Solar energy incentive programs in Minnesota and seven other states are at the heart of an unfair subsidies complaint by India to the World Trade Organization.
It’s the latest chapter in a three-year battle at the WTO between India and the United States over solar subsidies, but marks India’s first direct shot at the U.S.
On Sept. 9, India filed a notice with the WTO, the arbiter of global trade disputes, over domestic content requirements and other subsidies given out in California, Washington, Montana, Massachusetts, Connecticut, Michigan, Delaware and Minnesota.
The WTO has a settlement process for such disputes, but if it fails, the trade body can issue a ruling.
In 2013, the Legislature created the “Made in Minnesota” program, which offers financial incentives to residents and businesses who buy solar panels made in the state. Solar panel components can be made anywhere, but the final assembly must be done in Minnesota to qualify for the state’s program.
Under WTO rules, countries generally cannot discriminate against imported products through the subsidized use of home-country products. The WTO “deems that as giving an unfair advantage to domestic business,” said Ben Lilliston, director of climate strategies for the Institute for Agriculture and Trade Policy in Minneapolis.
In 2013, the United States complained to the WTO about the domestic content requirements of India’s National Solar Mission. For certain projects under that program, solar power generators require the use of Indian-made solar panels and the solar cells of which they are composed.
Early this year, the WTO ruled in favor of the United States. India has appealed that decision.
During the adjudication of the U.S. complaint, India pointed out that the U.S. also has domestic content subsidies.
“They said, ‘Look, you have a number of states with similar programs,’ ” Lilliston said. The U.S. “was inviting retaliation from India.”
Under the Made in Minnesota program, residents or businesses get a payment from the state based on how much solar energy they produce — providing they buy solar panels assembled in Minnesota from “certified” manufacturers. The state has certified five solar assembly plants. The program, administered by the Minnesota Department of Commerce, has a $15 million annual budget.
Since 2013, 1,009 Made in Minnesota projects have been approved and 564 have been completed, according to the Commerce department. The solar arrays are small, often limited to a single residential or commercial building and can’t exceed 40 kilowatts.
Made in Minnesota is “a consumer-oriented program that provides an incentive based on the power generated by a local solar energy system,” Julia Miller, a Commerce department spokeswoman, said in a statement. “There is no reason it should be part of an international trade dispute.”
The U.S. might have a tough fight against India’s complaint. It wasn’t surprising that the WTO ruled in favor of the U.S. instead of India earlier this year, Lilliston said. “The WTO has consistently ruled against these kind of [domestic content] programs.”