State and Local Policy Database

Minnesota

State Scorecard Rank

9

Minnesota

33.0Scored out of 50Updated 9/2016
State Government
Score: 6 out of 6
State Government Summary List All

Minnesota offers multiple loan programs for energy efficiency investments as well as PACE financing. The state government leads by example by requiring energy-efficient public buildings and fleets, benchmarking energy use, and encouraging the use of energy savings performance contracts. Researched focused on energy efficiency takes place at several institutions in the state.

Financial Incentives List All

Financial incentive information for Minnesota is provided by the Database of State Incentives for Renewables and Efficiency (DSIRE Minnesotaand State Energy Office contacts. Information about additional incentives not present on DSIRE is listed here. In addition to the state-funded incentives on DSIRE and below, Minnesota has enabled Property Assessed Clean Energy (PACE) financing and has several active programs, including a statewide program. For additional information on PACE, visit PACENation.

Energy Savings Fund for NonprofitsThis program offers up to $100,000 loans at 3.9% interest to 501(c)(3) nonprofits. Additionally, commercial properties owned or occupied by a nonprofit seeking lighting improvements through the One-Stop Efficiency Stop are eligible for up to $25,000 at 0% interest.

Rev It Up Program: The Community Energy Efficiency & Renewable Energy Loan Program, also known as the“Rev It Up” Program, is a revolving loan program that allows up to $100 million in revenue bonds to be issued for low-cost loans to local units of government, industrial and commercial businesses, or healthcare facilities seeking to finance energy efficiency and/or renewable energy projects. This program is administered by the Minnesota Department of Commerce.

Public Entity Energy Audit and Renewable Energy Feasibility Study Revolving Loan Fund Program: The Minnesota Department of Commerce offers a revolving loan fund to help Minnesota public entities pay for the cost of an energy audit or a renewable energy project feasibility study.

Energy Savings Partnership ProgramA statewide revolving loan program administered by the Saint Paul Port Authority that leverages Minnesota Department of Commerce funds to provide low-cost loans to local units of government and schools that pursue cost-effective energy efficiency and renewable energy projects.

Green Business Loan Program: This revolving loan program provides low-interest loans to Minnesota businesses seeking financing to install energy retrofits. Loan amounts range from $20,000—$300,000 and funded though the Community Reinvestment Fund, USA by the Minnesota Department of Commerce.

Last Updated: July 2017

Building Energy Disclosure List All

There is no disclosure policy in place.

Last Updated: July 2017

Public Building Requirements List All

Executive Order 05-16 (2005) required state-owned buildings to reduce energy usage by 10% in 2006 and mandated the use of specific energy conservation measures to help the state meet its target. It also required the incorporation of Minnesota Sustainable Guidelines for new construction and the adoption of "prudent energy" procurement strategies.

In May 2008 Minnesota adopted "Sustainable Building 2030" standards designed to achieve energy consumption reductions of 60% in 2010 (2003 baseline), increasing 10% every five years towards an ultimate target of 90% in 2025. Beginning on July 1, 2010 all Minnesota State bonded projects — new and substantially renovated — that had not already started the Schematic Design Phase on August 1, 2009 were required to meet the Minnesota SB 2030 energy standards.

In 2011, Governor Dayton issued Executive Order 11-12, which called for a 20% reduction in energy use in state facilities and requires the use of the B3 Energy Benchmarking website to track the success of these efforts.  By September 2011, each state agency was required to establish an energy savings goal, and annual progress reporting on these goals is required by Executive Order 11-13. All other public entities throughout the State of Minnesota are able to access the B3 Benchmarking tool via a free online user profile. Minnesota currently has over 320,000,000 square feet of public building space benchmarked, including city, county, K-12 public schools, higher education, and state agency buildings.

Last Updated: July 2017

Fleets List All

Minnesota Statutes requires the state to reduce the use of gasoline by on-road vehicles owned by state departments by 25 percent by 2010 and by 50 percent by 2015, and the use of petroleum-based diesel fuel in diesel-fueled vehicles by ten percent by 2010 and 25 percent by 2015, using 2005 as a baseline. Per Executive Order 11-13, Minnesota’s state agency fleet now references the EPA’s Green Vehicle Guide for fuel economy and energy efficiency and requires an agency procuring a vehicle to choose one with a score of 7 or greater for leased vehicles.

