A landmark energy bill passed by the Minnesota Legislature this winter didn’t just set goals for a carbon-free electric grid by 2040. A lesser-known passage also stuck a toe into what has become a larger debate around the transition away from fossil fuels: permitting.
Lawmakers voted to make it somewhat easier for renewable power developers to build in Minnesota, specifically by exempting certain large wind and solar projects from getting what’s known as a “Certificate of Need.” That’s not an earthquake of a change, according to supporters. But it does shorten part of the regulatory road.
“It cuts basically like 14 or 16 months, depending on the project, off the permitting process,” said Madelyn Smerillo, senior policy associate for Clean Grid Alliance, a renewable energy trade group that championed the policy change. The current Certificate of Need “makes Minnesota less competitive with surrounding states,” she said.
Across the country, regulators, politicians and the energy industry have grappled with the idea of altering permitting and review for all sorts of energy projects – and other industrial development like mining – while balancing environmental review and other scrutiny. In Minnesota, that conversation has grown in recent years. As industry pushes for what they see as a more efficient process on the energy front, wind and solar projects sometimes face backlash from those who live where the projects would be built.
Clean Grid Alliance is hopeful the Legislature will do more. And in their sights is a regulation that sits at the heart of debate over turning farmland into solar arrays.
Changes aimed at speeding renewable development
The Certificate of Need exemption came first as part of the 2040 bill guiding the energy mix for Minnesota utilities, which was passed by DFL lawmakers who hold majorities in the state House and Senate. (Legislators tweaked the change later in the year, however.)
The final product exempts what are known as independent power producers – developers that aren’t utility companies – building large wind and solar projects. There were some exceptions in existing law, but this is a significant new one.
A Certificate of Need is granted by the state’s Public Utilities Commission (PUC) and incorporates environmental review of a project. Regulators look at the size of a project, the type of project and the timing, to determine whether the energy facility is really needed and if there’s actually demand for the power.
Smerillo said this is unnecessary for an independent power producer. After a project receives permits, a developer must find a utility to buy the power. If they do, that proves a need, her organization argues. If they don’t, the project won’t get built, she said.
This doesn’t mean a developer can build whenever and wherever. The power plans of investor-owned utilities that buy electricity from developers still need approval from regulators, and there are still many aspects of environmental review, and other permitting before state officials. Smerillo said there is also space for public input on projects when a developer is applying for a site permit.
Brian Ross is vice president of renewable energy for the nonprofit Great Plains Institute, which does power planning work. Ross said he wrote Minnesota’s first solar farm ordinance and has worked in energy permitting for the last 15 years. The Certificate of Need change, he said, “was not earth shattering.”
“It was kind of small things that some of the people in the industry felt was needed to have done,” Ross said.
There’s usually a handful of wind and solar projects each year before the PUC that might get this new exemption. That can be limited by the amount of transmission infrastructure available to transport power. The ease of permitting for transmission is another question in the industry. But demand for wind and solar projects is also expected to grow as utilities seek more renewable power in coming years.
The Certificate of Need has a 12-month timeline in law, though it can be extended. That usually runs concurrently with other necessary approvals, namely a site permit, meaning a wind or solar project might not be ready for construction a full year faster now without the Certificate of Need. But the change will cut down on planning before the permit application and will otherwise save time and resources, Smerillo said.
At the Legislature, Sen. Nick Frentz, a DFLer from North Mankato who chairs the Senate’s Energy, Utilities, Environment and Climate Committee, said he didn’t see any opposition to the Certificate of Need exemption. “Any time we can find consensus in how we reduce our regulatory burden in state government, we should pull the trigger and that’s what this change represents,” he said.
The Legislature made other changes to energy law beyond the 2040 goals. Lawmakers also created some rules for regulating energy storage systems, made changes aimed at easing permitting on short “generation-tie” lines that connect power facilities to larger transmission lines and tweaked some rules around environmental review.
A growing conversation on permitting
In general, Ross said Minnesota’s regulatory environment for large energy projects can be a challenge but is more predictable than many other states because it is overseen at the state level rather than by local officials.
Xcel Energy spokesman Theo Keith said the Certificate of Need exemption will “streamline the development of some renewable projects,” but he also said state law had not been a significant barrier for the utility before the change.
But changing permitting in Minnesota is still a hot issue for the power industry and others. On Tuesday, the PUC unanimously ordered meetings to discuss improvements to its permitting and environmental review process for wind, solar and transmission lines. The goal? To better ensure “timely and cost-effective compliance” with the state’s renewable energy and decarbonization laws, says a document explaining the directive.
