(C) Minnesota Reformer
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Community solar amid a newly hostile federal government: Reformer Q&A with John Farrell • Minnesota Reformer [1]
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Date: 2025-03-11
Two months into his second term, President Trump’s promise to halve Americans’ energy bills within 12 months looks shaky.
Trump’s Jan. 20 “Unleashing American Energy” executive order took aim at federal efficiency standards for cars, trucks and home appliances while temporarily freezing billions in energy and infrastructure funding authorized during the Biden administration.
Subsequent orders suspended permitting for renewable energy projects on federal lands — darkening the outlook for wind power, the country’s least expensive source of electricity — and froze funding for a slew of programs meant to expand access to cheap, clean, often customer-owned energy resources, leaving folks who paid upfront in the lurch.
Meanwhile, Congress needs to find an estimated $4.2 trillion to offset a 10-year extension of tax cuts passed during the first Trump administration. After Medicaid, a prime target is the Inflation Reduction Act, which authorized or expanded many of the programs frozen by the new administration, including generous tax credits for investments in energy efficiency and clean energy production. Uncertainty around the fate of the IRA led California to pause its $582 million home energy rebate program, the country’s second-largest, after cutting its first round of checks in February. (Minnesota’s program has not yet launched.)
These federal policy shifts have “inserted a huge amount of uncertainty” into the environmental and energy policy atmosphere, says John Farrell, director of the Energy Democracy Initiative at the Institute for Local Self-Reliance, a community development nonprofit with offices in Minneapolis, Washington, D.C. and Portland, Maine.
In Minnesota, advocacy groups like ILSR must now contend with a far less supportive federal government while continuing to engage — and tussle with — lawmakers, regulators and utility executives who don’t always see things their way.
Despite recent policy wins that offer hope for more balance, Farrell says the present state of affairs remains skewed in favor of utilities and big commercial energy developers. ILSR’s Minnesota practice focuses on helping the state and municipalities “capture more of their energy dollars by investing in local, clean energy and prioritizing local ownership of that energy,” he says. The group is active on the community solar front, providing technical assistance and collaborating with other advocates to advance favorable legislation.
The Reformer spoke with Farrell last month about the state of energy democracy in Minnesota, what the Trump administration’s chaotic first weeks portend for consumers here, and how he’d go about creating a fairer, more sustainable energy system.
This interview has been edited for length and clarity.
What does all this uncertainty around federal support for energy equity, and the administration’s apparent hostility to renewable energy in general, mean for advocates here in Minnesota and nationwide?
It has inserted a huge amount of uncertainty, which at a minimum means delay. It will also siphon off funds for legal defense of supposedly secure contracts. In the end, it will mean fewer gold-standard renewable energy projects that reduce greenhouse gas emissions while building community wealth and reducing energy bills.
Organizations that receive federal funding are going to retrench while they try to secure the funds they were promised. Some will abandon work that relies on federal support. Many will turn to focus on state policy and implementation, since most meaningful energy policy is set at the state level.
I’ve already heard about valuable [federal] datasets disappearing. ILSR had planned to use a National Renewable Energy Laboratory dataset for tracking the growth of state community solar programs, but we’ve opted — at additional expense — to build our own system for data-scraping instead.
Much of this is illegal, but it will fulfill its intended purpose of delaying clean energy on behalf of fossil fuel companies close to the administration. That seems to be the administration’s goal: to support fossil fuels artificially, regardless of the impact on consumers. They are banking on propaganda about clean energy costing more than it really does. The Trump administration has broadcast clearly that it’s driven by favors and influence, not principles or policy.
With the fate of IRA tax credits still up in the air, would you advise folks considering rooftop solar panels, more efficient home appliances and other eligible purchases to buy sooner rather than later?
Buy now. One-hundred percent.
It would be silly to try to forecast what the Trump administration will do, but with regards to tax credits, we really don’t know. Lots of people didn’t expect the administration to do what it’s doing now, withholding federal funding, because they thought such overreach would provoke bipartisan outrage. I still think it’s likely that the courts won’t go along with the feds reneging on contractual agreements.
