Minnesota's clean energy industry fretting about possible rollback of tax credits

Clean energy tax credits would shrink drastically in a sweeping tax cut and spending bill that was passed last month by the U.S. House and is now before the Senate.

In Minnesota, those incentives have spurred new solar and wind projects and created thousands of jobs in clean energy development and manufacturing. 

The Trump administration’s so-called “big, beautiful bill” is sparking fears that rapidly phasing out those credits could severely curtail Minnesota's burgeoning clean energy sector.

“It aims to decimate our industry — an industry that is one of the fastest growing in terms of creating good-paying, local jobs,” said Gregg Mast, executive director of Clean Energy Economy Minnesota, an industry-led nonprofit. 

The Canadian company Heliene opened a new solar panel manufacturing plant last month in Rogers, just northwest of the Twin Cities. The company already operates another plant on the Iron Range. 

The new facility will create more than 200 jobs and produce roughly 800,000 solar panels a year — enough to power more than 100,000 homes. 

Heliene’s CEO, Martin Pochtaruk, said they had hoped to open a third plant in Minnesota to make solar cells, the building blocks of larger solar modules. But those plans are on hold due to the uncertain federal outlook. 

Pochtaruk said the House bill would affect demand for his company’s products in future years.

“That bill is bad,” he said. “It’s bad for job creation; it’s bad for the U.S. economy."

Tax credits for clean energy projects came about under President George W. Bush. During the Biden administration, the Inflation Reduction Act significantly expanded and extended those credits and created new ones. 

The credits have been used to defray the cost to build new solar and wind projects, help consumers install rooftop solar or weatherize their homes and encourage companies to invest in clean energy manufacturing.

But President Donald Trump has called those policies a “green new scam” and said they have caused inflation and increased the cost of energy. He said the clean energy industry should stand on its own, without the benefit of tax breaks.

Michael Allen, co-founder and CEO of All Energy Solar, based in St. Paul, said solar businesses would be happy to stand up against any other industry — if the playing field were actually level. 

“If we’re going to remove the tax incentives for the solar industry, then let’s remove the tax incentives for the natural gas and the coal and the petroleum industries,” Allen said.

Allen called it short-sighted to reduce incentives for clean energy at a time when demand for electricity is growing, including for electric vehicles, homes and large data centers.

“At a time where we’re going to see a huge spike in electricity consumption and or demand, we’re then reducing the incentives for industry like ours that is currently the largest provider of electricity in the state of Minnesota,” he said.

Rolling back the tax credits would raise Minnesotans’ energy costs by making the cost of clean energy projects more expensive, said Pete Wyckoff, deputy commissioner of energy resources for the Minnesota Department of Commerce.

“The president came in and said, ‘I’m here to lower your energy prices,’ but absolutely everything he’s done policy wise pushes in the opposite direction,” Wyckoff said. 

Under Minnesota law, utilities are required to provide carbon-free electricity by 2040. Their plans to meet that mandate assume the tax credits will be available, Wyckoff said.

According to the commerce department, in 2023, the first year of the expanded incentives, 8,700 Minnesota households claimed the tax credit for installing rooftop solar or geothermal systems in their homes, while more than 60,000 received a tax credit for making their home more energy efficient.

“It impacts Minnesotans indirectly through effects on their electric rates and their energy bills, but it also can impact them directly if they’re doing these home improvement projects,” Wyckoff said.

Much depends on whether the Senate decides to accept the House bill. Some Republican senators have expressed reservations about ending incentives for clean energy that have largely gone to red-voting districts.

The possible rollback of tax credits comes as clean energy businesses were already navigating ever-changing tariffs on steel, aluminum and other components. 

Heliene largely uses components made in the U.S. But Pochtaruk said tariffs on imports are driving up the price of domestic steel and other products, too.

“When imports on steel are 25 percent, but the pricing in the country has increased by 40 percent, that is inflation,” he said.

All this uncertainty makes it difficult to plan for the future, said Mast, of Clean Energy Economy Minnesota. Businesses need predictable policies, he said.

"That's exactly what we're not seeing now, when we go from one extreme to another,” Mast said. “We just need to have policy certainty."