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|Archives - June 2008|
|Sunday, June 01, 2008|
SUN, SUN, SUN, HERE IT COMES
Boosted by new state incentives and betting on the future, Oregon’s solar industry is soaring.
By Ben Jacklet
John Schumacher developed a revolutionary idea to lower the cost of solar power during the last oil crisis 33 years ago. Answering a call from the U.S. government for solar innovations, he invented a closed-loop, low-energy system to produce high-quality polysilicon for solar cells. He was certain his process would improve efficiency throughout the solar industry, but he never got to find out. Support from the government faded as oil prices returned to earth, and investors didn’t fill the gap. Schumacher reluctantly dropped his plans and proceeded with a successful career that saw him earn over 40 patents and create hundreds of high-paying R&D jobs through the various technology companies he created in California.
Oregon is betting big on all forms of renewable energy, but none has drawn more investment and business interest than the burgeoning solar industry. At the world’s largest solar trade show in Munich, Germany, in April there was one U.S. state with its own booth: Oregon. Solar entrepreneurs enticed by lucrative incentives, most notably the German powerhouse SolarWorld, are pouring into the Oregon market, and more are being recruited, making the state’s goal of a “self-reinforcing cluster” in the solar industry seem less like wishful thinking and more like concrete reality. Residential solar installations are up 35%, commercial projects are on track to quadruple from 2007 to 2008, and the market looks even sunnier to the south, where California has launched a $3.35 billion solar initiative that will further boost demand for solar equipment that is more and more likely to be made in Oregon.
The timing is serendipitous. The weak dollar is boosting exports and sending oil prices to all-time highs. New concerns and laws regarding climate change are strengthening a market that is firmly established in Europe and growing everywhere else. Venture capital investments in solar energy topped $1 billion in the U.S. last year, and two of the hottest stocks on Wall Street have been First Solar in Phoenix and Sun Power in San Jose. With a strong Silicon Forest workforce familiar with the basic technology used in solar manufacturing and some of the most generous subsidies offered by any state, Oregon has positioned itself to capitalize mightily on what New York Times columnist Thomas Friedman recently labeled “the next great global industry — clean power.”
Joseph Reinhart, executive director of the Oregon Solar Energy Industry Association, says solar’s future is rooted not in idealism but in “continued and sustained profitability.” A veteran of the semiconductor industry, Reinhart doesn’t see any reason why mass production and innovation can’t bring down costs quickly. “Just think about the $800 laptop you can buy today,” he says. “Less than 10 years ago it was $2,500, and you can’t even compare the functionality. I see the same thing happening with solar.”
For the past 30 years Oregon’s solar sector has been dominated by early adopters with plenty of ideas and innovation but limited access to capital. That has changed dramatically. According to the Portland-based research firm Clean Edge, capital investment in renewable energy companies in the United States has ballooned from $599 million in 2000 to $2.7 billion in 2007. VC investment in solar topped $1 billion in the nation in more than 700 financing rounds last year, according to the Prometheus Institute, a sustainable technology research firm based in Cambridge, Mass. Global powerhouses such as General Electric, Google and Applied Materials also are wagering aggressively on the future of solar as a hedge against rising energy prices and concerns about the true costs of pollution and climate change.
Oregon saw the light in the legislative session of 2007, approving sizable subsidies to companies willing to invest in solar. The biggest incentive is an aggressive business energy tax credit or BETC (pronounced “Betsy”) that was expanded by the state Legislature in January to cover an enticing 50% of a company’s investments up to $40 million. This super-sized incentive has had an immediate impact, enabling companies to leverage significant capital to set up, expand and drive up production in Oregon. Four companies — SolarWorld, Peak Sun Silicon, Solaicx and PV Powered — have received state approval for a combined $46 million in tax credits from this one subsidy alone.
A little more than a year ago, PV Powered was a small startup in Bend with 25 employees building inverters to change the direct current generated by solar systems to alternating current compatible with the grid. Now, with the help of $7 million in BETCs and nearly $30 million in venture capital, the company has grown to more than 60 jobs at a new 100,000-square-foot facility and plans to keep growing in Bend and begin exporting.
Gregg Patterson, a former Hewlett Packard vice president and general manager, took over as CEO and chairman of PV Powered in March 2007. His eyes grow wide as he describes market potential. “The worst forecast I’ve seen calls for a 30% annual growth rate for solar,” he says. “And the inverter will be a critical component of every installation.”
Solar experts have long decried the inverter as a weak link in the photovoltaic chain, causing 80% of a system’s downtime. Like all inverter manufacturers, PV Powered has struggled with reliability. But a recent collaboration with Boeing has helped the company tighten quality control standards; its inverters come with a 10-year warranty.
The more efficient a system becomes, the better it will compete. That is one of many lessons Jeff Jones learned from the boom years of the semiconductor industry. Jones was one of the original hires when Siltronic moved to Portland in the late 1970s, and in his 28-year career there he trained 450 people to manufacture semiconductors. Now he’s doing the same thing with silicon wafers for solar cells.
Jones left Siltronic during a recent downturn and is now vice president of manufacturing at the new Solaicx manufacturing plant in North Portland, where the sign on the entrance states the company’s mission clearly: “Making Solar Electricity Cost Effective.” Jones compares the solar market to the market for semiconductors in the early ’80s. “It seems like every time you turn around someone has figured out something they were never able to figure out before.”