Last Updated: July 2017

Energy Savings Performance Contracting List All

In April 2011, Governor Dayton issued Executive Order 11-12 which calls upon state organizations and local governments to investigate the use of ESPCs to improve energy efficiency. EO 11-12 established the Office of Guaranteed Energy Savings Program (GESP), within the Department of Commerce, Division of Energy Resources. GESP provides technical, contractual and financial assistance to state agencies, local government units, school districts, and institutions of higher learning that elect to implement energy efficiency and renewable energy improvements through Guaranteed Energy Savings Contracts. GESP offers a list of pre-qualified contractors and model contracts. All projects implemented by state facilities must use the Guaranteed Energy Savings Program. Municipals and schools are not required to use GESP, but if they do, they must report the project to the Department of Commerce. 272 buildings participate in Minnesota's Guaranteed Energy Savings Program, in addition to an unknown number of local governments and school buildings that participate in non-GESP ESPC projects.

Last Updated: July 2017

Research & Development List All

To help achieve the State Energy Conservation Goal on a sustained basis, the Next Generation Energy Act of 2007 (the Act) created a Conservation Applied Research and Development (CARD) Grant Program funded through utility assessments. With a $3.6 million annual budget and over $25.5 million in funded R&D since its establishment, the CARD Program is designed to identify new technologies or strategies to maximize energy savings, improve the effectiveness of energy conservation programs, and document the carbon dioxide reductions from energy conservation projects. The CARD program currently has a portfolio of approximately 90 R&D projects that have leveraged over $6.3 million in matching funds from grantees. 

The Center of Diesel Research at the University of Minnesota focuses on the energy-efficiency and environmental impact of internal combustion engines. The Center for Energy and Environment’s Innovation Exchange is a hub for researching, synthesizing and pioneering energy efficiency solutions.   

The Center for Energy and Environment is a hub for independent research, analysis and pioneering energy efficiency solutions.  

The Center for Sustainable Building Research at the University of Minnesota leads and supports the transformation of the regional built environment to provide for the ecological, economic, and social needs of the present without compromising those of the future. Research areas include guiding and rating systems, housing, life cycle assessment, windows and glazing, design for community resilience, and building evaluation.

Last Updated: July 2017

Buildings
Score: 6 out of 8
Buildings Summary List All

Minnesota currently has the 2012 IECC in effect for both residential and commercial codes. The state offers code training and outreach, and has completed a compliance study.

Residential Codes List All

Minnesota's residential building code is mandatory statewide. The IECC 2012 was adopted in August 2014 and went into effect February 2015.

Last Updated: August 2017

Commercial Code List All

Minnesota's commercial building code is mandatory statewide. The commercial energy code is consistent with ANSI/ASHRAE/IES Standard 90.1-2010 and /or the 2012 IECC. It went into effect June 2, 2015.

Last Updated: August 2017

Compliance List All
  • Gap Analysis/Strategic Compliance Plan: Minnesota completed a gap analysis in October 2014 with the Building Code Assistance Project.
  • Baseline & Updated Compliance Studies: In September 2013, the Minnesota Department of Labor and Industry submitted a code compliance study to the Minnesota Department of Commerce. The study estimated the weighted average of residential building compliance with provisions of the 2009 IECC at about 76.8% and commercial building compliance at 91.8%. As of 2016, the Minnesota Center for Energy Environment is conducting a commercial code compliance study. This study is funded by CARD, the State’s R&D program that is funded through utility assessments. 
  • Utility Involvement: Utilities have been active participants in an ongoing commercial code compliance study led by the Minnesota Center for Energy & Environment. Utilities have provided input and assistance in determining study design and identifying areas of the code where compliance issues may exist.
  • Stakeholder Advisory Group: The Minnesota Energy Code Compliance Collaborative is facilitated in large part by Fresh Energy.
  • Training/Outreach: Minnesota is currently funding a pilot program, funded through the CARD program, to help develop training and outreach for building officials to meet the new codes. Center for Energy and Environment is currently developing and administering this pilot program. 

