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Solar site competition heats up

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suntechmonocrystallinepanelsChina’s SunTech Power Holdings, a major manufacturer of solar energy products, has announced plans to open manufacturing operations in the U.S., and Oregon is high on the list of potential site locations.

According to the Portland Business Journal, a SunTech executive says that Oregon was the most aggressive suitor for the site, with state representatives traveling several times to China.

“They’ve been pursuing us long before we even made a commitment internally to even build a plant in the U.S.,” said Steve Chadima, vice president of external affairs in the publicly-traded company’s U.S. operations unit, in the BizJournal report. Oregon is “pretty much at the top of the list in terms of their aggressiveness.”

SunTech is the world’s largest manufacturer of crystalline silicon photovoltaic modules with $3.3 billion in total assets. The company did not disclose the other potential U.S. plant sites under consideration. It also has not disclosed the scope of its potential investments in the U.S.

Oregon is becoming a center for solar manufacturing. Germany’s SolarWorld AG last year opened a 480,000-square-foot solar cell facility in Hillsboro, just outside of Portland, that is North America’s largest. The company is expanding the facility by an additional 210,000 square feet.

Oregon is also home to some other solar companies, including Sanyo Solar, which is building a solar ingot and wafer production facility in Salem; PV Powered, a Bend-based manufacturer of solar inverters; and Solaicx Inc., the Santa Clara, Calif., company that makes silicon wafers for solar panels at a North Portland plant. In addition, earlier this year Solelectric Inc, a Troutdale, OR company, said Oregon was a front-runner to get a 100,000-square-foot manufacturing facility, potential based in Hillsboro, that would employ about 220 people to make thin-film solar modules.

The growth in the solar businesses in Oregon is attributed to four factors: the state’s relatively low electricity rates, an abundant skilled workforce, its proximity to the large California market, and a range of government incentives that include a state tax credit, capped at $20 million, for 50 percent of the costs associated with building a renewable energy manufacturing facility.

It’s almost all about the sweetest incentives packages offered by states, however. Many other states offer incentives similar to those offered by Oregon and the competition is intense. Recently Schott Solar AG, another German solar product maker, said it would build a $100 million manufacturing plant in Albuquerque, NM. Oregon had been in the running for the Schott plant but New Mexico won out with about $30 million in incentives that included $7.5 million for capital investment.

BizJournal reported that in another instance, SpectraWatt Inc., an Intel spin-off business, said it planned a 60,000-square-foot manufacturing and technology development facility on a portion of the chip-maker’s huge Hillsboro campus, but wound up moving to New York instead.

The solar field is wide open in the U.S. While the capacity of solar energy systems tied to the electric grid in the U.S. grew 58 percent last year, the nation is still behind the rest of the world in manufacturing capacity and production.

Of the 5.6 gigawatts of solar panels produced worldwide last year, only 14 percent, or 750 megawatts, was produced in the U.S., with 60 percent coming from Asia, the BizJournal article said.

Incentives are taking on increasing importance in this economy as renewable energy companies struggle along everyone else.

SunTech came out of the first quarter fairly well. It saw its net revenues plunge 24 percent to $315.7 million between last year’s fourth quarter and the first quarter this year, but income from operations was $21.1 million for the first quarter compared to a loss from operations of $43.8 million in the fourth quarter of 2008. Net income attributable to holders of ordinary shares for the first quarter of 2009 was $1.8 million, or $0.01 per diluted ADS compared to a net loss of $109.1 million, or negative $0.70 per diluted ADS, in the fourth quarter.

Suntech says it expects “moderate revenue growth in the second quarter of 2009.” And it expects full-year 2009 shipments to be in the range of 600MW to 700MW,  “reflecting a constrained project financing environment and the resultant limited demand visibility.”

The company said it intends to hold PV cell production capacity at 1GW in 2009 until demand visibility improves. Suntech expects capital expenditures of approximately $100 million in 2009.

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Written by William DiBenedetto

26 May, 2009 at 10:32 am

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