SF 4504

2nd Engrossment - 94th Legislature (2025 - 2026)

Posted on 05/12/2026 04:38 p.m.

A bill for an act
relating to energy; establishing provisions regulating plug-in solar photovoltaic
devices; expanding the ability of the commissioner of commerce to enter into
energy research partnerships or compacts; providing for energy security planning;
extending or modifying various energy-related grant programs; providing additional
financing mechanisms to support Minnesota Climate Innovation Financing
Authority activities; amending Minnesota Statutes 2024, sections 216C.02,
subdivision 1; 216C.05, subdivision 1; 216C.377, subdivisions 10, 13; 216C.391,
subdivisions 6, 7; 216C.441, subdivisions 3, 4, by adding a subdivision; 216C.46,
subdivision 3; proposing coding for new law in Minnesota Statutes, chapter 216B.

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

Section 1.

new text begin [216B.2413] PLUG-IN SOLAR PHOTOVOLTAIC DEVICE.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) "Electric utility" means a public utility, cooperative
electric association, or municipal utility that provides electric service at retail to customers
in Minnesota.
new text end

new text begin (b) "Energy storage system" has the meaning given in section 216B.2422, subdivision
1.
new text end

new text begin (c) "Photovoltaic device" has the meaning given in section 216C.06, subdivision 16.
new text end

new text begin (d) "Plug-in solar photovoltaic device" means a portable photovoltaic device that:
new text end

new text begin (1) is intended primarily to offset a portion of a customer's electricity consumption;
new text end

new text begin (2) has a maximum power output of 1,200 watts;
new text end

new text begin (3) is capable of being connected with an on-site energy storage system; and
new text end

new text begin (4) is listed or certified to UL 3700 as compliant with the requirements for interactive
plug-in photovoltaic equipment and systems.
new text end

new text begin (e) "UL 3700" means a standard that is compliant with the National Electric Code and
was developed by Underwriters Laboratories, a testing laboratory that is recognized under
the federal Occupational Safety and Health Agency's Nationally Recognized Testing
Laboratory program to certify photovoltaic equipment and systems.
new text end

new text begin Subd. 2. new text end

new text begin Exemptions. new text end

new text begin (a) A plug-in solar photovoltaic device is exempt from:
new text end

new text begin (1) a requirement to enter into an interconnection agreement with an electric utility;
new text end

new text begin (2) the net metering provisions under section 216B.164; and
new text end

new text begin (3) an electric utility's establishment of any fee, condition, required approval, or reporting
requirement, except as specified in subdivision 3, on its installation or operation.
new text end

new text begin (b) An electric utility is not liable for damage or injury caused by a plug-in solar
photovoltaic device.
new text end

new text begin Subd. 3. new text end

new text begin Registration. new text end

new text begin An electric utility may require a customer to register a plug-in
solar photovoltaic device installed by the customer and provide the following information:
new text end

new text begin (1) the customer's name and contact information;
new text end

new text begin (2) the customer's service address and utility account number;
new text end

new text begin (3) the brand and model of the plug-in solar photovoltaic device; and
new text end

new text begin (4) the size of the plug-in solar photovoltaic device in kilowatts.
new text end

new text begin Subd. 4. new text end

new text begin Installation. new text end

new text begin A customer must install a plug-in solar photovoltaic device
according to the manufacturer's installation instructions.
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 216C.02, subdivision 1, is amended to read:

Subdivision 1.

Powers.

(a) The commissioner may:

(1) apply for, receive, and spend money received from federal, municipal, county,
regional, and other government agencies and private sources;

(2) apply for, accept, and disburse grants and other aids from public and private sources;

(3) contract for professional services if work or services required or authorized to be
carried out by the commissioner cannot be satisfactorily performed by employees of the
department or by another state agency;

(4) enter into interstate new text begin or intrastate partnerships or new text end compacts to carry out research and
planning jointly with other states or the federal government new text begin , private entities, or
nongovernmental organizations new text end when appropriate;

(5) upon reasonable request, distribute informational material at no cost to the public;
and

(6) enter into contracts for the performance of the commissioner's duties with federal,
state, regional, metropolitan, local, and other agencies or units of government and educational
institutions, including the University of Minnesota, without regard to the competitive bidding
requirements of chapters 16A and 16C.

