A new perk for Minnesota’s small solar energy industry has been tacked onto a state transportation policy bill, thanks to industry allies in the Legislature.

The provision mandates that any solar panels installed in buildings, highways, roads and bridges by the Minnesota Department of Transportation be manufactured in Minnesota.

DFL legislators from the Iron Range are promoting the mandate, and the short list of its beneficiaries includes operators of a solar firm from the Range who have contributed thousands of dollars to political campaigns.

“They’ve got a great solar panel,” Rep. Jason Metsa, DFL-Virginia, said of Silicon Energy in Mountain Iron. Metsa said the mandate to buy from Minnesota manufacturers would bring jobs and tax revenue to the state and help the firm compete with cheaper products made elsewhere.

Others object to special treatment they say could shortchange taxpayers.

“If government is going to be investing in solar, they should be … finding what’s the best value,” said Rep. Pat Garofalo, R-Farmington, urging the state to invite competitive bidding from any manufacturer.

The transportation policy bill is advancing in the House in the final weeks of the legislative session.

Silicon Energy President Gary Shaver testified in favor of the “Made in Minnesota” mandate at a legislative hearing. In an interview, he said his firm can’t undercut prices of panels manufactured elsewhere in the United States and in China. He said Silicon Energy makes panels ideally suited for Minnesota’s climate, but fears that without a mandate the Minnesota Department of Transportation is “just going to go to the cheapest thing.”

Garofalo countered, “Sometimes the most expensive product does provide you the best value. Other times it doesn’t. So it’s silly to mandate it in state law.”

Other help for solar

The proposed mandate would build on help already given to Silicon Energy and to tenKsolar of Bloomington, the state’s other manufacturer of solar panels. Several years ago the Legislature enacted the Minnesota Bonus program, requiring utilities to subsidize solar power for homeowners and businesses that install panels made in the state.

Silicon Energy also got a $1.5 million loan at 3 percent interest from the Iron Range Resources and Rehabilitation Board, a state development agency funded by taxes on Range mining companies. Silicon struggled after opening its Range plant a couple of years ago and missed its first two quarterly payments on the loan. The agency has given the company more time to repay it.

The mandate in the House proposal doesn’t apply if construction projects involve federal funding with requirements that might favor a solar manufacturer from outside Minnesota.

But that exception is unlikely to have much impact.

“Solar panels likely would go on buildings,” said MnDOT spokesman Kevin Gutknecht. “All of our buildings are funded with state money. We don’t use federal money for buildings.”

The result would be two Minnesota firms competing for the solar contracts.

Silicon Energy, which also operates in Washington state, was acquired three years ago by Newport Partners in Southern California, which invests in renewable energy projects. It opened the Mountain Iron facility in 2011.

“We’re up against an onslaught of Chinese … solar modules,” said John Carroll, a vice president of Newport, describing those panels as heavily subsidized “compared to what goes on here.”

Carroll said Silicon Energy tailored its product for the Minnesota climate by making especially durable panels. “It costs a little bit more money to install, but it’s going to last four or five times longer,” he said.

The firm had “a rough start in the state of Minnesota” because the Japanese earthquake delayed delivery of equipment needed for the Mountain Iron plant and caused it to miss some of the utility subsidies, he said.

As for the Made in Minnesota mandate, ”It doesn’t hurt, does it?” he said. “Every little bit helps.”

TenKsolar also favors the mandate, but hasn’t been as active as Silicon Energy in seeking it, said tenKsolar CEO Joel Cannon.

Political contributions

Shaver of Silicon Energy and top operators of Newport Partners and their wives have given at least $12,675 in political contributions to Minnesota campaigns since 2009, nearly all of it going to DFLers. Current and former Iron Range politicians have been among the primary legislative recipients, including Metsa, Sen. David Tomassoni, DFL-Chisholm, and Rep. Carly Melin, DFL-Hibbing. Melin has sponsored a bill that would go beyond the larger transportation policy measure and could require Minnesota-manufactured solar panels in all state buildings.

Gov. Mark Dayton and the DFL Senate caucus also have received recent contributions from Newport.

“You don’t win by having your buddies in the Legislature change the law,” Garofalo said.

Shaver defended the push for a Minnesota mandate and called the campaign contributions “a very small amount.

“We’re a very small start-up company,” he said. “We can’t really buy anybody.”

“These amounts … are modest in nature,” Carroll said. “Politics is part of the solar business. That’s the reality.”