XCel Energy's '
Solar Rewards' program, which has offered a boon to Minnesota's
renewable energy producers and installers,
may soon
come to an end.
According to the Solar Minnesota Coalition, the state's solar potential is
comparable to that of Florida and greater than that of Germany, the world's leading producer of solar power, but most of this potential is untapped. The Solar Rewards program gives businesses and homeowners rebates, upfront, for
installing panels. This is designed to make the panels more
affordable, nurturing the growing industry. It also provides XCel, who buys the energy, with a solar supply.
Solar capacity has been installed at St. John's University
However, XCel now says that the program, which has cost $5 million annually, has been successful in meeting its goals. The company will be rolling back the rebates, ending them entirely by 2014. Though Minnesota's Department of Commerce will hold a hearing preliminary ruling later this month and a final decision in October, XCel says that the company has no obligation to continue its voluntary subsidy.
The rollback has Gary Shaver, president
Silicon Energy, worried. The company, based in Washington state, has a manufacturing facility in Mountain Iron, a small town in the Iron Range. "For us, that will be damaging to where we consider whether or not it makes sense to manufacture in Minnesota", he says, citing worries that the demand will drop without the subsidy keeping prices low."We have an innovative product, but
still, we're a small manufacturer. So, to pull that out right
now is to really destroy a business plan where you're talking about
working at a local level to innovate toward the future." Silicon Energy has already downsized their Mountain Iron factory from 15 to 11 workers in anticipation of the lower demand.
Silicon Energy workers in Mountain Iron
Part of the problem, Shaver says, is the competition American solar panel companies face from cheap imports from places like China. China's cheap solar manufacturing, which has
captured over half of the world demand for solar, has also caused problems for domestic producers in Germany, and reduced European and North American solar R&D spending. The Chinese solar industry enjoys considerable subsidies, and eschews many environmental regulations that US firms follow, bringing cheap solar at the cost of intense
water and air
pollution in China's cities, and
devastating villages near the mines where the rare earth metals essential to solar are extracted. In a very real sense, the current Chinese cheap solar, like cheap fossil fuels, is given the 'subsidy' of ignoring its social and environmental
externalities.
In response to cheap Chinese imports, the US government has
placed a
controversial tariff of over 30% on Chinese panels, accusing the Chinese companies of price dumping to deliberately drive competitors out of business. The tariff could harm the growth of solar power, the
price of which has fallen by half in the last five years, becoming in some cases competitive with fossil fuels. On the other hand, the long-term effects of allowing the stagnation of American an European solar development and production could themselves be harmful both to the technological advancement of renewable energy and to the popular goal of energy independence. Shaver fears that ending XCel's program could further disadvantage American solar.
Workers construct panels in Wuxi, Jiangsu Province
Not all solar manufacturers share Shaver's concerns regarding the end of the program. Joel Cannon, CEO of Minneapolis-based firm
tenKsolar, says of the rollback, "It's definitely not what's keeping me up at night." However, his company keeps their costs low in part by using Chinese labor for the company's lower-skilled tasks, leaving the skilled jobs to their Minneapolis factory. They also focus on out-of-state markets with strong incentive programs, such as Tennessee, California, Massachusetts, Romania, and Japan.
XCel, for its part, acknowledges that the end of the program will likely stagnate Minnesota's solar growth. Regional company VP Laura McCarten suggests that the state will have to make changes to promote the industry:"From a public policy standpoint, it really needs to be looked at with a
fresh eye the regulatory framework, the incentive
mechanism, and then how does this work and who should really pay for
it."
While the program remains in place, information on it can be found
at XCel's website.
Image Sources:
Clean Energy Resource Teams,
Made In USA News, and
CSB/SJU
The Energy Solutions Home, part of the Eco Experience exhibit, is a partnership of public agencies, contractors, retailers, utilities, advocacy groups, and other parties, presented by the Minnesota Department of Commerce. will show a range of energy-saving technologies. There will be a Green Materials and Efficient Appliances Display, a Heating, Ventilation, and Air Condition Display, and a Sustainability Stage for demonstrations. Miniature gardens displaying rain barrels and drip irrigation take the efficiency not only to electricity, but to water as well. 
