Solar on the Farm (part 2)

Solar on the Farm (part 2)

Published February 3, 2022

Video transcript

Hello, and thank you for watching this video: Solar Energy for Your Farmstead – Part 2.

My name is Fritz Ebinger and I’m with the Clean Energy Resource Teams, a program of the University of Minnesota Extension.

This video is a joint effort between the MN Farmers Union, the Clean Energy Resource Teams, and the Citizens Utility Board of Minnesota.

In our first Solar for Your Farmstead video, we discussed identifying the solar resource at your farmstead, siting considerations, and evaluating solar panels, and selecting an installer.

In this second video, we will discuss

  • Electric utility policies
  • Relevant rates and fees, and
  • Sizing your solar array.

Once again, remember to eat your energy efficiency vegetables first! 

Please conserve and use efficient technologies where practical. The cheapest and cleanest kilowatt-hours and thermal units are the ones we never consume at all.  

As a rule of thumb, for every dollar we invest in energy efficiency and conservation, we save roughly $3 to $5 in clean energy project costs. Reducing the amount of energy we consume from the start allows us to size a smaller solar array for offsetting our energy needs.

Electric utility policies

First, if you are considering a solar installation at your farmstead for co-generation of electricity, be sure to contact the electric utility that serves you. Communicating early and often with your electric utility will help you understand the process, the policies, and different programs that will help you achieve your clean energy goals and the goals of your member-owned rural electric cooperative, publicly-owned municipal utility, or investor-owned utility.

Rates and fees

Electric utilities place customers into different electric rate classes, each with a different electric rate structure that correlates with their power, infrastructure, and energy needs. 

For example, industrial energy users have high power demand for activities like manufacturing. The industrial energy class pays special fees, called demand charges that are based on industrial users’ peak demand for energy, to cover the necessary infrastructure – the wires, transformers, and utility-scale generation – and instantaneous power draw, along with a low kilowatt-hour rate. The demand charges for industrial customers often make up half or more of their energy bill.

In contrast, a farm-residential customer class would typically not pay a demand charge because the infrastructure needs are much lower, but would pay a modestly higher kilowatt-hour rate. A small portion of those infrastructure costs are embedded in the kilowatt-hour rate and monthly fixed fee.

For farms and homes, generally, the kilowatt-hour rate makes up the majority of the electric bill because farms and homes do not draw large volumes of power and have much lower electricity infrastructure needs relative to commercial and industrial operations.

Net Metering

Knowing the electric utility rate class structure helps us understand a Minnesota policy called Net Metering. Net metering relates to how electric utilities compensate customers who cogenerate with solar and other forms of distributed generation.

Under Minnesota’s Net Metering policy, electric utilities must compensate customers with solar arrays sized 40 kilowatts AC and under for their net excess generation at the “average retail utility energy rate” for their customer class.

This means a farmstead that cogenerates with a solar array and produces more energy than it consumes will be compensated by their electric utility at the average retail electricity rate for the farm-residential customer rate class. Compensation for any net excess generation may take the form of an actual payment like a monthly check or as a credit on the cogenerator’s monthly electric bill.

Grid Access Fee

As we discussed, a portion of the fixed costs of the wires, transformers, poles and the labor to service the local grid and maintain power 24 hours a day is embedded in the kilowatt-hour rate for the farm-residential customer class.

When a farmstead chooses to cogenerate with solar the utilities lose revenue that would otherwise cover those fixed costs to maintain firm power.

In turn, Minnesota law permits municipal and cooperative utilities to charge a Grid Access Fee. The Grid Access Fee allows for the recovery of the fixed cost charges that are embedded in the farm-residential rate. Again, these fixed costs cover the equipment and labor that provide the customer with power for 24 hours a day.

Other fees

When a customer decides to cogenerate with solar, their relationship with the local electric grid changes. This change includes reversing power flow at times when solar generation exceeds consumption on the farmstead. Consequently, the electric utility must study the electric grid to ensure the customer-owned solar does not negatively affect power quality or damage transformers, among other safety matters.

Electric utilities will charge an application fee to process a cogenerator’s application and a one-time interconnection fee for the time and expertise to study the solar array’s impacts to the local electric grid. Typically, the application fee costs around $100 and the interconnection fee to study the local grid and commission the solar array costs around $1,000 to $1,500. Also, any new metering equipment the solar array requires for operation is charged to the customer. Again, these are one-time costs.

Sizing your solar array

Different farmsteads have different energy needs and goals they wish to achieve with investments in solar equipment. Most folks wish to offset 100% of their electric consumption load. This preferred practice is known as “Sizing to Load”.

For sizing to load, a customer may take 24 months of kilowatt-hour consumption history and average the years out to arrive at a representative year. The practice of averaging years helps address unique electrical energy uses specific to a year like weather extremes that might require heavy air conditioner use or space heaters, for example. 

Once a customer knows the yearly average electric load or an estimated future load for new construction, they can roughly estimate the size of the solar they need by dividing the total annual average kilowatt-hour consumption in alternating current by 365 to represent the average daily use. Then take the average daily use and divide that by 4.5. The 4.5 represents a rough average of “sun hours” Minnesota receives.

Finally, multiply by 1.2 to account for the conversion from direct current the sun produces from the panels to alternating current, as well as snow cover, dirt and pollen, and other minor impediments that cause small energy losses.

This concludes Part 2 of the Solar for your Farmstead video series. 

You can look for additional segments on the Citizens Utility Board of Minnesota’s YouTube page, including Part 3 which will discuss funding, financing, and tax advantages, among other things. Thank you for tuning in!