Provisions to support deployment of energy storage added and modified, Public Utilities Commission directed to issue an order, utilities required to install an energy storage system , incentive program established, and money appropriated.

A bill for an act

relating to energy; adding and modifying provisions to support deployment of

energy storage; directing the Public Utilities Commission to issue an order;

requiring utilities to install an energy storage system under certain conditions;

directing public utilities to file a tariff with the Public Utilities Commission;

requiring the Public Utilities Commission to order the installation of energy storage

systems; requiring public utilities to file a plan to install energy storage systems;

establishing an incentive program to install energy storage systems; appropriating

money; amending Minnesota Statutes 2024, sections 216B.1611, by adding a

subdivision; 216B.2422, subdivision 7; proposing coding for new law in Minnesota

Statutes, chapters 216B; 216C.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2024, section 216B.1611, is amended by adding a subdivision

to read:

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Subd. 5.

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Distributed generation capacity; treatment.

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(a) No later than November 1,

2026, the commission must issue an order clarifying that for purposes of interconnecting

an on-site customer-owned distributed generation facility, the capacity of the facility must

be measured and expressed as:

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(1) export capacity rather than nameplate capacity; and

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(2) alternating current capacity.

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(b) For purposes of this subdivision, "export capacity" means a distributed generation

facility's nameplate capacity net of any limitations on the amount of power the distributed

generating facility is capable of exporting to a utility's distribution system resulting from

physical equipment that is part of or connected to the generating facility, including but not

limited to an inverter, relay, or energy storage system, as defined in section 216B.2422,

subdivision 1, paragraph (f), as reported to the utility by the owner of the distributed

generation facility.

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(c) The owner of a distributed generation facility interconnected to a utility's distribution

system is prohibited from increasing the export capacity of the distributed generation facility

beyond the level that was first interconnected to the utility's distribution system unless the

utility provides written approval. The utility must respond in writing to an owner's notice

of intent to increase export capacity within 90 days of the date the notice is received and

may reject the request only upon determining that approving the request reduces safety or

the reliability of electric service.

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EFFECTIVE DATE.

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This section is effective the day following final enactment.

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Sec. 2.

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[216B.1616] FEEDER LINE REPLACEMENT; STORAGE REQUIREMENT.

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(a) When replacing a feeder line with a feeder line with a higher capacity, a public utility

must install at the applicable distribution substation an energy storage system that has

sufficient capacity to ensure customer safety and grid reliability.

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(b) For purposes of this section:

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(1) "energy storage system" has the meaning given in section 216B.2422, subdivision

1, paragraph (f); and

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(2) "feeder line" means a powerline (i) that transfers power from a distribution system

substation to distribution transformers, and (ii) whose current flow is the same at the sending

and receiving ends of the powerline.

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EFFECTIVE DATE.

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This section is effective the day following final enactment.

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Sec. 3.

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[216B.1617] ENERGY STORAGE; DISTRIBUTED ENERGY RESOURCE

TARIFF.

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(a) No later than September 15, 2026, the commission must initiate a docket designed

to result in a commission order requiring public utilities providing electric service to file a

distributed energy resource tariff with the commission, based on guidelines established in

the order, to compensate customer-owners of on-site distributed energy resources for the

discharge of generated or stored energy that is net input to the public utility. The tariff must

account for all value provided by distributed energy resources, including but not limited to

energy, capacity, ancillary services, demand response, temporal value, locational value, and

environmental value.

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(b) Within 90 days of the date the commission issues an order under this subdivision, a

public utility must file with the commission for commission approval, disapproval, or

modification a tariff that is consistent with the order.

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(c) For purposes of this section, "distributed energy resource" means a resource, located

at a public utility customer's site, with a generation capacity no greater than ten megawatts.

Distributed energy resource includes an energy storage system, as defined in section

216B.2422, subdivision 1.

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EFFECTIVE DATE.

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This section is effective the day following final enactment.

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Sec. 4.

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[216B.1697] ENERGY STORAGE SYSTEMS; DEPLOYMENT TARGETS.

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Subdivision 1.

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Definition.

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For purposes of this section, "energy storage system" has the

meaning given in section 216B.2422, subdivision 1.

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Subd. 2.

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Deployment targets.

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(a) A utility required to file a resource plan under section

216B.2422 must deploy energy storage systems with a capacity determined by the

commission under paragraph (b). No later than December 31, 2036, the aggregate statewide

capacity of energy storage systems deployed by all utilities subject to this section must be

at least 3,000 megawatts.

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(b) No later than October 1, 2026, the commission must issue an order specifying the

amount of energy storage capacity required of each utility subject to this section to meet

the statewide capacity target and schedule in paragraph (a). The amount of energy storage

capacity required of an individual utility must be calculated by dividing the utility's total

electric retail sales to Minnesota customers in 2025 by the total electric retail sales to

Minnesota customers in 2025 of all utilities subject to this section, and multiplying the

resulting quotient by 3,000 megawatts. The commission may establish interim energy storage

capacity targets that utilities are required to meet before the 2036 target date.

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Subd. 3.

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Application.

