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Clean Power Minnesota solar scandal

Published on April 2nd, 2014 | by Zachary Shahan

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Is Protectionism & Cronyism Hurting The Minnesota Solar Industry?

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April 2nd, 2014 by Zachary Shahan
 
State-based solar incentives that require local solar products be used may be driving up solar costs considerably. Of course, this sort of issue is not exclusive to solar power and it is not exclusive to the United States, but there does seem to be fairly good evidence that it is keeping the price of solar artificially high in some places.

Let’s take a look at Minnesota, which has Made in Minnesota solar photovoltaic legislation. A solar expert I’ve been in communication with is convinced that this policy creates higher installed prices, gives fewer options to customers, and creates fewer jobs for Minnesota. The legislation is reportedly starting via the lobbying efforts of one company, and then later modified a bit as a second company came in and wanted the legislation to benefit it as well. The result? Legislation that benefits two companies to the detriment of essentially all the others and solar customers.

The Minnesota statute in question is 116C.7791. The main clauses are:

1. Solar photovoltaic modules must be manufactured in Minnesota to be Rebate Eligible;

2. “Manufactured” means:

a. the material production of solar photovoltaic modules, including the tabbing, stringing, and lamination processes; or

b. the production of interconnections of low-voltage photoactive elements that produce the final useful photovoltaic output by a manufacturer operating in this state on May 18, 2010.

3. Solar photovoltaic modules must be certified by Underwriters Laboratory, must have received the ETL listed mark from Intertek, or an equivalent certification from an independent testing agency;

4. Rebate amount and payment:

(a) to the applicant of $5 per watt of installed generating capacity.

(b) rebate paid, (net) must not exceed 60 percent of the total installed cost.

5. Rebate program funding:

(1) $2,000,000 in fiscal year 2011;

(2) $4,000,000 in fiscal year 2012;

(3) $5,000,000 in fiscal year 2013;

(4) $5,000,000 in fiscal year 2014; and

(5) $5,000,000 in fiscal year 2015.

Can you guess which parts were critical pieces stuck in by one company to deter helpful, free-market competition?

That would be this one: “manufactured means solar photovoltaic modules, including the tabbing, stringing, and lamination processes.”

Can you guess the obscure requirement that benefits the second solar company to the detriment of helpful, free-market competition?

That would be this one: “the production of interconnections of low-voltage photoactive elements that produce the final useful photovoltaic output by a manufacturer operating in this state on May 18, 2010.”

Oddly, a rather important piece of the legislation – UL certification — was reportedly overlooked for these two companies in May 2010, as they didn’t have it.

Now, I’m not particularly interested in picking on specific companies that used political maneuvering to compete, but I’m interested in pointing out harmful policies that result in a net harm to society. So, let’s get to the rather clear results of this policy.

Important to note is that there’s also an incentive for solar projects that don’t meet the very specific local content requirements. It’s just much smaller. In the table below regarding solar projects installed in 2013 and 2013, obtained from the Minnesota Department of Commerce, you can see (highlighted by me) that the two companies benefiting from the local content incentive are installing solar power projects for a considerably higher cost than other installers in the state.

Minnesota solar scandal

That’s a big difference. Actually, if you do the math, 1,941 kW x ($8.3/W – $5.02/W) = a $6,366,000 premium. Somehow, I have a hard time believing that results in a net benefit to the state. And remember that installers working for the companies that don’t qualify for the Minnesota Made bonus are still installing solar projects using Minnesota residents. They aren’t importing installers from Tibet.

2013 Brings Even More Exclusive Policies

Sorry to bring more bad news to the story, but in 2013 the Minnesota legislature passed another solar-related bill, HF 729, that provides $15 million per year (starting in 2014) for 10 years for companies that qualify for the “Made in Minnesota” program.

Let’s put this another way: that’s $150 million for companies installing solar power for a price about 62% more than their competitors in the state.

Furthermore, where’s the incentive for these solar companies to cut their prices? There isn’t a reduction in available bonuses each year. There’s $15 million a year from 2014 to 2023.

Project Example

Here’s an example of a 2010 “Minnesota Made” solar project:

Minnesota Made solar project

Where’s the incentive to cut costs when a $167,000 solar project comes in at $3,900, or about 97.66% less than the actual installation cost?

And how can other Minnesota-based companies compete? How can they cut $55,000 off the cost of a 20 kW solar system?

Ironically, one of the Minnesota companies locked out of this incentive uses solar panels which are completely “Made in America,” while one of the two companies benefiting uses panels with components imported from China and the other isn’t actually based in Minnesota.

Here’s a Thought

What if that $6,366,000 mentioned above was used more broadly to bring down the costs of more competitive solar companies? how much more competitive could that make solar in the state? How many more people and companies would then think it made sense for them to go solar? How many solar installation jobs would that create?

