Analyst says watch Oregon
By Phil Riske
Managing Editor, Rose Law Group Reporter
(3rd in a series of articles comparing solar industries in Arizona, Colorado, New Mexico, California and Oregon. See previous reports at: http://bit.ly/9ndMLK and http://bit.ly/bhTa0f)
During discussions about a bill that threatened to kill Arizona’s solar industry by eliminating its renewable energy portfolio, an Arizona House member said the state needs to become as aggressive in luring solar business as states such as Oregon.
Oregon, with only 175 days of sunshine annually compared with Arizona’s 310 days, lists about 125 solar manufacturers, producers and other solar companies located in the state.
The Oregon companies are heavy hitters, and their number is increasing as a result of aggressive marketing by and incentives from the state, although renewable energy incentives were recently cut back.
Shyam Mehta of GTM Research ranks Oregon as the No. 1 site for companies locating solar manufacturing plants in the United States. He predicts Oregon and California will emerge as major solar manufacturing centers in the next few years, with Oregon accounting for 59 percent of the United State’s “producible (solar) wafers” in 2012.
Portland General Electric ranked 9th in 2008 in the nation in megawatts (MW) installed annually.
To be elected in Oregon, one must be environmentally friendly. Such is the case with Gov. Ted Kulongoski and many of his state lawmakers.
Many of Oregon’s solar companies said they were drawn in by the state’s package of goodies, including reasonably priced vacant semiconductor plants and their skilled ex-workers; inexpensive, reliable electrical power; access to higher-education researchers and work force training; proximity to the massive California solar market; and incentives, including the state’s Business Energy Tax Credit (BETC) program, known as “Betsy.”
Under the program, a solar manufacturer may apply for a tax credit worth half of a project’s costs. The tax credit is capped at $20 million, to be claimed over five years.
Perhaps the best example of Oregon’s forward thinking is a concept at which many scoffv — a “solar highway.”
Allison Hamilton, project director for the Oregon Solar Highway Program, said the model has been in place for 20 years, and solar systems are lining highways in Switzerland, Spain and Austria.
The fact that we had none of them in the U.S. on operating right-of-way was a real shock to me,” Hamilton told the Sacramento Bee.
The $1.3 million project in Oregon started feeding renewable energy to the electricity grid at the end of 2008. It supplies about a third of the energy needed to illuminate a highway interchange, or about 112,000 kilowatt hours a year. It covers about 8,000 square feet, or about the length of two football fields, the Bee reported.
Portland General Electric spokeswoman Elaina Medina said, “A lot of people think, ‘Oh, rainy Oregon.’ But solar is actually the most abundant renewable resource in Oregon.”
Oregon’s goal is to become the top state in the U.S. for manufacturing solar energy equipment and to grab a hunk of the $25 billion per year in worldwide solar sales. Oregon’s strategy is to establish an integrated “cluster” of solar manufacturing, with more than $3 billion in annual gross sales by 2015.
New economic blood
The state has attracted SolarWorld to Hillsboro, where the facility’s 100 MW/yr is equal to 15 percent of total U.S. production. Multi-millions of dollars in tax credits are riding on the SolarWorld plant.
Other Oregon-based solar manufacturers include: PV Powered (Bend): Sol-Reliant (Portland); Solaicx (Portland); Peak Sun Silicon (Millersburg), and Sanyo Solar (Salem).
By 2015, gross revenues for these companies are expected to grow to $1.5 billion annually, providing new jobs for 2,000-4,000 Oregonians with average salaries more than $40,000 per year, according to The Oregon Global Warming Commission’s 2009 Report to the Oregon Legislature.
Under the Business Energy Tax Credit program, Sanyo will receive $40 million in credits for creating 200 jobs, said Marc Zolton, of the Oregon Business Development Department. In addition, the company received $225,000 for workforce training.
Uni-Chem, South Korean company, is the latest among foreign companies coming to Oregon. A half-dozen solar companies, including firms based in Germany and Japan, already
SolarWorld Oregon headquarters
have landed in Oregon.
