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Minnesota

Minnesota

Incentives/Policies for Renewables & Efficiency

Printable Version
Community-Based Energy Development (C-BED) Tariff   

Last DSIRE Review: 04/25/2013
Program Overview:
State: Minnesota
Incentive Type: Other Policy
Eligible Renewable/Other Technologies: Solar Thermal Electric, Photovoltaics, Landfill Gas, Wind, Biomass, Municipal Solid Waste, Hydrogen, Small Hydroelectric
Applicable Sectors: Utility, Municipal Utility, Investor-Owned Utility, Rural Electric Cooperative
Web Site: http://mn.gov/commerce/energy/consumers/Wind-Systems/Large-Wind-S...
Authority 1:
Date Enacted:
Date Effective:
Minn. Stat. ยง 216B.1612
05/25/2005 (subsequently amended)
07/01/2005
Summary:
Under the Community-Based Energy Development (C-BED) Tariff, each public utility in Minnesota is required to file with the state Public Utilities Commission (PUC) to create a 20-year power purchase agreement (PPA) for community-owned renewable energy projects. The original legislation was enacted in 2005 but has been amended several times subsequently. Utilities were required to submit revised tariffs for the 2007 amendments by December 1, 2007.

Municipal and cooperative utilities were required to file a tariff 90 days after the first PUC order approval of a tariff for a public utility. The tariff rate must be higher in the first 10 years of the agreement than the last ten years. The intent of this structure is to provide renewable energy projects with better cash flow during the first ten years. This makes it easier to achieve financing and pay project debt. The lower rate in the second half of the project ensures declining power costs for the utility and ratepayers over the 20-year term of the contracts.

Under the original C-BED legislation, the tariff rate was capped at a net present value of 2.7 cents per kilowatt-hour calculated over the life of the PPA (using the relevant utility’s normal discount rate). This cap was eliminated in 2007. A 2008 amendment allows Minnesota political subdivisions and local governments to participate in C-BED projects in a variety of ways -- including outright ownership -- but prohibits them from acquiring property for such projects through eminent domain. Further 2009 legislation (S.F. 550, Sec. 10) requires all utilities to file standard contracts with the PUC for the purchase of electricity from projects with a rated capacity of five megawatts (MW) or less. The contracts are required to be "similar in all material respects" to the standard contracts Xcel Energy is required to use for wind projects of 2 MW or less under the utility's mandated Renewable Energy Set Aside.

C-BED tariffs can be used to satisfy the state's Renewable Energy Standard. Utilities are required to consider C-BED projects, but they are not required to sign C-BED contracts.

In order for a project to be considered community-based and eligible for C-BED tariffs:
  • 51% of the revenues from the power purchase agreement must flow to Minnesota-based owners and other qualifying local entities.
  • No single wind project investor can own more than 15 percent of a project consisting of two or more wind turbine, except for local governments which may be the sole owners of community-based projects.
  • The project must have a resolution of support adopted by the county board of each county in which the project is to be located, or in the case of a project located within the boundaries of a reservation, the tribal council for that reservation.
  • All owners of property traversed by transmission lines serving the project must be given the opportunity to invest.
In November 2005, Minnesota established a goal of developing an additional 800 MW of community-owned wind projects by 2010. This is in addition to the roughly 200 MW which already existed at that time and which resulted to a large degree from the MN Renewable Energy Production Incentive (now closed to new wind applicants). As of September 2011, a total of  266.30 MW of C-BED projects had been completed, with an additional 114 MW under contract and .24 MW in negotiations. Please see the Minnesota Department of Commerce, Division of Energy Resources (DOCDER) C-BED Project Report for additional details and updated statistics.

 
Contact:
  Energy Information
Minnesota Department of Commerce
Division of Energy Resources
85 7th Place East
Suite 500
St. Paul, MN 55101-2198
Phone: (800) 657-3710
Fax: (651) 297-7891
E-Mail: energy.info@state.mn.us
Web Site: http://www.energy.mn.gov
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Disclaimer: The information presented on the DSIRE web site provides an unofficial overview of financial incentives and other policies. It does not constitute professional tax advice or other professional financial guidance, and it should not be used as the only source of information when making purchasing decisions, investment decisions or tax decisions, or when executing other binding agreements. Please refer to the individual contact provided below each summary to verify that a specific financial incentive or other policy applies to your project.

While the DSIRE staff strives to provide the best information possible, the DSIRE staff, the N.C. Solar Center, N.C. State University and the Interstate Renewable Energy Council, Inc. make no representations or warranties, either express or implied, concerning the accuracy, completeness, reliability or suitability of the information. The DSIRE staff, the N.C. Solar Center, N.C. State University and the Interstate Renewable Energy Council, Inc. disclaim all liability of any kind arising out of your use or misuse of the information contained or referenced on DSIRE Web pages.

Copyright 2013 - 2014 North Carolina State University, under NREL Subcontract No. XEU-0-99515-01. Permission granted only for personal or educational use, or for use by or on behalf of the U.S. government. North Carolina State University prohibits the unauthorized display, reproduction, sale, and/or distribution of all or portions of the content of the Database of State Incentives for Renewables and Efficiency (DSIRE) without prior, written consent.