I have plenty more info on the matters above that could be shared. I could go on. But I think the case has been made: this “Made in Minnesota” policy looks like unhelpful protectionism and cronyism, and it hurts Minnesota.

Unfortunately, there are probably similarly harmful policies in other states as well.

If you have info to share that counters any of the above, or critical information to further support it, I’d be happy to see it. If you live in Minnesota and would like to see a more inclusive solar incentive that will make solar more competitive, push for it politically.

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About the Author

is the director of CleanTechnica, the most popular cleantech-focused website in the world, and Planetsave, a world-leading green and science news site. He has been covering green news of various sorts since 2008, and he has been especially focused on solar energy, electric vehicles, and wind energy since 2009. Aside from his work on CleanTechnica and Planetsave, he's the founder and director of Solar Love, EV Obsession, and Bikocity. To connect with Zach on some of your favorite social networks, go to ZacharyShahan.com and click on the relevant buttons.



  • SolarPod

    If you are a solar installer in MN and wish to take action against this, please contact Mouli at SolarPod www at mysolarpod dot com. We can discuss the groups action plan as the people and companies join.

  • Reeves

    Zachary, as I’m sure you have, look to Washington State. We have the same kind of incentive and the same kind of problems/opportunities, and manufacturers. Rumor is the WTO is starting to look into the incentive as it may violate trade rules as it is currently written. MN installers, you may want to reach out to Solar Installers of Washington as we have had our incentive in place for a while, and knowledge of some of the politics behind it.

    • Solar_mike

      Great advice!

    • Solar_mike

      Could you send me some names?

  • DrtyCola69

    I don’t understand why the state would not just do a production based incentive similar to that of Xcel Energy but with a higher rate? It would drive down the cost of solar and also create competition between solar installers along with more overall solar being installed in the state. Is that not the point of the incentive? Or does the state have plenty of taxpayer money to burn? Because if its not I know of a few things where 5million could be spent elsewhere.

  • Larry

    As a lifelong MN resident I find this type of legislation deplorable. I’d like to know which legislators carried the water for the 2 companies and turned an otherwise worthwhile piece of legislation into a bill more suited to something backed by the Koch Bros. This is both disheartening and disgusting

    • SolarPod
      • Larry

        Thank You for the links. Unfortunately they don’t provide me with the information of who the legislators were that authored those 2 pieces of horrible language which ended up being amended onto the bill. Maybe that inf. is there and I just can’t figure out how to find the “wheat” amongst all the chaff.

        • SolarPod

          I am an engineer and do not understand much of the legal
          lingo.

          I met with Rep. Will Morgan, Rep. Laurie Halverson and
          Senator Jim Carlson before the bill was written in and around March 2013. I urged them not to pass the Made in MN part of the bill. I also met with MN Solar Energy
          Industry Association (MNSEIA) in March 2013 and urged them not to move the bill. I also sent a letter to Mr. Bill
          Grant – http://mn.gov/commerce/energy/images/Mouli-VOST-100813.pdf.

          Rep. Laurie Halverson and Senator Jim Carlson are from my district. Rep. Will Morgan and Rep. Laurie Halverson voted for the bill while Sen. Carlson voted against.

          I was informed that Rep. Will Morgan was the chief promoter
          in the MN House and Sen. Marty Stan and Sen. Tomassoni in the Senate.

          I did attend the hearings in 2013 in the capitol
          building. The people testifying FOR the bill whom I remember were Mr. Lynn Hinkle (MNSEIA), someone from Fresh Energy I do not remember the name and Mr. Nathan Franzen (Geronimo Energy). The two organizations NOT supporting the bill were Xcel Energy and MN Chamber of Commerce. This is what I know and remember.

          I also met with Commissioner Rothman of the MN Department of Commerce and urged him to not pass the “Made in MN” portion of the bill.

          The lobbyist were also involved for the two companies.
          http://www.cfboard.state.mn.us/lobby/adetail/a6367.html

          http://www.cfboard.state.mn.us/lobby/adetail/a6452.html

          I am not familiar with the way bills get passed. I attempted in my own way without any process understanding. I apologize for the poor understanding and I do not have the deep pockets to fund lobbyist.

          Hope this helps. When it gets to politics it sure gets ugly. I
          always prefer the engineering because there is always a solution to engineering problems. In politics ……. May need some supernatural powers.

          Thanks Sir for your graciousness.

