On February 7, 2023, Governor Tim Walz signed into law new legislation requiring that 100 percent of electricity generated or procured for use in Minnesota must be from carbon-free resources by 2040. Minnesota joins ten other states, the District of Columbia, and Puerto Rico to establish 100 percent carbon-free or renewable generated electricity laws. The bill passed in both the House and the Senate by straight party line votes, with all members of the DFL Party voting in favor, and all members of the Republican Party voting against. While the carbon-free requirement has gained significant attention, the legislation includes more requirements in addition to the 100% carbon-free mandate.
The new law requires all electric utilities, including investor-owned utilities, municipalities, and rural electric cooperatives, to generate or procure 100 percent of the electricity they provide to retail customers in Minnesota from carbon-free technologies. The law ramps up to the 100 percent mandate, requiring carbon-free technology to provide:
- 80 percent of electricity for public utilities, and 60 percent for other electric utilities by 2030; and
- 90 percent of electricity for all utilities by 2035.
Utilities are permitted to purchase renewable energy credits to offset electricity acquired through fossil-fuel generation.
The new law also requires all electric utilities to generate or procure 55 percent of their electricity from eligible energy technology by 2035, an increase from the previous top-out of 25 percent by 2025. Eligible technology includes: solar, wind, hydropower with a capacity of less than 100 megawatts, biomass, and hydrogen generated from another eligible energy technology. Hydropower with a capacity greater than 100 megawatts is also eligible if the facility was operational when the law took effect. Of note, the new law does not include battery storage in the list of eligible energy technology. Whether co-located energy storage with wind or solar installations satisfies the requirement is an issue Winthrop and Weinstine is continuing to monitor and will provide additional updates as more guidance is issued
The new legislation also establishes ”Environmental justice areas”, which are defined as areas, based on Census data, that meet threshold racial , income, or English proficiency parameters, or are located within Indian country as defined by federal law. The new clean energy law requires utilities to consider impacts on these areas in future resource plans, and directs the Minnesota Public Utilities Commission to consider the economic and environmental impact of its decisions on these areas
Expect to see increased investment in eligible energy technologies to meet the demands of electric utilities aiming to meet the law’s mandate. Further, the legislation recognizes that capacity constraints currently exist in the transmission system, and will likely be exacerbated by the increase in less-localized generation. We anticipate this will lead to increased investment and development of transmission and distribution projects in Minnesota. This could also likely spur new distributed energy resource projects that avoid or minimize connection with transmission systems and provide electricity through interconnection to the distribution system.
The first major objection to the law came from North Dakota. North Dakota Governor Doug Bergum has indicated he is continuing to try to reach an agreement with Minnesota to avoid impacts to North Dakota’s economy from the law, and has threatened to sue if those efforts fail.
Winthrop and Weinstine is closely following the impact of the new legislation. For more information, please feel free to reach out to any member of our Energy team.