Last Updated: July 2017

CHP
Score: 2.5 out of 4
CHP Summary List All

Minnesota has an interconnection standard that applies to CHP and stakeholders have recently completed a strategic process to encourage CHP deployment, but has not otherwise adopted additional policies. No new CHP systems were installed in Minnesota in 2016.

Interconnection StandardsList All

The Minnesota Public Service Commission initiated a new docket to update its interconnection standards in June 2016. The Commission will re-examine the Minnesota Standards for Interconnection of Distributed Generation that were established in September 2004 in Docket E-999/CI-01-1023. The existing standards delineate uniform procedures applicable to all investor-owned utilities, apply to systems up to 10 MW in size, and include CHP systems. Several aspects of the review process are different depending on the size of system. 

Last Updated: August 2017

Encouraging CHP as a ResourceList All

CHP in energy efficiency standards: The Next Generation Energy Act (NGEA), passed in 2007, established energy-savings goals through the Conservation Improvement Program (CIP), for electric and natural gas investor-owned utilities in Minnesota. H.F. 729, passed in 2013, modified the definition of “energy conservation improvement” in Minnesota Statutes 2012, section 216B.241 to include topping cycle CHP. More information is available here.

Last Updated: August 2017

Deployment IncentivesList All

Net metering:  Minnesota's net-metering law, enacted in 1983, applies to all investor-owned utilities, municipal utilities and electric cooperatives. All "qualifying facilities" less than 40 kilowatts (kW) in capacity under the federal Public Utility Regulatory Policy Act of 1978 (PURPA) are eligible. There is no limit on statewide capacity. Each utility must compensate customers for customer net excess generation (NEG) at the "average retail utility energy rate," defined as "the total annual class revenue from sales of electricity minus the annual revenue resulting from fixed charges, divided by the annual class kilowatt-hour sales." This rate is basically the same as a utility's retail rate.

Last Updated: August 2017

Additional Supportive PoliciesList All

There are currently some additional supportive policies to encourage renewable-fueled CHP and the state provides per-kilowatt-hour production incentives for electricity generated by on-farm anaerobic digesters, which may be used in conjunction with CHP.

With support from the U.S. DOE State Energy Program in 2013, Minnesota conducted a significant stakeholder engagement process that resulted in the development of a CHP Action Plan to help policy makers, utilities, industries, and trade allies increase implementation of CHP in the state. In 2016, the National Association of State Energy Officials (NASEO) published a case study documenting Minnesota's experience that can serve as a model for other states.

Last Updated: August 2017

Utilities
Score: 14.5 out of 20
Utilities Summary List All

Minnesota has a long record of customer energy efficiency programs offered by both investor-owned and publicly owned utilities. Minnesota has achieved significant savings from these programs, which have been in place in various forms for well over two decades. These programs and efforts have remained steadfast in Minnesota without any of the interruption or upheavals that occurred in other states that restructured their electric utility industries.

In 2007, the Minnesota Legislature passed the Next Generation Energy Act of 2007 (Minnesota Statutes 2008 § 216B.241). Among its provisions, the Act sets energy-saving goals for utilities of 1.5% of retail sales each year, thereby establishing an EERS. This act also directed the Public Utilities Commission to allow one or more rate-regulated utilities to participate in a pilot program (of up to 3 years) to assess the merits of a rate-decoupling strategy. The Commission continues to examine decoupling and has established criteria and standards to be used when considering proposals from utilities. Minnesota allows utilities to earn performance incentives for energy efficiency programs.  Minnesota’s regulated utilities are required to file integrated resource plans with the Public Utilities Commission. The plans identify the potential resources the utilities intend to use to meet consumer needs in future years, including significant energy efficiency and conservation savings.

The most recent budgets for energy efficiency programs and electricity and natural gas savings can be found in the State Spending and Savings Tables.

Customer Energy Efficiency Programs List All

Minnesota's investor-owned utilities and publicly owned utilities offer a broad portfolio of customer energy efficiency programs. The programs have benefited from long records of consistent, strong support, allowing them to evolve and improve over many years.

