Energy affordability is top of mind for many state legislative and regulatory bodies. As part of those energy affordability considerations, conversations and proposals are increasingly contemplating who should be allowed to own the batteries that keep the grid running. Utilities, independent developers and customer-owned systems can all deliver various grid services. The states that let all three compete for the same projects tend to land the lowest prices for ratepayers. The states that restrict or prioritize a singular ownership model run the risk of higher rates for ratepayers.
That is the caution regulators should carry into every storage docket: a policy that favors utility ownership over private developers, or the reverse, trades a competitive market for a guaranteed one, and someone always ends up covering the difference. Minnesota’s newest battery program shows what that looks like when that caution goes missing.
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The Minnesota Public Utilities Commission approved a plan this year letting the utility own up to 200 megawatts of batteries, backed by a $430 million budget. Third-party developers never got the chance to compete for that same work.
MnSEIA, SEIA, and the Coalition for Community Solar Access say the plan shifts financial risk onto ratepayers while shutting out cheaper third-party ownership alternatives. SEIA calls it the only utility-owned virtual power plant of its kind in the country with a cost-benefit ratio below one. Ratepayers will be forced to cover that gap regardless of how the batteries perform.
This math traces back to how utility regulation works. A regulated utility earns a fixed return on whatever capital it invests. A bigger, costlier battery system earns a bigger return than a cheaper one that solves the same grid problem. An ownership target locks that price in because no competing bid ever gets the chance to challenge it.
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