Minnesota's solar energy subsidies look to be on their way out

A popular rooftop solar energy subsidy would be killed by legislation heading to Gov. Mark Dayton, though a smaller amount of money would continue to flow to another solar program that is less lucrative for consumers.

The solar subsidy actions, part of an omnibus jobs and energy bill, disappointed clean energy advocates but satisfied critics who say Made in Minnesota is too costly.

The program has doled out $15 million annually since 2014, subsidizing homeowners, businesses and nonprofits — as well as Minnesota's handful of solar panel manufacturers. Panels must be assembled in Minnesota to qualify.

Made in Minnesota, created to last through 2024, has funded 1,105 solar arrays during its first three years. In February, 679 more Made in Minnesota solar grants were approved by the state Department of Commerce, the program's administrator.

The terms of the new grants will be honored, as will grants made in previous years, said Ross Corson, a Commerce Department ­spokesman.

Made in Minnesota covers about 40 percent of a solar installation's cost by giving homeowners and other program participants an annual rebate for power they produce over 10 years.

Critics, led by Rep. Pat Garofalo, R-Farmington, have said the program is too expensive for the amount of energy it produces. Garofalo, head of the House committee that deals with energy, has called Made in Minnesota a "boondoggle."

Proponents, as well as the Commerce Department, have said Made in Minnesota has been critical to building out rooftop solar in Minnesota.

Its demise "is going to hurt quite a bit," said David Shaffer, an attorney for the Minnesota Solar Energy Industry Association, a trade group.

That's particularly the case for many solar panel installation firms; Made in Minnesota has been a core part of their business. Made in Minnesota's extinction will likely end most solar panel assembly operations in Minnesota, but the program never created a sizable manufacturing jobs base.

About 80 percent of Made in Minnesota's budget has come from the Renewable Development Fund (RDF), which itself is funded by Xcel Energy's ratepayers. The fund, which Xcel contributes to annually, was created by the Legislature in 1994 as a condition of allowing Xcel to store nuclear waste at its Prairie Island power plant.

The RDF also has been supplying $5 million a year to another solar subsidy program, Solar Rewards. Administered by Xcel itself, Solar Rewards also pays participants for power generated beyond their own needs.

Solar Rewards was supposed to phase out next year. However, the energy omnibus bill will extend its life through 2021 and increase its funding. Solar Rewards would get $15 million this fiscal year, a number that will decrease to $10 million and then $5 million in subsequent years.

Solar Rewards is available only to Xcel customers, not statewide. Also, it pays consumers a lower rate for power than does Made in ­Minnesota. But Solar Rewards is more cost efficient.

"We are glad there is still money going to rooftop solar in Minnesota," said Allen Gleckner, director of energy markets at Fresh Energy, a renewable energy research and advocacy group based in St. Paul. "It is a bit of a ­silver lining."

Made in Minnesota was created when there were only two solar panel manufacturers in the state, Bloomington-based Ten K Solar and ­Silicon Energy in Mountain Iron. The legislation was seen as particularly critical to struggling Silicon Energy.

Silicon Energy appears to have gone out of business recently, renewable energy industry sources say. Its phone numbers have been delisted, records show. Its Facebook page also has been taken down. Silicon Energy representatives couldn't be reached for comment.

Ten K Solar had grown beyond Made in Minnesota and the program had become a "very small" part of its business, a company representative said in January. However, Ten K has been hobbled, too, announcing earlier this month that it was winding down its business. Like other U.S. solar manufacturers, it has been pummeled by lower cost Asian panels.

Made in Minnesota grants approved by the Commerce Department for 2017 were nearly all allocated to two manufacturers, Washington-state based Itek Energy and Ontario-based Heliene Inc. Both companies set up Minnesota operations in 2014 to take advantage of Made in Minnesota.

Paul Krumrich, president of Itek's Minnesota operations, said the company will fulfill its Made in Minnesota contracts. But when those are finished, "essentially that would mean the end of Itek Minnesota," he said. The company employs eight to 10 people at its Minneapolis operations.

A Heliene representative could not be reached for comment Friday.

Mike Hughlett • 612-673-7003