind energy conversion facility qualifies if it is owned at least 51 percent by one or more of any combination of the entities listed in that clause.

(b) A subsequent owner of a qualified facility may continue to receive the incentive payment for the duration of the original payment period if the subsequent owner qualifies for the incentive under subdivision 1.

(c) Nothing in this section may be construed to deny incentive payment to an otherwise qualified facility that has obtained debt or equity financing for construction or operation as long as the ownership requirements of subdivision 1 and this subdivision are met. If, during the incentive payment period for a qualified facility, the owner of the facility is in default of a lending agreement and the lender takes possession of and operates the facility and makes reasonable efforts to transfer ownership of the facility to an entity other than the lender, the lender may continue to receive the incentive payment for electricity generated and sold by the facility for a period not to exceed 18 months. A lender who takes possession of a facility shall notify the commissioner immediately on taking possession and, at least quarterly, document efforts to transfer ownership of the facility.

(d) If, during the incentive payment period, a qualified facility loses the right to receive the incentive because of changes in ownership, the facility may regain the right to receive the incentive upon cure of the ownership structure that resulted in the loss of eligibility and may reapply for the incentive, but in no case may the payment period be extended beyond the original ten-year limit.

(e) A subsequent or requalifying owner under paragraph (b) or (d) retains the facility's original priority order for incentive payments as long as the ownership structure requalifies within two years from the date the facility became unqualified or two years from the date a lender takes possession.

Subd. 7.

Eligibility process.

(a) A qualifying project is eligible for the incentive on the date the commissioner receives:

(1) an application for payment of the incentive;

(2) one of the following:

(i) a copy of a signed power purchase agreement;

(ii) a copy of a binding agreement other than a power purchase agreement to sell electricity generated by the project to a third person; or

(iii) if the project developer or owner will sell electricity to its own members or customers, a copy of the purchase order for equipment to construct the project with a delivery date and a copy of a signed receipt for a nonrefundable deposit; and

(3) any other information the commissioner deems necessary to determine whether the proposed project qualifies for the incentive under this section.

(b) The commissioner shall determine whether a project qualifies for the incentive and respond in writing to the applicant approving or denying the application within 15 working days of receipt of the information required in paragraph (a). A project that is not operational within 18 months of receipt of a letter of approval is no longer approved for the incentive. The commissioner shall notify an applicant of potential loss of approval not less than 60 days prior to the end of the 18-month period. Eligibility for a project that loses approval may be reestablished as of the date the commissioner receives a new completed application.