In 2007, the Minnesota Legislature passed the Next Generation Energy Act of 2007 (Minnesota Statutes 2008 § 216B.241). Among its provisions, the Act sets energy-saving goals for utilities of 1.5% of retail sales each year. Regulated utilities recover the cost of energy efficiency programs through rate cases which include consideration of program costs and incentives. Program plans are made and approved on a 3-year cycle for investor-owned utilities and a 1-year cycle for electric cooperatives and municipal utilities. Approved CIP expenses are trued up annually.

The most recent budgets for energy efficiency programs and electricity and natural gas savings can be found in the State Spending and Savings Tables.

Last Updated: July 2017

Energy Efficiency as a Resource List All

Through Minnesota’s long-running “Conservation Improvement Program”, electric and natural gas utilities operating in Minnesota are required to invest a portion of their state revenues in projects designed to reduce their customers' consumption of electricity and natural gas and to improve efficiency.

Minnesota’s regulated utilities are required to file integrated resource plans with the Public Utilities Commission. The plans identify the potential resources the utilities intend to use to meet consumer needs in future years. The plans include significant energy efficiency and conservation savings.

Minnesota continues to take actions to support energy efficiency as a resource. On May 19, 2010, the Minnesota 2009 Energy Policy Act was signed into law as Chapter 110. This was the outcome of the Omnibus Energy Policy Bill from the 2009 legislative session.  The PUC summarized the energy efficiency section of the statute:

Modifies the criteria the PUC can consider in setting incentives for energy conservation. Adds language that makes implementation of cost-effective conservation “a preferred choice” while taking into account the impact of conservation on earnings.

In addition, Article 12, Sec. 2 and 3 of H.F. 729, passed in 2013, explicitly declared energy efficiency a resource and clarified that the state energy policy goal of saving 1.5% of retail energy sales annually is a floor, not a ceiling. 

Last Updated: July 2017

Energy Efficiency Resource Standards List All

Summary: Electric and Natural Gas: 1.5% incremental savings each year beginning in 2010, adjustable to a minimum of 1% savings.

Minnesota investor-owned electric and gas utilities are subject to the energy savings requirements of the Next Generation Energy Act (NGEA), passed by the Minnesota Legislature in 2007 (Minnesota Statutes 2008 § 216B.241). Among its provisions, the Act set incremental energy-saving goals for utilities of 1.5% of retail sales annually, commencing with the first triennial plan period that began January 1, 2010. Of the 1.5%, the first 1% must be met with direct energy efficiency energy savings, or conservation improvements.  This may include savings from efficiency measures installed at a utility’s own facilities. The NGEA also allows savings to be achieved indirectly through energy codes and appliance standards. Up to 0.5% may be met by efficiency enhancements to each utility’s generation, transmission, and distribution infrastructure.

All electric and natural gas utilities, including municipal utilities and co-operatives, must set energy efficiency spending goals based on a percentage of revenue. Prior to the Next Generation Energy Act going into effect fully in 2010, Minnesota utilities were required to spend a percentage of gross operating revenue (0.5% gas, 1.5% electric, 2% for Xcel Energy's electric utility) on energy efficiency programs rather than to achieve a set amount of energy savings.  In practice, however, these minimum spending requirements are often irrelevant, as utilities must spend more than these minimum percentages to achieve the 1.5% EERS.

The NGEA allows a utility to request a lower target (based on historical experience, an energy conservation potential study, and other factors), but for investor-owned utilities that target can be no lower than 1% per year. Lower savings can also be justified if the Commissioner of Commerce determines that additional savings are not cost-effective to ratepayers, the utility, participants, and society. In 2009, the state legislature passed interim legislation to reduce the mandated level of savings during the first three years for natural gas utilities, establishing an interim average annual savings goal of 0.75 percent over 2010-2012 for utilities that submit a “ramp up” plan that averages annual savings of 1% in subsequent years (Minnesota Session Laws 2009, Ch. 110, Sec. 32).

In the most recent triennial planning period (2013-2015), Xcel Energy electric savings goals were set at 1.38% annually (see Docket No. E,G002/CIP-12-447). 

