Minnesota became the first state in the nation Thursday to adopt a “value of solar” approach for determining how community solar customers will be paid for the power the projects produce.

The state’s Public Utilities Commission agreed to use the value of solar methodology – currently voluntary for utilities – as part of a ruling on changes proposed to the state’s community solar garden program.

Xcel Energy, the state’s largest electric utility, is managing one of the largest community garden programs in the country. The value of solar approach includes external factors such as avoided transmission investments, the favorable health and environmental impact of clean energy and the ability to help the electric grid meet large demand on sunny days when extra power is often needed.

Fresh Energy, where Midwest Energy News is published, was a primary backer of the proposal.

Allen Gleckner, a policy director at Fresh Energy, said in a post on his organization’s website that the decision “will be a transparent rate for subscribers that is based on a set 25-year bill credit schedule, creating clarity and reducing risk for subscribers.”

The move may lessen financing costs, improve access to community solar for low and middle income subscribers and “put to rest” fears that utility customers were subsidizing community solar subscribers, he wrote.

“Ultimately we’re excited the commission adopted the value of solar rate as the bill credit option moving forward,” he said in an interview. “We think the value of solar is the best credit option. It was an excellent decision and a win for subscribers.”

The commission also decided Thursday to continue to prohibit co-located gardens and limit the size of them to only 1 MW. That policy has been in place since last year and it has proven to be “detrimental” to the continued growth of community solar, said David Shaffer, development director of the Minnesota Solar Energy Industries Association,

The community solar program had for a time allowed up to five 1 MW gardens to be co-located and, during that period, applications skyrocketed. Shaffer believes after the initial community solar gardens have been built, “it will be a much smaller program” with the 1 MW limit.

Xcel’s most recent monthly report to the PUC pointed out 414 MW of development were in the design and construction phase. By the end of the year the utility believes 200 MW will be operational, with another 200 to 250 MW to be added within 18 months.

Just three gardens are in place and producing power, the document said.

Xcel has been under considerable criticism for not handling solar gardens in a timely manner, an issue that came to light in a Minneapolis Star Tribune article on problems developers face in hooking into the grid.

Austin Energy in Texas is currently the only utility in the country to use value of solar. In 2014, Minnesota became the first state to approve a statewide value of solar methodology.