(b) The commissioner shall collect information on conservation and other energy-related
programs carried on by other agencies, by public utilities, by cooperative electric associations,
by municipal power agencies, by other fuel suppliers, by political subdivisions, and by
private organizations. Other agencies, cooperative electric associations, municipal power
agencies, and political subdivisions shall cooperate with the commissioner by providing
information requested by the commissioner. The commissioner may by rule require the
submission of information by other program operators. The commissioner shall make the
information available to other agencies and to the public and, as necessary, shall recommend
to the legislature changes in the laws governing conservation and other energy-related
programs to ensure that:

(1) expenditures on the programs are adequate to meet identified needs;

(2) the needs of low-income energy users are being adequately addressed;

(3) duplication of effort is avoided or eliminated;

(4) a program that is ineffective is improved or eliminated; and

(5) voluntary efforts are encouraged through incentives for their operators.

(c) By January 15 of each year, the commissioner shall report to the legislature on the
projected amount of federal money likely to be available to the state during the next fiscal
year, including grant money and money received by the state as a result of litigation or
settlements of alleged violations of federal petroleum-pricing regulations. The report must
also estimate the amount of money projected as needed during the next fiscal year to finance
a level of conservation and other energy-related programs adequate to meet projected needs,
particularly the needs of low-income persons and households, and must recommend the
amount of state appropriations needed to cover the difference between the projected
availability of federal money and the projected needs.

Sec. 3.

Minnesota Statutes 2024, section 216C.05, subdivision 1, is amended to read:

Subdivision 1.

Energy planning.

The legislature finds and declares that continued
growth in demand for energy will cause severe social and economic dislocations, and that
the state has a vital interest in providing for: increased efficiency in energy consumption,
the development and use of renewable energy resources wherever possible, new text begin a secure and
resilient energy system infrastructure, new text end and the creation of an effective energy forecasting,
planning, and education program.

The legislature further finds and declares that the protection of life, safety, and financial
security for citizens during an energy crisis is of paramount importance.

Therefore, the legislature finds that it is in the public interest to review, analyze, and
encourage those energy programs that will minimize the need for annual increases in fossil
fuel consumption deleted text begin by 1990 deleted text end and the need for additional deleted text begin electrical generating plants deleted text end new text begin electric
generation, distribution, and storage new text end , and provide for an optimum combination of energy
sources and energy conservation consistent with environmental protection and the protection
of citizens.

new text begin The legislature further finds that maintaining an energy security plan that addresses (1)
all sources of regulated and unregulated energy, (2) a statewide risk assessment, (3) an
all-hazards threat assessment, (4) analysis of cross-sector critical infrastructure
interdependencies, (5) risk mitigation strategies, and (6) multistate and regional coordination
is in the public interest. The responsibilities pursuant to the energy security plan must be
executed under a planning, preparedness, and response framework, and in consultation with
state agencies, local units of government, energy providers, community-based organizations,
and others as appropriate.
new text end

The legislature intends to monitor, through energy policy planning and implementation,
the transition from historic growth in energy demand to a period when demand for traditional
fuels becomes stable and the supply of renewable energy resources is readily available and
adequately utilized.

The legislature further finds that for economic growth, environmental improvement,
and protection of citizens, it is in the public interest to encourage deleted text begin those deleted text end energy programs new text begin
and planning processes new text end that deleted text begin will deleted text end provide an optimum combination of energy resources,
including energy savings.

Therefore, the legislature, through its committees, must monitor and evaluate progress
toward greater reliance on cost-effective energy efficiency and renewable energy and lesser
dependence on fossil fuels in order to reduce the economic burden of fuel imports, diversify
utility-owned and consumer-owned energy resources, reduce utility costs for businesses
and residents, improve the competitiveness and profitability of Minnesota businesses, new text begin
increase energy security, new text end create more energy-related jobs that contribute to the Minnesota
economy, and reduce pollution and emissions that cause climate change.

Sec. 4.

Minnesota Statutes 2024, section 216C.377, subdivision 10, is amended to read:

Subd. 10.

Application deadline.

An application must not be submitted under this section
after June 30, deleted text begin 2026 deleted text end new text begin 2028 new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective June 1, 2026.
new text end

Sec. 5.

Minnesota Statutes 2024, section 216C.377, subdivision 13, is amended to read:

Subd. 13.

Reporting.

Beginning January 15, 2025, and each year thereafter until January
15, deleted text begin 2027 deleted text end new text begin 2029 new text end , the commissioner must report to the chairs and ranking minority members
of the legislative committees with jurisdiction over energy finance and policy regarding
grants and amounts awarded to local units of government under this section during the
previous year and any remaining balances available in the account established under this
section.

