There are massive changes underway in Minnesota as commercial properties, businesses and utilities work to transition to renewable energy sources. To gain some insight into this transition, I sat down with CEO Griffin Dooling who is also the current president of the board of directors for the Minnesota Solar Energy Industries Association. We discuss how businesses are impacted by Minnesota’s push for clean energy, the ROI of these projects and why sustainability is also about profitability.
Q: There is a big sustainability movement driving solar adoption for Minnesotan homeowners. Is that also what’s driving solar adoption for commercial and industrial businesses?
Solar adoption certainly intersects with sustainability, but beyond that there are really three drivers for the adoption of solar energy on commercial properties. The first is simply demand. Businesses, investors and employees are all looking for ways to tie their physical assets to their corporate values and objectives – solar energy is a very visible and tangible way to achieve that. The second driver is economics. These solar energy projects have an attractive return on investment and can be accretive to the net operating income of a commercial property or business. The third driver I would characterize as culture: the overall society-wide movement toward clean energy. This is more than a trend; we’re seeing communities encouraging – and sometimes requiring – clean energy to be a part of commercial real estate development and business operations.
Blue Horizon Energy CEO Griffin Dooling
Q: How do today’s solar projects compare to projects, say, five years ago?
Projects five years ago still made a lot of sense and have made positive impacts on businesses that were early adopters, but the math is even better today.
Project economics are stronger now, helped by advancements in cost and efficiency. Incentives have also improved. For example, the updated and expanded 30-60% federal investment tax credit. Utility rate increases have accelerated, with rates rising to 20% in recent years in some markets. Businesses with solar systems installed are insulated from those rate increases, and folks without solar are more motivated than ever to reduce their energy expenses.
Technological maturity is another factor here. Solar technologies are proven. The reliability is proven. These projects are known quantities for banks, insurers, permitting authorities and utilities. There are established processes to onboard these projects onto the grid (though the process can certainly improve in some corners). This all demonstrates a maturity that was still emerging five or 10 years ago.
Q: Your point about bank and insurer familiarity is interesting. Can you elaborate?
We’ve not only seen more variety in financing options available today, but banks themselves are more comfortable with the creditworthiness of these projects. A few years ago, lenders were assigning solar projects a higher risk rating than other building improvements or capital projects. Those risk ratings have come down, which allows more attractive rates and terms on project financing, enabling more project flexibility.
Q: How is all of this affecting the rate of commercial solar adoption?
We’re seeing significantly more interest across the board. That’s driven by the factors we’ve discussed but also by a general growing awareness in the marketplace. For example, the federal government has allocated over $500 billion of investments into clean energy and related programs for the next decade; that gets people’s attention. Organizations are looking at how they can tie that investment into advancing their own sustainability and financial goals.
At the state level, Minnesota itself has new aggressive clean energy objectives. Earlier this year, Gov. Tim Walz signed Minnesota’s 100% carbon-free energy by 2040 bill. That timeline is 10 years earlier than was previously discussed at the state level, and it’s motivating businesses and commercial property owners to consider how they can make the most of these federal and state investments while advancing the overall transition to carbon-free energy.
Q: I don’t know if the general public realizes how massive of a change it is that we’re talking about here.
Yes, it’s a big change and runs parallel to the electrification of our energy system broadly. Transportation is moving from liquid fuels to electric vehicles. Homes are becoming increasingly efficient and electrified. Industry is using more power as our economy grows. As this all happens, people are naturally asking “How can I manage my electricity use more effectively?” What follows is a conversation about efficiency and, ultimately, on-site power production through technologies like solar energy which give you direct control of your power.
Q: You mentioned three converging events: a push to 100% clean energy, rising utility electric rates and the transition from fossil fuels to electricity. I suppose consumers could sit back and let the utilities drive that clean energy push, but on-site solar seems like one of the only options to lower utility bills. Do I have that right?
