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Efforts to curb solar industry subsidies fail amid opposition from Iron Rangers

The DFL-controlled Minnesota Senate blocked an attempt by the House to curtail the state subsidy, which lowers the cost of solar panels produced in Minnesota by providing payments to buyers.

Solar panels manufactured by Minnesota-based Silicon Energy.
Silicon Energy

An effort to curb state subsidies and other perks for Minnesota firms making solar panels fizzled in the final days of the legislative session amid opposition from an Iron Range company with political ties to the DFL.

But the company, Silicon Energy of Mountain Iron, will soon face scrutiny on another front.

Auditor Jim Nobles

Legislative Auditor James Nobles says he will investigate the $7 million in government loans for Silicon Energy as part of a wider probe of a state agency’s controversial economic development projects.

“Given the size and importance of it, it will be in our scope, for sure,” Nobles said.

Nobles is evaluating whether the agency, the Iron Range Resources and Rehabilitation Board (IRRRB), has made smart bets with loans and grants intended to create jobs in northern Minnesota. The agency uses taconite taxes paid by mining companies to finance economic development.   

Silicon Energy has fallen far short of its goals for job creation despite the IRRRB loans and the state subsidies. Some House Republicans oppose the subsidies as costly and unfair, but Senate DFLers defend them as good public policy.

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This week the solar industry won a reprieve when the Minnesota Senate blocked an attempt by the House to curtail the state subsidy, which lowers the cost of solar panels produced in Minnesota by providing payments to buyers. The Senate also rejected a bid by the House to end a policy encouraging the government to buy Minnesota-made panels over those made elsewhere.

The bid to curb the solar perks ran into stiff opposition from Iron Range DFLers.

“For pretty much the entire Iron Range delegation, it was like, ‘That’s a non-starter,’” Rep. Jason Metsa, DFL-Virginia, whose district includes the Mountain Iron solar plant, said Tuesday.

Rep. Pat Garofalo
Rep. Pat Garofalo

Rep. Pat Garofalo, R-Farmington, who proposed the curbs, said some environmentalists regarded any changes in the solar program “as a step back.” Garofalo argues there are less costly and more effective ways to reduce energy pollution than incentives for Minnesota-made solar panels. He says the solar preferences will likely be challenged again next year.

Silicon Energy said it can’t survive in Minnesota without the breaks. Over the years, the California backers of the firm have contributed at least $24,000 to Minnesota politicians. Nearly all went to DFLers, much of it to Iron Range legislators who have been the driving force in getting and protecting the solar preferences.

In 2010, Tom Rukavina, then a DFL House member from Virginia, and Sen. David Tomassoni, DFL-Chisholm, sponsored the customer incentives for buying Minnesota-made solar panels.

Tom Rukavina
Former state Rep. Tom Rukavina

That year Rukavina and Tomassoni played another role beneficial to Silicon Energy. As members of the IRRRB, they voted to approve $5.1 million in loans to Silicon Energy and to a city development authority for building a solar factory for the firm in Mountain Iron.

Rukavina, who is now a St. Louis County commissioner, was running for governor in 2010 and his loan vote came after California backers of Silicon Energy contributed $1,500 to his campaign.

Silicon Energy opened in Mountain Iron in 2011. Although the state preference program for the solar energy was exanded in 2013, the firm shut down production for a large part of 2014. Company president Gary Shaver says it has 11 workers in Mountain Iron, less than half the workforce it once predicted.

Nevertheless, the IRRRB gave the company another loan – for $1.95 million – last December.

Part of larger probe

When he announced plans to evaluate the IRRRB in April, Nobles said a probe “could provide useful information regarding investments the agency has made and its effectiveness in developing businesses and job opportunities in the agency’s service area.”

He said “grants, loans, and other expenditures made by the agency” might be subjects for scrutiny.

Regarding the relationship between IRRRB and Silicon Energy, “we’ll be looking at that one and at a lot of others,” Nobles said in an interview last week.

His April announcement noted that IRRRB loans to a call center with ties to the Democratic Party also raised questions about the agency’s investments. In 2006, the agency loaned the call center $625,000 and hasn’t been repaid all of the money. However, the call center made more headway than Silicon Energy in creating jobs, at times claiming 100 employees.

Pat Doyle is a longtime Twin Cities journalist.