Sec. 6.

Minnesota Statutes 2024, section 216C.391, subdivision 6, is amended to read:

Subd. 6.

Grant awards; administration.

(a) An eligible entity seeking a grant award
under subdivision 3 or an entity seeking a grant award under subdivision 4 must submit an
application to the commissioner on a form prescribed by the commissioner. The
commissioner is responsible for receiving and reviewing grant applications and awarding
grants under this section, and shall develop administrative procedures governing the
application, evaluation, and award process. The commissioner may not make a grant award
under this section unless the commissioner has determined, and has notified the applicant
in writing, that the application is complete. In awarding grants under this section, the
commissioner shall endeavor to make awards to applicants from all regions of the state.

(b) The department must provide technical assistance to applicants. Applicants may also
receive grant development assistance at no cost from entities awarded grants for that purpose
under subdivision 4.

(c) Within ten business days of determining a grant award amount to an applicant, the
commissioner must:

(1) reserve that amount for that specific grant in the state competitiveness fund account;
and

(2) notify the Legislative Advisory Commission in writing of the reserved amount, the
name of the applicant, the purpose of the project, and the unreserved balance of funds
remaining in the account.

(d) Reserved funds are committed to the grant and use specified in the notice provided
under paragraph (c) and are unavailable for reservation or appropriation for other applications
unless and until the commissioner receives written notice from the applicant that the
application for federal funds has been withdrawn or from the federal grantor that the
application for which funds from the account were reserved has been denied federal funds.

(e) Reserved funds may only be expended upon presentation of written notice from the
federal grantor to the commissioner stating that the applicant will receive federal funds for
the project described in the application. If the amount of federal funds awarded to an applicant
differs from the amount requested in the application, the commissioner may adjust the award
made under this section accordingly. new text begin Notwithstanding sections 16B.98, subdivisions 5 and
7, and 16C.05, a reimbursement may cover cost-sharing expenses incurred after the start of
the federal award agreement but before the date the contract with the state of Minnesota is
effective, to ensure the applicant's compliance with federal award schedule requirements.
new text end

(f) Reserved funds must be made for projects that demonstrate they will help meet the
state's clean energy and energy-related climate goals through renewable energy development,
energy conservation, efficiency, or energy-related greenhouse gas reduction benefits.

(g) The commissioner must notify the chairs and ranking minority members of the
legislative committees with jurisdiction over energy finance when the unreserved balance
of the competitiveness fund account reaches the following amounts: 50 percent, unreserved;
25 percent, unreserved; 15 percent, unreserved; and five percent. The notification must be
within ten days after each level of unreserved balance is reached.

Sec. 7.

Minnesota Statutes 2024, section 216C.391, subdivision 7, is amended to read:

Subd. 7.

Report; audit.

deleted text begin Beginning February 15, 2024, and each deleted text end new text begin By new text end February 15 deleted text begin thereafter deleted text end new text begin
each year new text end until February 15, 2035, the commissioner must submit a written report to the
chairs and ranking minority members of the legislative committees with jurisdiction over
energy finance on the activities taken and expenditures made under this section. The report
must, at a minimum, include the following information for the most recent calendar year:

(1) the number of applications for grants filed with the commissioner and the total amount
of grant funds requested;

(2) each grant awarded;

(3) the number of additional personnel hired for the purposes of this section;

(4) expenditures on activities conducted under this section, reported separately for these
areas:

(i) the provision of technical assistance;

(ii) grants made under subdivision 4 to entities to assist applicants with grant
development;

(iii) application review and evaluation, including applicants that were denied federal or
state grant awards and the reason for the denial;

(iv) information technology activities; and

(v) other expenditures;

(5) the unreserved balance remaining in the state competitiveness fund account;

(6) a copy of a financial audit of the department's expenditures under this section new text begin for the
previous fiscal year new text end new text begin , new text end conducted by an independent auditor;

(7) recommendations for legislation to enhance the ability of eligible entities to
successfully compete for federal funds;

(8) additional available funding opportunities to obtain energy-related funding from
federal agencies; and

(9) federal grant program changes that would affect the federal funds available to the
state and eligible applicants, including changes that would affect the required match for
receiving federal funds.

Sec. 8.

Minnesota Statutes 2024, section 216C.441, subdivision 3, is amended to read:

Subd. 3.

General powers.

(a) For the purpose of exercising the specific powers granted
in this section, the authority has the general powers granted in this subdivision.

