Minnesota fights to keep $62 million solar grant yanked by feds

Minnesota officials hope to stop the federal government from canceling a $62 million grant for small-scale solar projects meant to reduce the cost of energy for poorer households.

The cash would pay mainly for solar arrays shared by residential utility customers, as well as panels on apartment buildings, houses and tribal lands in projects the state estimated would save more than 11,000 households 20% or more on their electric bills.

The projects under the program would have to benefit households that make less than 80% of an area’s median income, or people who live in certain designated communities, according to the Minnesota Department of Commerce.

The dispute is focused on whether the Trump administration can legally claw back money that states were already granted.

The Environmental Protection Agency said the “Solar for All” money was repealed by the “One Big Beautiful Bill” passed by a Republican-controlled Congress earlier this year and that EPA doesn’t have the authority to administer the $7 billion program.

“With clear language and intent from Congress in the One Big Beautiful Bill, EPA is taking action to end this program for good,” said EPA administrator Lee Zeldin, in a statement. “We are committed to the rule of law and being a good steward of taxpayer dollars.”

But the Department of Commerce said in a news release that it has a contract for the money, so it’s too late to be legally canceled. The agency said it’s “exploring immediate legal action.”

The repeal of “Solar for All” eliminated another element of the Inflation Reduction Act passed under Joe Biden in 2022. That legislation included hundreds of billions in spending on programs meant to speed up the transition away from fossil fuels.

Republicans in Congress sharply limited tax breaks from the IRA for wind and solar production in the One Big Beautiful Bill approved earlier this year.

Those changes could cost Minnesota utility customers $10 billion to $20 billion over the next decade, said Lissa Pawlisch, an assistant commissioner at Commerce overseeing federal and state initiatives.

Pawlisch said Solar for All might seem modest in comparison, but it is “directly targeting” the most vulnerable households in the state with a high share of income eaten up by power bills.

“As rates are going up, as electricity will get more expensive because of the repeal of the tax credits, Solar for All funds would have been a way for those households to mitigate that harm,” she said.

Another $10 million was for tribal solar projects. Smaller sums were set to be spent on rooftop solar projects and workforce development in the solar industry.

Zeldin said the money in Solar for All would have been diluted as the grants passed through middlemen before project construction, which he characterized as a “grift.” He also said little of the money had been spent.

“Recipients are still very much in the early planning phase, not the building and construction process,” Zeldin said.

Pawlisch rejected the accusations of grift. She said Minnesota is planning to work with the state’s housing agency because it has staff and expertise for projects on multifamily housing. But she said administrative funds for the agency would make the project more efficient, not less.

This is not the first clash over environmental money between the EPA and Minnesota entities. In June, a federal judge said EPA had to restore $180 million in environmental justice funds it awarded to the Minneapolis Foundation and two other nonprofits.