Minnesota ups the value of its Social Cost of Carbon

While it is unclear if and when these revised carbon cost assumptions will be integrated in Minnesota’ Value of Solar Tariff, the new, higher calculations are to be considered in utility planning.

July 31, 2017 Christian Roselund

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With the Trump Administration continuing to bury its head in the sand about climate change, the impetus is on individual U.S. states to act. And across the nation, they are acting on issues of climate and the energy transition.

As the latest, last week Minnesota regulators updated the state’s 20-year old assumptions regarding the costs to the rest of society of CO2 pollution from power plants, dramatically increasingly the value from a current range of $0.44 to $4.53 per short ton of carbon to $9.05 to $43.06 by 2020.

These values are based on the federal Social Cost of Carbon, which the Trump Administration suspended the use of in March. And while much higher than proposed by some of the state’s utilities, they are remarkably close to the values proposed by Xcel Energy.

Minnesota’s utilities will be required to use this new Social Cost of Carbon in their long-term planning efforts. However, it is unclear whether or not this value will be folded into Minnesota’s Value of Solar Tariff (VOST), which includes the social costs of carbon as part of its calculation.

GTM Research Associate Director of U.S. Solar Corey Honeyman says that either way, the decision is likely to benefit solar. “This upward revision to carbon pricing could move the needle in making large scale solar the least cost alternative over new-build natural gas in future resource plans,” Honeyman told pv magazine.

Honeyman notes that this has already happened with Enel’s Aurora project, which came online last year. “With PPA pricing continuing to dip below $50/MWh, this decision could make Minnesota a surprise market for additional solar procurement above and beyond preexisting RPS requirements,” explains Honeyman.

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