(b) The authority may:

(1) hire an executive director and staff to conduct the authority's operations;

(2) sue and be sued;

(3) have a seal and alter the seal;

(4) acquire, hold, lease, manage, and dispose of real or personal property for the
authority's corporate purposes;

(5) enter into agreements, including cooperative financing agreements, contracts, or
other transactions, with a Tribal government, any federal or state agency, county, local unit
of government, regional development commission, person, domestic or foreign partnership,
corporation, association, or organization;

(6) acquire by purchase real property, or an interest therein, in the authority's own name
where acquisition is necessary or appropriate;

(7) provide general technical and consultative services related to the authority's purpose;

(8) promote research and development in matters related to the authority's purpose;

(9) conduct market analysis to determine where the market is underserved;

(10) analyze greenhouse gas emissions reduction project financing needs in the state
and recommend measures to alleviate any shortage of financing capacity;

(11) contract with any governmental or private agency or organization, legal counsel,
financial advisor, investment banker, or others to assist in the exercise of the authority's
powers;

new text begin (12) borrow money or other property for any purpose pertaining to the authority's
activities;
new text end

deleted text begin (12) deleted text end new text begin (13) new text end enter into agreements with qualified lenders or others insuring or guaranteeing
to the state the payment of qualified loans or other financing instruments; deleted text begin and
deleted text end

new text begin (14) sell at a public or private sale a note, mortgage, or other interest or obligation that
evidences or secures a loan; and
new text end

deleted text begin (13) deleted text end new text begin (15) new text end accept on behalf of the state any gift, grant, or interest in money or personal
property tendered to the state for any purpose pertaining to the authority's activities. new text begin Money
received under this clause must be deposited in the account under subdivision 11.
new text end

Sec. 9.

Minnesota Statutes 2024, section 216C.441, subdivision 4, is amended to read:

Subd. 4.

Authority duties.

(a) The authority must:

(1) serve as a financial resource to reduce the upfront and total costs of implementing
qualified projects;

(2) ensure that all financed projects reduce greenhouse gas emissions;

(3) ensure that financing terms and conditions offered are well-suited to qualified projects;

(4) strategically prioritize the use of the authority's funds to leverage private investment
in qualified projects, with the aim of achieving a high ratio of private to public money
invested through funding mechanisms that support, enhance, and complement private lending
and investment;

(5) coordinate with existing federal, state, local, utility, and other programs to ensure
that the authority's resources are being used most effectively to add to and complement
those programs;

(6) stimulate demand for qualified projects by:

(i) contracting with the department to provide, including through subcontracts with
community navigators, information to project participants about federal, state, local, utility,
and other authority financial assistance for qualifying projects, and technical information
on energy conservation and renewable energy measures;

(ii) forming partnerships with contractors and informing contractors about the authority's
financing programs;

(iii) developing innovative marketing strategies to stimulate project owner interest,
especially in underserved communities; and

(iv) incentivizing financing entities to increase activity in underserved markets;

(7) finance projects in all regions of the state;

(8) develop participant eligibility standards and other terms and conditions for financial
support provided by the authority;

(9) develop and administer:

(i) policies to collect reasonable fees for authority services; and

(ii) risk management activities to support ongoing authority activities;

(10) develop consumer protection standards governing the authority's investments to
ensure that financial support is provided responsibly and transparently and is in the financial
interest of participating project owners;

(11) develop methods to accurately measure the impact of the authority's activities,
particularly on low-income communities and on greenhouse gas emissions reductions;

(12) hire an executive director and sufficient staff with the appropriate skills and
qualifications to carry out the authority's programs, making an affirmative effort to recruit
and hire a director and staff who are from, or share the interests of, the communities the
authority must serve;

(13) apply for, either as a direct or subgrantee applicant, and accept Greenhouse Gas
Reduction Fund grants authorized by the federal Clean Air Act, United States Code, title
42, section 7434, paragraph (a), clauses (1), (2), and (3). Until the Climate Innovation
Finance Authority is established, the commissioner shall apply for and receive funding
through Public Law 117-169 in order to leverage state investment, on behalf of the authority.
To the extent practicable, applications for these funds by or on behalf of the authority should
be made in coordination with other Minnesota applicants;

(14) acting under its powers as a state energy financing institution under United States
Code, title 42, section 16511, collaborate with the United States Department of Energy Loan
Programs Office to ensure that authorities made available under the Inflation Reduction
Act of 2022, Public Law 117-169, maximally benefit Minnesotans. Until the Climate
Innovation Finance Authority is established, the commissioner may engage with the United
States Department of Energy Loan Programs Office on behalf of the authority; and

(15) ensure that authority contracts with all third-party administrators, contractors, and
subcontractors contain required covenants, representations, and warranties specifying that
contracted third parties are agents of the authority and that all acts of contracted third parties
are considered acts of the authority, provided that the act is within the contracted scope of
work.