Solaicx designed and built the machines at the center of its new Portland factory. The company developed its high-volume process over five years of research in California backed by $58.4 million from investors and expanded to Portland in 2007 after considering Austin, Phoenix and Vancouver, Wash. Among the many government incentives that enticed Solaicx to Portland was a BETC worth approximately $9 million.
Solaicx and PV Powered are growing quickly and may one day raise further capital by going public. But for now their combined market share is minuscule compared to that of SolarWorld, the vertically integrated German giant that is building the nation’s largest solar factory plant in Hillsboro.
SolarWorld vice president Bob Beisner says his company considered the option of building in Asia to save on labor costs and rejected it. “We made a decision to manufacture in the U.S. because we feel the U.S. will become one of the biggest marketplaces for solar in the world over the next five to 10 years. For us to be here makes perfect sense. It will help us to diversify our risks, and the euro exchange rate makes it very favorable to be manufacturing in the U.S. We were also dissuaded by intellectual property rights laws in China.”
Local and state subsidies also played a role, including an enterprise zone property tax abatement, $500,000 for workforce training from the state’s Strategic Reserve Fund and a whopping $20 million BETC. SolarWorld plans to create 1,000 jobs by 2010 and may expand beyond that depending on the market.
Large manufacturers aren’t the only Oregon businesses investing in subsidized solar. Kettle Foods, Pacific Botanicals, PepsiCo, Gerding Edlen and Sokol Blosser Winery are just a few of the companies that have installed solar systems on their rooftops with support from the Energy Trust of Oregon.
Kacia Brockman, the trust’s senior solar program manager, says incentives can make solar installations attractive, with a return of up to 8% over the life of the investment. “It’s not a huge moneymaker, but it is a sound investment,” she says. “And it’s very low risk, because the systems are guaranteed to produce power for 20 years.”
The more systems that are installed, the more demand there is for workers with solar expertise. In 2003 the trust had 12 “trade allies” to collaborate on solar installations. That number has grown to more than 100, according to Brockman. The trust also has helped train more than 750 union electricians to assist with solar installations.
There is also more work than ever for renewable energy specialists from law firms such as Stoel Rives and Ater Wynne, research firms such as Clean Edge, developers such as Commercial Solar Ventures, plus the growing legion of distributors and marketers moving into Oregon. The nation’s first renewable energy undergraduate degree at the Oregon Institute of Technology should bring more expertise into the industry, as will training programs through Portland Community College and research efforts at the University of Oregon and Oregon State University. New products ranging from solar-powered skylights and scooters to the City of Portland’s goofy solar-powered garbage cans are just the beginning. The next big thing will probably be building materials with solar cells incorporated into them.
Thursday, August 13, 2015
BY JACOB PALMER | DIGITAL NEWS EDITOR
Portland-based startup ImpactFlow recently announced a $5.7 million funding round. CEO and co-founder Tyler Foreman talks about matching businesses with nonprofits, his time at Intel and the changing face of philanthropy.
Wednesday, August 19, 2015
BY JACOB PALMER
Live, Work, Play wit the CEO of Ruby Receptionists.
Wednesday, August 19, 2015
BY CHRIS NOBLE
Oregon is home to an abundance of gritty warehouses reborn as trendy office spaces, as well as crafty hipsters turned entrepreneurs. Does the combination yield an equally bounteous office products sector? Not so much. Occupying the limited desk jockey space are Field Notes, a spinoff of Portland’s Draplin Design Company, and Schuttenworks, known for whittling Apple device stands. For a full complement of keyboard trays, docking stations and mouse pads, check out the GroveMade line, guaranteed to boost the cachet of even the lowliest cubicle drone.
Friday, July 10, 2015
BY JOE CORTRIGHT
The false promise of economic impact statements.
Wednesday, August 19, 2015
BY AMY MILSHTEIN
Training, from the mundane to the sublime, bolsters companies and workers in an uncertain world.
Thursday, August 27, 2015
BY LINDA BAKER
How do you put a baby on the cover of a business magazine without it looking too cutesy?
Thursday, August 20, 2015
Which of the following would be most effective in reducing the cost of operating a public university in Oregon?
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For good or ill, gay marriage inspires many people. They have strong feelings about it. Sometimes those strong feelings are grounded in religion and sometimes they are not. When the workplace is added to the mix, emotions tend to run high. After giving an overview of two current situations, The Bullard Edge is going to outline three key points for consideration and clarity.
Yesterday, a divided National Labor Relations Board dropped another hammer on the employer community. In a long-awaited and much debated move, the Board jettisoned the decades old standard for determining when two independent businesses should be considered joint employers of an individual worker for collective bargaining purposes.
Transforming the culture of Oregon’s educational leadership.
Attendance, breakfast buffet, materials, certificate of attendance and parking are all complimentary on behalf of the firm.
New regulations are in effect and more updates are on the horizon, are you prepared?
The Oregon Entrepreneurs Network (OEN) is pleased to announce 16 finalists — from over 60 nominees — for the 2015 OEN Tom Holce Entrepreneurship Awards.