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Published August 20, 2012, 10:28 AM

Xcel solar incentives to be rolled back

MINNEAPOLIS (AP) — Xcel Energy plans to pull the plug on a solar energy incentive program next year, leaving at least one manufacturer concerned about its future in Minnesota.

MINNEAPOLIS (AP) — Xcel Energy plans to pull the plug on a solar energy incentive program next year, leaving at least one manufacturer concerned about its future in Minnesota.

The Solar Rewards program gives upfront rebates to homeowners and business owners who install photovoltaic solar panels to boost demand and bring down the costs. But Xcel says the $5 million annual program has met its goals, so it plans to roll back the rebates next year and end them by 2014.

Manufacturers are split on the proposed end of the program.

"It's definitely not what's keeping me up at night," Joel Cannon, CEO of Minneapolis-based solar panel maker tenKsolar, told Minnesota Public Radio. He said his company started up without expectations of a local incentive program.

But Gary Shaver, president of Silicon Energy, said the rebates help because it's expensive to produce solar panels in Minnesota compared with manufacturing them in China. His Washington state-based company makes solar panels in Mountain Iron, a town of around 3,000 on the Iron Range.

"For us, that will be damaging enough to where we consider whether or not it makes sense to manufacture in Minnesota," Shaver said.

The state Department of Commerce still has to approve Xcel's proposal to end the program. But Xcel wrote in public comments filed with the department that Solar Rewards is a voluntary program and that the company is not obligated by state law to continue it. The agency is expected to make a preliminary ruling later this month, followed by more public comment and a final decision in October.

While Silicon Energy produces panels mostly for customers in Minnesota, Cannon said tenKsolar and its 80 employees are focused on markets outside the state, where energy costs tend to be higher and solar is more competitive — and where there are incentive programs. The company is building projects in places like Tennessee, Massachusetts and California, as well as Japan and Romania.

"If all incentive programs everywhere went away we would have challenges. Right?" Cannon said. "But there's a variety of different solar incentive programs all over the world. But it can't be dependent on any particular one incentive."

In addition to its manufacturing plant in Minneapolis, tenKsolar also relies on a factory in China to cut costs on some work that requires lower-skilled labor.

Xcel acknowledges that the growth of Minnesota's solar industry is likely to drop off if Solar Rewards ends.

Laura McCarten, regional vice president for Xcel, said it was good to test the solar market, but that if Minnesota seriously wants to pursue solar, it needs a new model.

Even if Xcel ends Solar Rewards, it says a separate rebate program will stay in place — the Minnesota Bonus PV Solar Rebate Program — a $5 million annual fund paid for by Xcel customers that covers up to 60 percent of a project that uses solar panels made in Minnesota. Solar Rewards does not require that the panels be made in the state.

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