Last Updated: July 2017

Utility Business Model List All

In 2007, the Minnesota legislature enacted Section 216B.2412, directing the Public Utilities Commission to allow one or more rate-regulated utilities to participate in a pilot program (of up to 3 years) to assess the merits of a rate-decouplingstrategy. Two utilities, CenterPoint Energy and Minnesota Energy Resources Corp, have decoupling for natural gas customers (Docket No. G-008/GR-08-1075, G007,G011/GR-10-977).  In June 2009, the PUC issued an Order adopting criteria and standards for pilot proposals for revenue decoupling (Docket No. E,G-999/CI-08-132, Issue date June 19, 2009). 

Minnesota has had a shared benefit incentive in place since 1999. The incentive increases as the percentage of savings of retail sales increases. There is a cap of 20% of net benefits on the amount of incentive that may be earned. The incentive is set such that at savings of 1.5% of retail sales, electric utilities will earn an incentive of $0.07 per kWh saved and gas utilities will earn and incentive of $9.00 per thousand cubic feet saved. The percentage of net benefits to be awarded to each utility at different energy savings levels will be set at the beginning of each year. (See Minn. Stat.§ 216B.241, subd. l(c) and Docket No. E,G-999/CI-08-133).

The PUC adopted an updated DSM benefit incentive mechanism for 2017-2019 with the following provisions: For electric utilities, the threshold is set for one percent of retail sales. For each energy savings increase of 0.1% of retail sales, net benefits awarded increase by 0.75% until reaching the net benefits cap at energy savings achievements equal to 1.7 %. At savings of 1.7% and higher, the incentive provided equals the net benefit cap times the net benefits.

For gas, the threshold is set at 0.7% of retail sales. For each energy savings increase of 0.1 percent of retail sales, net benefits awarded increase 0.75% until reaching the established cap at energy savings achievements equal to 1.2%. At 1.2% savings and higher, incentives provided are equal to the net benfit cap times the net benefits.

Net benefit caps are set at 13.5% for 2017, 12.0% in 2018, and 10.0% in 2019.

Last Updated: September 2017

Evaluation, Measurement, & Verification List All

In addition to the TRM, Minnesota has developed the Energy Savings Platform (ESP) to track and report the energy savings for all 187 utilities that participate in CIP. The evaluation of ratepayer-funded energy efficiency programs in Minnesota relies on legislative mandates (MN Statutes 261B.241). Evaluations are mainly administered by the utilities. However, the Division of Energy Resources and staff from Minnesota Department of Commerce also assists in the evaluation administration. Evaluations for each of the utilities are conducted. Minnesota has formal requirements for evaluation articulated in MN Statutes 261B.241 and Rule 7690.0550. Minnesota uses four of the five classic benefit-cost tests identified in the California Standard Practice Manual. These are the Utility/Programs Administrator (UCT), Participant (PCT), Social Cost (SCT), and Ratepayer Impact Measure (RIM). Minnesota specifies the SCT to be its primary test for decision making. The benefit-cost tests are required for portfolio, total program, and customer project level screening, with exceptions for low-income programs, pilots, and new technologies. The rules for benefit-cost tests are stated in MN Statutes 261B.241 and Rule 7690.0550.

Last Updated: September 2017

Guidelines for Low-Income Energy Efficiency Programs List All

Requirements for State and Utility Support of Low-Income Energy Efficiency Programs

Minnesota Statute 216B.241 (Subdivision 7) requires both natural gas and electric utilities to provide low-income energy efficiency programs. Both municipal gas and electric utilities must spend at least 0.2% of their gross operating revenue from residential customers on low-income programs. Legislation passed in 2013 raised the minimum low-income spending requirement for investor-owned natural gas utilities from 0.2% to 0.4% of their most recent three-year average gross operating revenue from residential customers.