          • Larry

            SolarPod: Thanks for the background information. It gives some of the picture but still not the bit I’m curious about. You are correct about the legislative process. There’s an old saw that the “Legislative process is like sausage making. You really don’t want to know what goes into the final product”. This is a good piece of legislation gone sour because someone lobbied long and hard to get those 2 cronyism/protectionism clauses in it. That’s what stinks and that’s what needs to be changed. Time for a revision to that law which deletes the 2 protectionist clauses. I wonder if there is a legislator with enough guts to carry such a revision.

          • SolarPod

            It is $150 Million vs. the $1Billion for 1.5% solar by 2020. So it is 15% which is significant considering the size ($150 Million).

            There is a way to stop this bill now. The MN Department of Commerce can stop the program now. It has not started giving
            out projects. It is time for the Governor to stop it IF there is any semblance for American markets and fairness for democracy.

  • Pvwattsup

    Solar_mike maybe tone it down a bit? in addition to that fact that you were so excited to post that you barely managed to spell check that paragraph, you may have made a few errors of fact. You are the largest installation company in MN? it depends on what metric you used, installed kW, operating budget, # of employees, etc.

    Also if you are so firmly against Made in MN solar perhaps it would seem dishonest to have pictures of MiM modules on your website? Did you receive permission to use that photo btw?

    • Solar_mike

      So brazzin’ to not even post your name. We where the 2nd company in the state to be approved to install the product. Once we realized they planned to not lower the price and rely on corporate welfare we abondened ship. Standardized product installations will and could provide more jobs. My guess is you install mim, meaning your only sales tactic is, “it’s practically free”. So if you want to chat about reality and how the long term solar industry will succeed, I suspect you will find a way to get ahold of me. Our you can continue to hide behind your tag “pvwattsup” or shall it be “grammerwattsup”!

    • DCdaisy

      PVwattsup, do you have any comments on the article’s very well laid out points? Any response to the other commenter’s legitimate concerns? Your post seems to be a pretty thinly veiled deflection, and a bit of playground bullying without any value to the discussion.

    • Solar_mike

      BTW. We took the picture in our studio, with the Silicon panels we own, on a rack we designed and built, with our camera. So yes I think we do have permission!

  • Solar_mike

    Exactly!!!! I am owner of Able Energy Co. that operates most of its business in MN and as one of if not thee largest installation company in MN we have been outraged by made in MN. We have fought it from day one, and we stand by our decision to not install the products for many of the reasons indicated above. They say it creates jobs, we’ll open market that same money with a rebate program funded deeper and I gurantee the jobs created on the installation side of things far out paces the manufacturing jobs. I would be happy to share my data on the 2 bad manufacturing companies working in the state.

  • SolarPod

    One of the two companies was installing 7kW of solar and claiming 10kW in rebates. All this under the nose of the Utility Company and the MN Department of Commerce. Illegal is perhaps a nice word, criminal may be more appropriate.

  • Seppo

    Thank you Zachary for your research and putting this together. As sales manager for a solar installer who refuses to use MN Made products based on principle, this information needs to get out. The funding used for the MN Made incentive could triple the amount of rooftop solar being installed, using traditional solar products, whether U.S. or Chinese made. Add boondoggle to cronyism, and you’ve hit the nail on the head.

  • anderlan

    This amounts to an interstate tariff. Illegal.

    • Peter Gray

      That’s what I thought. It’s pretty clearly spelled out in the Constitution. I hope someone’s taking this to court. Outrageous!

      • SolarPod

        The installers in MN fall into two categories – The ones that want their business to grow hence do not care if this legal and the ones who have principles to say this is not right. The second category is short. Hence a tough battle.

        What adds fuel to the fire is that MN Department of Commerce is differentiating between the two manufacturers. They offer different rebate rates for the two “alleged manufacturers”. I say alleged because most of the stuff they get comes from China (cells) or Taiwan.

        The rebates you will see in this website shows the different rates.
        http://mn.gov/commerce/energy/topics/resources/energy-legislation-initiatives/made-in-minnesota/project-developers-installers.jsp

        The MN Government is acting just exactly like how a right wing company or a dictatorship will act with complete disregard. THAT IS MN POLITICS unfortunately.

      • SolarPod

        The State cannot give different rebate rates for
        different companies. The MN Department of Commerce is giving $0.29/kWh
        for tenKsolar and $0.39/kWh for Silicon Energy for residential
        installations. If there are 100 companies will the state have 100
        different rebate rates? That does not make sense.

        Clearly the MN Department of Commerce and the State of MN are showing favoritism for two companies that is harming the industry, country and many honest businesses.

  • Matt

    My fav part is “operating in this state on May 18, 2010″ so that no company can start in Minn (add NEW jobs) and get the break.

  • JamesWimberley

    I’m surprised this is legal in the *United* States of America. It would be banned in the EU. The French government introduced a protectionist clause in its solar FIT, but it was for products “made in Europe”.

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