That’s right. Sustainability is the overarching drive behind businesses investing in solar energy, and it’s the driver behind state laws mandating carbon-free energy. But sustainability is really about efficiency: doing more with less and ensuring we’re good stewards of the resources we have. If you pursue energy efficiency and generate your own power with solar energy, you not only can achieve sustainability, but you can also have control of your energy costs. That creates a profitability motive as much as a sustainability motive.
These projects really have a triple bottom line: they’re good for the organization, because they’re saving on energy expenses; good for society, because we’re decarbonizing the electricity system; and good for the environment, because clean energy is emission-free.
You mentioned that solar is making businesses more efficient. It also sounds like behind-the-meter solar is also helping lower the strain on the electrical grid that could happen as we electrify everything that has been powered by fossil fuels.
Absolutely. By investing in clean energy now, you’re lessening your impact on the grid. There are utility-based incentive programs that are directly tied to that. For example, Xcel Energy’s photovoltaic demand credit program gives an additional credit for power that a business or commercial property’s solar energy system produces from 1 to 7 p.m. By producing your own power during that window, you’re helping offset peak requirements for the grid. This is a significant program for commercial-industrial properties and is a formal tariff that’s been set up with the Public Utilities Commission to incentivize a specific behavior. Individuals and businesses utilizing programs like this to invest in solar energy directly helps accelerate the broader transition to a carbon-free energy system.
Q: Speaking of the future, I want to see if I can get some of your predictions. You’re not just the CEO of Blue Horizon Energy, but also the board president for MnSEIA. Can you give a prediction of what solar in Minnesota is going to look like in five or 10 years?
We’re certainly going to see solar deployment in the commercial-industrial space continue to grow. Organizations that have already done sustainability planning and made public commitments over the past decade have goals set for 2025, 2030 and beyond. Now is the time to put rubber on the road and implement projects addressing carbon dependency so they can achieve those goals. Energy is one of the easiest and most financially attractive ways to do that. Solar technology has been around for so long and has matured so much that these projects can be seen as proven long-term investments which also make very quick progress on near-term carbon reduction goals. Over the next few years, we’re going to see more and more organizations putting their commitments into action, driving a lot of solar energy adoption.
Q: I know that we’ve mentioned it already: Minnesota’s Clean Energy Bill, targeting 100% renewable power by 2040. Do you think we’re on track?
Well, put it this way. Last year, carbon-free energy represented 28% of energy production in Minnesota. That 28% includes primarily hydro, wind, solar and nuclear, which all started to become mainstream energy infrastructure in roughly the 1970s. Over the last 50 years, we got to 28%. Now, Minnesota needs to see nearly three times that much clean energy deployed over the next 17 years. It’s a big lift, but the roadmap is clear.
The Public Utilities Commission has already said that we have a clear pathway to 85-90% in this period, based on existing technologies and growth patterns. However, it’s going to require a concerted effort and focus from all stakeholders for the state to stay on track and reach these goals. One of the very helpful things the bill established was deployment intervals along the journey to 2040. For instance, for large utilities, 80% of Minnesota’s electricity must be renewable by 2030. This helps give a clear roadmap to make sure we’re on pace.
As this transition continues to accelerate, organizations who don’t account for clean energy as part of their operational plan or construction plan are probably going to become outliers. Much in the same way that flip phones are an outlier in a world where smartphones are ubiquitous. I think it’s a useful analogy to say that the clean energy industry is basically at the place the iPhone was 12 years ago.
Q: That’s a compelling analogy. Do you have any closing thoughts for readers?
Yes: now is the time. There has never been a better opportunity to integrate solar energy into your business plan. The overall incentives and economic picture are very compelling. Utilities, state government and the federal government are ramping up incentives to accelerate these deployments. That won’t be a permanent condition. As deployment grows and we make progress on these goals, it might not be as great of an opportunity down the road. Anyone interested in solar power really should take advantage of the excellent framework that exists today and set themselves up for some very successful projects. We’re happy to help.