[Editor’s note: On March 5, the U.S. Supreme Court narrowly blocked the administration’s effort to withhold $2 billion in USAID contract payments.]
Minnesota’s community solar industry boomed in the late 2010s, but installations have since declined, and residential and community installations haven’t taken off here as they have elsewhere. What’s going on, and what needs to change?
In the places where other costs to build were low, much of the available grid capacity has been absorbed or has been declared off limits by the utility, without sufficient evidence. The Public Utilities Commission also recently reneged on contracts and retroactively lowered compensation for existing community solar projects, which cools enthusiasm for new development.
For residential and commercial solar, certainly one significant barrier to adoption is the upfront cost. Rooftop solar costs three times as much here as in Australia, and that is driven by policy.
ILSR put out a study this year on solar permitting in Minnesota that found a range of local requirements that can make solar more expensive. Statewide, we have a rule restricting the ratio of licensed electricians to other workers, which inhibits efficiency. Installers are not advocates for consumers because they’re focused on making do rather than trying to figure out how to make it better.
[Editor’s note: MNSEIA has endorsed a consumer-friendly bill for instant solar permitting requirements this legislative session.]
Commercial installations also have to contend with additional challenges, like competing business investments with shorter payback times, and the inability under state law to work with a turnkey company that would build and own the solar, and pass along the savings via a lease or power purchase agreement. For entities that don’t own their property or pay their utility bills, which includes most commercial businesses, it’s hard to take advantage.
How would you describe relations between community and distributed solar groups on the one hand, and big Minnesota utilities like Xcel Energy on the other?
If you follow the money, you can understand a lot about how our grid works. For-profit utilities like Xcel make their money by investing capital into infrastructure, like poles, wires and power plants. Community solar poses a powerful competitive threat by lowering the need for capital investment by the utility.
Despite forecasts for a lot of demand growth that will require utility-built capacity, I suspect Xcel simply wants to lock in as much of that capital expenditure — and potential profit — for itself. They now agree that distributed energy can deploy faster and more cost-effectively, but it’s been many, many years to get them to that realization.
On the policy front, what are you watching in the Minnesota Legislature this session? Elsewhere in state government?
On the whole, we saw pretty good reforms coming out of the 2023-2024 legislative session. But now I’m concerned that certain legislative leaders would like to destroy the successful community solar program, convinced by misleading utility data that it’s in the public interest. What’s really happened in the past few years is community solar grew a lot more than Xcel expected to, and they don’t make money when other people build things.
We’ve seen people from the Laborers’ International Union of North America, which represents Xcel employees, essentially parroting the utility’s line on these issues. In California, Southern California Edison’s contract with the International Brotherhood of Electrical Workers includes a ‘loyalty oath.’
DFLers are sympathetic to unions, for good reason, and I can understand the unions’ perspective because many small-scale solar installers are not unionized. But the bottom line is that Xcel is lying about the cost and benefits of the community solar program. A more honest approach for lawmakers would be to say ‘We want to kill community solar so we can have more union work on Xcel projects,’ or to require that all community solar projects must use union labor. That would result in fewer projects getting developed.
[Xcel Energy spokesperson Josiah Mayo responded: “Community solar in Minnesota today accounts for roughly 5% of our energy mix, but 23% of our fuel costs. That imbalance is concerning as we work to keep costs low for all customers while we support more clean energy options that benefit them and the environment.”]
If you could wave a magic wand and transform Minnesota’s energy system to your liking, what would you do?
I’d separate grid operation from asset ownership. For example, Xcel Energy would be split into one company that builds and owns energy resources for profit, and a separate publicly-owned or not-for-profit company that handles grid operations. This would eliminate the major conflict of interest in Xcel’s implementation of any state energy policy, where they’re always looking out for their shareholders first.
In Texas, they separate electricity distribution from generation, so you don’t have these bizarre situations where you avoid building power lines because you want to build more power plants instead, or try to kill customer-owned solar because it competes with your assets.
But Texas also allows competition for retail sales, which leads to cable-style pricing for electricity. Most people would not tell you they want more things priced like their cable bill. So they’re 50% in the right direction and 50% not.
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