Minnesota solar rebate extension gives installers longer runway to reach lower-income customers

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The “solar-coaster” is about to get a little smoother for Minnesota solar installers.

State lawmakers this spring extended funding for a rooftop solar rebate program through 2035, bucking a trend of two-year renewals that caused uncertainty for installers every couple of years.

Solar industry leaders say the additional financial certainty will help companies invest in longer-term marketing and outreach, particularly for reaching lower-income customers.

Since 2014, Solar Rewards has helped more than 8,000 residential and small business customers pay for solar installations in Xcel Energy’s territory. The program is managed by the utility, but the legislature controls its budget, which has ranged between $5 million and $15 million annually. The money comes from yearly fees the state collects from Xcel in return for allowing it to store nuclear waste at two power plants.  

Logan O’Grady, executive director of the Minnesota Solar Energy Industries Association, said the extension represents a compromise — and a victory — after failed attempts to convince lawmakers to increase the program’s funding. Funding has rarely stayed the same two years in a row. Installers have struggled with planning because they did not know if the rebates would be renewed. 

“It creates the inability to plan for what you’ll be getting year to year,” O’Grady said. “You get through a two-year cycle, and then there might be nothing.”

Uncertainty about the rebate’s future has been challenging to communicate to customers. O’Grady said installers could not make promises in some years because they did not know if the program would continue. Now, even if funding runs out for the year, companies will be able to confidently tell customers that it will be available next year.

He said the extension also will help installers work with low- and moderate-income Solar Rewards customers. In 2023, the Legislature significantly modified Solar Rewards by allocating half the money for low-income participants while increasing subsidies for those projects.

Bobby King, Minnesota director of Solar United Neighbors, said connecting to organizations working with low-income households has taken a few years. The extension gives him the confidence to continue the work.

“You need the program to be consistent if you’re going to continue to grow a program to help folks get low-income solar,” he said. “We can be confident about bringing more resources to staff a (low-income) program.”

All Energy Solar CEO Michael Allen said the Solar Rewards extension “provides you a little bit more confidence” but “still doesn’t take away the real costs of having to market and to sell, design and build projects for this market segment.” He estimated that it can cost as much as 10 times more to recruit and sell to income-qualified customers because of the relationship building, education, financing and sometimes structural issues that need to be addressed.

The Solar Rewards budget over the 10-year extension will be a bit more than half of what the program received from 2014 to 2025. He worries the subsidies will slow rooftop solar, which needs to expand to meet the state’s climate goal of net zero emissions by 2050.

Martin Morud, CEO and owner of TruNorth Solar, said he prefers stable funding that allows his business time to develop relationships with community organizations that work with income-qualified customers. He said TruNorth Solar has worked on income-qualified projects involving food shelves and transitional and low-income housing through Solar Rewards and other programs. 

Cooperative Energy Futures had begun using Solar Rewards for residential projects over the past two years after primarily building community solar projects with many low- and moderate-income subscribers.

Pouya Najmaie, its policy and regulatory director, said the nonprofit recently hired an employee to focus on income-qualified projects. The Solar Rewards extension will help the nonprofit maintain that position and potentially add another if demand grows.

The Solar Rewards bill was part of a 1,430-page omnibus bill that Gov. Tim Walz signed into law in late May. Rep. Patty Acomb, House of Representatives Climate and Energy Finance and Policy Committee Chair, said lawmakers supporting Solar Rewards worried that the program could have ended in 2025 if the Democratic-dominated Legislature changed hands.

“Fifty million dollars, or $5 million a year, is better than zero,” she said. “I think that having programs like this is a signal to the industry that there is support from the state.”

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