“As we look around the U.S. and ask the question, who has the best incentives for starting solar factories, Oregon always comes out at the top,” said Roger Little, CEO of Spire Solar, the Massachusetts company that is working with Uni-Chem to set up U.S. solar production.
Three companies have gotten a total of $87 million in tax credits to boost clean-energy technology in Oregon.
They include the SolarWorld wafer plant in Hillsboro and a German company, Centrosolar, reported to be interested in a photovoltaic operation in Gresham.
The SolarWorld plant got the largest amount of credits — $82 million — for an expansion. Centrosolar got $4.7 million in credits. Pacific Metal Fab of Eugene got $304,000 for producing solar hot water systems.
Ferrotec has announced that it will set up a manufacturing plant in a suburb of Portland, that is expected to open by mid-2010.
Ferrotec makes quartz crucibles and other equipment needed to produce monocrystalline ingots from which hair-thin wafers are sliced to create solar cells. It also makes equipment used in manufacturing thin-film solar products.
Akira Yamamura, president of Ferrotec Corp., said, “After investigating a number of potential locations for establishing a facility in the United States, we selected Oregon for its combination of business opportunities, support structure and incentives necessary to make our investment a success.”
A company called XsunX operates a small thin-film production facility in a Portland suburb, and Oregon State University researchers have been working on thin-film technology for possible commercial use.
Ferrotec said the plant is needed “to provide rapid response to the growing Oregon and West Coast solar industry.”
A consortium of 30 Chinese companies in the solar panel industry is setting up a U.S. sales hub in Eugene. The group, named Centron Solar, has leased a 25,000-square-foot warehouse in west Eugene, has 10 high-level managers on board and has ambitious plans to grow to 200 to 300 employees in a year, Yuan said.
The group probably also will set up one or two solar panel assembly lines in Eugene, creating about 50 “green” jobs. Those positions would pay about $20 an hour, including benefits, he said.
Centron Solar plans to revolutionize the way solar panels are sold in the United States by selling directly to installers, rather than going through distributors.
China produces more than 50 percent of the world’s solar panels, but 90 percent (of them) are shipped to Europe.
Influencing factors for the future
The Oregon Legislature last year killed Oregon Senate Bill 80, which would have established a cap-and-trade program, in line with the Western Climate Initiative. The climate bill in Congress, if passed, includes a provision pre-empting state legislation, and that was given as the main reason Oregon rejected the state bill. Observers said that If it appears a federal cap and trade bill is not achievable, or if it is indefinitely delayed, SB 80 is likely to be reintroduced in Oregon in some form.
Meanwhile, Oregon Governor Ted Kulongoski (photo) signed into law House Bill 3039, which “directs the PUC (Public Utilities Commission) to develop a pilot program to integrate 25 megawatts of small scale-solar energy into Oregon’s electricity mix using a feed-in tariff. The bill also requires 20 megawatts of large scale solar be integrated into utility loads.”
If all goes according to plan, the Oregon FIT program will be in place by April 1, 2010. This is potentially great news for solar in Oregon, as a feed-in tariff guarantees a premium price for the electricity generated by eligible renewable energy systems, such as solar panels.
State lawmakers passed a bill that will rein in a business energy tax credit that was designed to help strengthen the state’s renewable energy industry.
The Oregonian newspaper reported in a series of articles that the program had several problems, including being so popular that it put funding for other programs in jeopardy.
Pacific Power is seeking a 20 percent increase in electricity rates starting next January to cover major investments in transmission and generation as well as forecasted higher power costs next year.
The company also intends to file an additional request for a rate increase of about 1.5 percent later this year to cover the eventual removal of dams on the Klamath River.
The new requests come on top of rate increases earlier this year that added about 5 percent to customers’ bills. They also come as the state’s largest electric utility, Portland General Electric Co., has filed a request for a 7.4 percent rate increase.
Company officials acknowledged that it’s a terrible time for rate increases, but said the investments were in many cases being driven by state and local mandates for more renewable power and pollution controls.
The company told regulators it needs a 13.1 percent general rate increase to recover the costs of new transmission lines, two wind farms in Wyoming and pollution control equipment at a coal plant.
Regulators will examine the specific elements of the rate requests over the next nine months to determine what increase is justified.