(b) The authority may:

(1) employ credit enhancement mechanisms that reduce financial risk for financing
entities by providing assurance that a limited portion of a loan or other financial instrument
is assumed by the authority via a loan loss reserve, loan guarantee, or other mechanism;

(2) co-invest in a qualified project by providing senior or subordinated debt, equity, or
other mechanisms in conjunction with other investment, co-lending, or financing;

(3) aggregate small and geographically dispersed qualified projects in order to diversify
risk new text begin ; new text end deleted text begin or
deleted text end

new text begin (4) new text end secure additional private investment through securitization or similar resale of the
authority's interest in a completed qualified project;

deleted text begin (4) deleted text end new text begin (5) new text end expend up to 25 percent of funds appropriated to the authority for start-up
purposes, which may be used for financing programs and project investments authorized
under this section, prior to adoption of the strategic plan required under subdivision 7 and
the investment strategy under subdivision 8; and

deleted text begin (5) deleted text end new text begin (6) new text end require a specific project to agree to implement a project labor agreement as a
condition of receiving financing from the authority.

Sec. 10.

Minnesota Statutes 2024, section 216C.441, is amended by adding a subdivision
to read:

new text begin Subd. 4a. new text end

new text begin Liability; limitation. new text end

new text begin (a) The state is not liable on notes, loans, or other interests
or obligations evidencing or securing a loan entered into by the authority under this section.
A note, loan, or other interest or obligation securing a loan under this section is not a debt
of the state.
new text end

new text begin (b) A note, loan, or other agreement or contract evidencing security for a loan entered
into under this section must contain a statement that clearly indicates the liability limitation
under paragraph (a).
new text end

Sec. 11.

Minnesota Statutes 2024, section 216C.46, subdivision 3, is amended to read:

Subd. 3.

Application.

(a) An application for a rebate under this section must be made
to the commissioner on a form developed by the commissioner. The application must be
accompanied by documentation, as required by the commissioner, demonstrating that:

(1) the applicant is an eligible applicant;

(2) the applicant owns the Minnesota residence in which the heat pump is to be installed new text begin
or has the signed approval from the owner of the Minnesota residence in which the heat
pump is to be installed new text end ;

(3) the applicant deleted text begin has had an energy audit conducted of the residence in which the heat
pump is to be installed within the last 18 months by a person with a Building Analyst
Technician certification issued by the Building Performance Institute, Inc., or an equivalent
certification, as determined by the commissioner deleted text end new text begin , heat pump, and installation meet the
federal Department of Energy's documentation and eligibility requirements to receive a heat
pump rebate under the federal Inflation Reduction Act of 2022, Public Law 117-169 new text end ;

(4) deleted text begin either: deleted text end new text begin the applicant has accepted the potential impacts of replacing a natural gas
primary heating system with a heat pump in the applicant's home;
new text end

deleted text begin (i) the applicant has installed in the applicant's residence, by a contractor with an Air
Leakage Control Installer certification issued by the Building Performance Institute, Inc.,
or an equivalent certification, as determined by the commissioner, the amount of insulation
and the air sealing measures recommended by the auditor; or
deleted text end

deleted text begin (ii) the auditor has otherwise determined that the amount of insulation and air sealing
measures in the residence are sufficient to enable effective heat pump performance;
deleted text end

(5) the applicant has purchased a heat pump of the capacity recommended by the auditor
or contractor, and has had the heat pump installed by a contractor deleted text begin with sufficient training
and experience in installing heat pumps, as determined by the commissioner deleted text end new text begin approved to
install heat pumps under comparable federal programs administered by the department
under the federal Inflation Reduction Act of 2022, Public Law 117-169 new text end ; and

(6) the total cost to purchase and install the heat pump in the applicant's residence.

(b) The commissioner must develop administrative procedures governing the application
and rebate award processes.

(c) The commissioner may modify program requirements under this section when
necessary to align with comparable federal programs administered by the department under
the federal Inflation Reduction Act of 2022, Public Law deleted text begin 117-189 deleted text end new text begin 117-169 new text end .