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(a) A utility must file an application with the commission before

installing a proposed energy storage system. The application must contain:

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(1) the energy storage system's technical specifications, including but not limited to:

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(i) the maximum amount of electric output the energy storage system is capable of

providing;

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(ii) the length of time the energy storage system is capable of sustaining maximum

output;

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(iii) the location of the project within the utility's distribution system and a description

of the analysis conducted to determine the location;

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(iv) a description of the utility's electric system needs the proposed energy storage system

addresses;

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(v) a description of the services the energy storage system is expected to provide; and

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(vi) a description of the technology required to construct, operate, and maintain the

energy storage system, including a data or communication system necessary to operate the

energy storage system;

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(2) the estimated cost of the project, including:

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(i) capital costs;

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(ii) the estimated cost per unit of energy delivered by the energy storage system; and

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(iii) an evaluation of the energy storage system's cost-effectiveness;

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(3) the energy storage system's estimated benefits to the utility's electric system, including

but not limited to:

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(i) deferred investments in generation, transmission, or distribution capacity;

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(ii) reduced need for electricity during times of peak demand;

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(iii) improved reliability of the utility's transmission or distribution system; and

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(iv) improved integration of the utility's renewable energy resources;

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(4) a description indicating how the addition of an energy storage system complements

the utility's proposed actions described in the most recent integrated resource plan submitted

under section 216B.2422 to meet expected demand with the least expensive combination

of resources; and

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(5) any additional information required by the commission.

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(b) A utility must include in the application an evaluation of the potential to store energy

throughout the utility's electric system and must identify geographic areas in the utility's

service area where the deployment of energy storage systems has the greatest potential to

achieve the economic benefits identified in paragraph (a), clause (3).

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Subd. 4.

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Commission review.

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The commission must review each proposal submitted

under this section and may approve, reject, or modify the proposal. The commission must

approve a proposal the commission determines: (1) is in the public interest; and (2) reasonably

balances the value derived from the deployment of an energy storage system for ratepayers

and the utility's operations with the cost to procure, construct, operate, and maintain the

energy storage system.

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Subd. 5.

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Cost recovery.

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A public utility may recover from ratepayers all costs prudently

incurred by the public utility to deploy an energy storage system approved by the commission

under this section, net of any revenues generated by the operation of the energy storage

system.

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Subd. 6.

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Reporting; compliance.

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The commission must establish reporting procedures

for utilities that are sufficient in content and frequency to ensure the commission is informed

regarding compliance with this section.

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Subd. 7.

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Commission authority; orders.

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The commission may issue orders and conduct

proceedings necessary to implement and administer this section.

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EFFECTIVE DATE.

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This section is effective the day following final enactment.

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Sec. 5.

Minnesota Statutes 2024, section 216B.2422, subdivision 7, is amended to read:

Subd. 7.

Energy storage systems assessment.

(a) Each
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public
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utility required to file a

resource plan under subdivision 2 must
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incorporate in the utility's resource planning the

energy storage targets the utility is required to meet under section 216B.1697 and must
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include in the filing an assessment of energy storage systems that analyzes how the

deployment of energy storage systems contributes to:

(1) meeting identified generation and capacity needs;
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and
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(2) the factors identified under section 216B.1697, subdivision 3, paragraph (a), clause

(3); and

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(2)
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(3)
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evaluating ancillary services.

(b) The assessment must employ appropriate modeling methods to enable the analysis

required in paragraph (a).

Sec. 6.

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[216C.3771] ENERGY STORAGE INCENTIVE PROGRAM.

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(a) The public utility subject to section 116C.779 must develop and operate a program

that provides grants to customers to reduce the cost to purchase and install an on-site energy

storage system, as defined in section 216B.2422, subdivision 1, paragraph (f). No later than

November 1, 2026, the public utility subject to this section must file a plan with the

commissioner to operate the program. The public utility must not operate the program until

the plan is approved by the commissioner. A change to an operating program must be

approved by the commissioner.

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(b) To be eligible to receive a grant under this section, a customer's energy storage system

must:

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(1) have a capacity no greater than 50 kilowatt-hours; and

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(2) be located within the electric service area of the public utility subject to this section.

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(c) An owner of an energy storage system is eligible to receive a grant under this section

if:

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(1) a solar energy generating system is operating at the same site as the proposed energy

storage system; or

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(2) the owner has filed an application with the public utility subject to this section to

interconnect a solar energy generating system at the same site as the proposed energy storage

system.

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(d) The amount of a grant awarded under this section must be based on the number of

watt-hours that reflects the duration of the energy storage system at the system's rated

capacity, up to a maximum of $........

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(e) The commissioner must annually review and may adjust the amount of grants awarded

under this section, but the commissioner must not increase the amount above the amount

awarded in previous years unless the commissioner demonstrates in writing that an upward

adjustment is warranted due to market conditions.

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(f) A customer who receives a grant under this section is eligible to receive financial

assistance under programs operated by the state or the utility for the solar energy generating

system operating in conjunction with the energy storage system.

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(g) For purposes of this section, "solar energy generating system" means a set of devices

whose primary purpose is to produce electricity by means of any combination of collecting,

transferring, or converting solar-generated energy.

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EFFECTIVE DATE.

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This section is effective the day following final enactment.

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Sec. 7.
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APPROPRIATION.
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Notwithstanding Minnesota Statutes, section 116C.779, subdivision 1, paragraph (j),

$....... in fiscal year 2027 is appropriated from the renewable development account established

in Minnesota Statutes, section 116C.779, to the commissioner of commerce to award grants

to install energy storage systems under Minnesota Statutes, section 216C.3771, and to pay

the reasonable costs incurred by the department to administer Minnesota Statutes, section

216C.3771. This appropriation is available until expended. The base for this appropriation

in fiscal year 2028 is $........

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