“Siting facilities will not be getting any easier as we go forward, the prime sites have already been selected – now we’re moving into probably some more challenging zones,” said Commissioner John Tuma, a Republican, during the meeting on Tuesday. “So I think having conversations at this stage is critical if we’re going to even have a shot at meeting 2040 goals.”
Commissioner Joseph Sullivan, a Democrat, said it’s good to debate making regulations more smooth, but also cautioned that there’s a “value in the process” when the state is considering huge projects that can impact thousands of landowners. “I hope that we don’t also lose sight of the fact that it’s oftentimes faster to measure twice or three times and then get it right on the first go round than it is to kind of rush things,” Sullivan said.
Frentz told MinnPost there will be discussions before the Legislature convenes next year on what exactly they might take up. But Frentz, like Sullivan, said there’s a balancing act in the need for a “reasonable process” for developers and others seeking permits across state government and the state’s need to properly regulate and review projects.
“I think we’re coming into next session with permitting a front-burner issue,” Frentz said.
A debate over ‘prime farmland’ on the horizon?
Smerillo said Clean Grid Alliance will have a few ideas for changes the Legislature or the PUC could take up, like rules for how far apart wind turbines need to be. But perhaps the organization’s biggest and most controversial priority is getting an exemption for solar from what is known as the “prime farmland” rule.
A decades-old PUC rule prohibits large electric power plants from using more than a half-acre of prime farmland – a federal designation based on soil quality – for each megawatt of electricity the project can generate. One megawatt of solar takes about seven to 10 acres of land. Smerillo said roughly 30% of Minnesota’s total land mass is made up of prime farmland. And in Minnesota, much of that land that is suitable for solar is farmland.
This hasn’t brought solar development to a halt. The PUC can allow projects on prime farmland if there is no “feasible and prudent alternative.” The five-member commission has used that exception.
“There has not been a project that’s been stopped because of the prime farmland rule,” Smerillo said.
Nevertheless, Clean Grid Alliance wants an exemption for solar because Smerillo said the regulation could be more of a hindrance under a PUC, governor or Legislature less friendly to renewable power. And she said it takes time and energy for a developer to argue there’s no alternative to using prime farmland.
Agricultural trade groups and others are bigger fans of the prime farmland rule. Pierce Bennett, director of public policy for the Minnesota Farm Bureau, said the organization wants productive farmland to remain in use for agriculture, and taking land out of the picture for a long time could limit what is available for young and emerging farmers when buying land can be difficult and expensive.
Bennett said the bureau respects a property owner’s right to sell land for solar development. “What we want to be protective of, and are weary of … is how much are we incentivizing that behavior,” he said. “That is the part that we’re very sensitive to.”
Bennett said using “marginalized land” is a different conversation. But he said regulation changes like the 2040 bill are incentivizing solar development, affecting the market. He said it has farmers concerned about losing out in a competition for land. An exemption for solar on prime farmland would be “deeply concerning,” he said.
It’s not just farmers. Local leaders and residents in some rural areas have pushed back against large energy projects over the years in the state. The large 200-megawatt Byron Solar project in southeastern Minnesota stirred controversy because of its use of 1,500 acres of prime farmland.
Frentz said there are 2,000 family farms in his southern Minnesota district and there’s “a concern about prime farmland prices being driven up by clean energy.” At the same time, he said the rights of landowners to use their land how they want is important too, along with meeting carbon-free goals.
Where does he fall on exempting solar from the regulation? “It’s an ongoing discussion and I think it’s a good one,” Frentz said. “The question is, if there’s a near-term cost, who’s going to pay it?”
In general, the energy sector needs to “build long-term social license” for development in the state, Ross said, even as it aims to meet clean energy goals. There have been efforts to make solar and farming co-exist. At the Minnesota State Fair on Friday, the Great Plains Institute, state and federal officials, solar developers and others showcased a pilot project that combines a solar project with farming.
“It does change the community,” Ross said of renewable projects. “If you live in a township that is primarily corn and soybeans and suddenly it’s spouting a 1,500-acre solar farm, that’s kind of transformative.”
Smerillo, meanwhile, argued solar expansion will take up less prime farmland than some fear. But either way, Smerillo is looking for a lawmaker to sponsor an exemption for solar. And she said the Legislature is ready for the broader permitting debate.
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“We have a very renewable energy-friendly Legislature right now and a very renewable-friendly governor, and so now is the time. “Especially after the passage of the 100% by 2040, that is the catalyst; that is the green light from our Legislature to get this stuff moving.”