Cost-Effectiveness Rules for Low-Income Energy Efficiency Programs

The rules for benefit-cost tests are stated in MN Statutes 261B.241 and Rule 7690.0550. The benefit-cost tests are required for portfolio, total program, and customer project level screening with exceptions for low-income programs. Subd 7(e) of 216B.241 directs that “costs and benefits associated with any approved low-income gas or electric conservation improvement program that is not cost-effective when considering the costs and benefits to the utility may, at the discretion of the utility, be excluded from the calculation of net economic benefits for purposes of calculating the financial incentive to the utility. The energy and demand savings may, at the discretion of the utility, be applied toward the calculation of overall portfolio energy and demand savings for purposes of determining progress toward annual goals and in the financial incentive mechanism.”

Coordination of Ratepayer-Funded Low-Income Programs with WAP Services

The Minnesota Department of Commerce is responsible for administration of the federal Weatherization Assistance Program (WAP). The department’s Division of Energy Resources includes not only WAP but also the State Energy Program (SEP), Low Income Energy Assistance Program (LIHEAP), as well as the Conservation Improvement Program (CIP), a statewide program funded by ratepayers to help Minnesota households and businesses use electricity and natural gas more efficiency. Close proximity of these programs within the department allows for coordination of services for low-income households. The Department of Commerce Energy Assistance Program (EAP) offers a simple one-stop shop for applying to EAP, WAP, and CIP.

Last updated: July 2017

Self Direct and Opt-Out Programs List All

Minnesota offers a self-direct option, with a full exemption from assigned CRM fees, to customers with 20 MW average electric demand or 500,000 MCF of gas consumption. Customers must also show that they are making "reasonable" efforts to identify or implement energy efficiency and that they are subject to competitive pressures that make it helpful for them to be exempted from the CRM fees. Participating customers must submit new reports every five years to maintain exempt status. The utility is not involved in self-direct program administration; the state Department of Commerce functions as the manager of self-direct accounts and is the arbiter of whether a company qualifies for self-direct and is satisfying its obligations. 

Commercial gas customers served by a gas utility with less than 600,000 gas customers in Minnesota that do not meet either threshold may opt-out if they can demonstrate that they have acquired or can reasonably acquire the ability to bypass use of the utility's gas distribution system. They must file a report every five years for up to ten years demonstrating that they are continuing to make reasonable efforts towards energy efficiency improvements.  If the majority ownership of the facility changes, that period can be extended another ten years.  Minnesota Department of Commerce staff will evaluate their spending and savings claims. 57 facilities have opted-out. 

Last Updated: July 2017

Data AccessList All

There is no policy in place that requires utilities to release energy use data to customers or third parties. 

Last Updated: July 2017 

Transportation
Score: 4 out of 10
Transportation Summary List All

Minnesota adopted legislation in 2010 that provides significant funding for transit maintenance and construction, although funding levels have dropped in recent years. Minnesota has complete streets legislation in place.

Tailpipe Emission Standards List All

No policy in place or proposed.

Last Updated: July 2017

Transportation System Efficiency List All

Transportation and Land use integration: No policy in place or proposed.

VMT Targets: No policy in place or proposed.

Complete Streets: Minnesota adopted a complete streets policy in 2013 and updated it in 2016.

FAST Freight Plans and Goals: Minnesota has a state freight plan that identifies a multimodal freight network, but it does not include freight energy or greenhouse gas reduction goals.

Last Updated: July 2017

Transit Funding List All

In order to finance continued transit development in the state, Minneosta adopted House File 2700 in 2010. The bill is an omnibus bonding and capital improvement bill which provides $43.5 million for transit maintenance and construction.  The bill also prioritizes bonding authorization so that appropriations for transit construction for fiscal years 2011 and 2012 amount to $200 million. 

Last Updated: July 2017

Incentives for High-Efficiency Vehicles List All

No policy in place or proposed.

Last Updated: July 2017

Equitable Access to TransportationList All
Minnesota incentivizes the creation of low-income housing near transit facilities through the Land Acquisition for Affordable New Development (LAAND) Program, and it considers the proximity of transit facilities when distributing federal Low-Income Housing Tax Credits to qualifying property owners. Last Updated: July 2017
Appliance Standards
Score: 0 out of 2
Appliance Standards Summary List All

Minnesota has not set appliance standards beyond those required by the federal government.

Last Updated: June 2017