Wednesday, March 07, 2007

Solar Company To Open Nation's Largest Solar Silicon Wafer and Solar Cell Production Plant in Oregon

SolarWorld AG Purchases Empty Silicon Wafer Plant in Hillsboro

SolarWorld AG announced plans Thursday to establish a solar silicon wafer and solar cell production plant in Hillsboro, Oregon that it expects to become the largest in the United States by 2009. SolarWorld expects to invest $440 million in the plant, hiring as many as 1,000.

Gov. Ted Kulongoski, who has worked with business leaders to champion sustainability as the state's new industrial focus [see previous post], said SolarWorld would help Oregon move toward energy independence. Strong public policy support, including the expanded Business Energy Tax Credit and the proposed Renewable Energy Standard, could help make Oregon a hub for solar and other renewable energy industries.

According to the Oregonian, the publicly held Germany solar company is buying the plant for $40 million -- a bargain in comparison with the $500 million spent by Japan's Komatsu Silicon America, which finished the factory in 1998 but never opened it because of forecasts of declining chip sales.

Governor Kulongoski and his staff have been working behind the scenes for several years to market Oregon as an ideal site for a new solar hub. Oregon's existing 'Silicon Forest' high-tech corridor has brought both the infrastructure and experienced workforce to Oregon for silicon-related businesses, much of which is applicable to the solar wafer and cell manufacturing industry. In addition, the strong Business Energy Tax Credit provides incentives for locating solar and other renewable energy manufacturing in Oregon.

The SolarWorld announcement is a major coup for Oreogn's economic development efforts. SolarWorld's investement dwarfs other recent high-profile industry announcements, including South San Francisco-based biotech company, Genentech, Inc., which recently announced plans to invest $250 million in a drug processing and packaging plant nearby the Komatsu Factory in Hillsboro's technology park. Genentech as announced it plans to hire as many as 300 by 2015.

The Oregonian reports that the SolarWorld deal differed from the Genentech plan both in terms of its speed and its package of government incentives.

According to the Oregonian, the German solar company will mainly hire highly skilled workers -- ranging from engineers to research-and-development positions -- at salaries above those of other operations the state has attracted recently, such as Amy's Kitchen, a Medford-area maker of burritos and other oven-ready meals.

And the investment could pioneer a new industry in Oregon, that may help keep Oregon's economy thriving as some existing high tech manufacturers ship jobs overseas.
"We usually go through this courtship dance," Hillsboro Mayor Tom Hughes said. "This was like the boogie-woogie."

Only last fall, SolarWorld acquired the solar business of oil giant Royal Dutch Shell, which had taken it over from Siemens AG. The deal gave SolarWorld, founded in 1998, plants in Vancouver as well as in Camarillo, Calif.

Robust demand for solar panels quickly pushed SolarWorld to expand. In December, company representatives toured the 422,000-square-foot former Komatsu plant. "It was amazing to see such a huge site in that good condition after 10 years, and to imagine that the company wasted more-or-less a half a billion dollars for just building it," said Boris Klebensberger, SolarWorld chief operating officer. "It will fit all our needs."

The plant will hold at least 1,000 workers by 2010, SolarWorld CEO Frank Asbeck said Thursday in Germany, according to The Associated Press. But Klebensberger said "some hundreds" of workers would be hired for the first phase and "several hundred" thereafter.

Genentech held lengthy negotiations, brokering a property tax deal under the state's Strategic Investment Program (SIP). But SolarWorld was content with local property tax breaks and a chance to apply for refunds under the state's business-energy tax credit program.

Under the program, SolarWorld could receive credits worth 35 percent of $50 million or more in eligible project costs, depending on how much of the investment qualifies for the tax breaks. The percentage could increase under legislation passed by the Oregon House of Representatives on Thursday. But the tax breaks are unlikely to approach the amounts awarded under the SIP to big semiconductor manufacturers during the 1990s.
The new Hillsboro plant will be able to produce solar silicon wafers and cells capable of generating 500 megawatts of electricity a year, the Oregonian reports. SolarWorld plans to shift its solar wafer-making work -- and their current staff of approximately 100 workers -- from its plant in Vancouver to the new facility Hillsboro. The company is also expanding its plant in Freiberg, Germany.

It is my hope that this announcement is the first of many to come over the next several years. With the passage of the proposed Renewable Energy Standard as well as the packaged of supporting legislation, including the Business Energy Tax Credit, Oregon should be quite attractive to the renewable energy industry, both for energy projects and manufacturing.

Governor Kulongoski's plan to set Oregon up as a hub for the renewable energy and energy efficiency industries is an excellent strategy to ensure a strong economy while helping Oregon expand its energy independence.

Oregon is particularly well suited to become a new solar hub. Like Silicon Valley in California, where many solar manufacturers have opened factories, Oregon's Silicon Forest has created the necessary base of silicon industry infrastructure and expertise to make Oregon a perfect site for the solar photovoltaic industry to set up shop.

Hopefully the SolarWorld wafer and cell production factory will become an anchor for a new solar industry in Oregon. The plant will ideally attract PV panel manufacturers, who can purchase silicon wafers and cells from the SolarWorld factory.

The expanded Business Energy Tax Credit and net metering and interconnection standards, which will encourage a more robust solar industry in Oregon, along with the proposed Renewable Energy Standard will also help create a strong demand for solar panels in Oregon.

Let's hope this is the beginning of a new Oregon solar industry!

[Image Source: Addison Engineering, Inc.]

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