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Solar incentive programs, whether crafted by state legislatures or public utility commissions, are often the focus of much attention for their promise to increase deployed power capacity. However, many public officials see such programs as merely foundations on which to build persistent - and hopefully job-creating - manufacturing and technology development capacity.

Last September, SolarCity broke ground on what it is calling its “GigaFactory” for Silevo photovoltaic modules near Buffalo, N.Y. Billed as what will be the largest PV manufacturing facility in the Western Hemisphere, the facility will be located at the Buffalo High-Tech Manufacturing Innovation Hub at RiverBend, owned by the State University of New York’s College of Nanoscale Science and Engineering. The commitment is the result of a campaign by New York under its START-UP NY campaign to attract manufacturing and other job opportunities to the state.

SolarCity says it will spend $5 billion over the next decade in connection with the creation and operation of the facility. New York has said it will invest a total of $750 million to establish infrastructure, build the 1.2 million square-foot facility and purchase required equipment.

The selection of Buffalo also represents an effort by the New York State Energy Research and Development Authority (NYSERDA) to develop upstate New York as a center of excellence for PV technology development. In December 2013, the Center for the Evaluation of Clean Energy Technology Inc. (CECET) opened its new PV Certification Testing Lab in Cortland, N.Y. NYSERDA provided a portion of the funding for the center, which, among its other functions, will study the impacts of snow, extreme temperature and adverse weather conditions on PV power systems.

Outside of Albany, the town of Halfmoon, N.Y., is getting the Photovoltaic Manufacturing and Technology Development Facility at the State University of New York’s College of Nanoscale Science and Engineering with the assistance of state and federal funds.

NYSERDA’s efforts to bring solar research and development and manufacturing to New York is an example of a methodical campaign to turn existing industrial and intellectual resources toward building promising new centers of solar excellence. Other states are making similar efforts to build solar manufacturing - and jobs - in support of solar development incentives.

 

Minnesota-made

In 2013, the Minnesota legislature established an incentive program for consumers who install photovoltaic and solar thermal systems using solar modules and collectors certified as manufactured in Minnesota. Incentives for PV are based on performance, established by a system’s energy production. Qualified participants will receive payments for a period of 10 years.

The Made in Minnesota Solar incentive program is administered by the state’s Department of Commerce (DOC) with an annual budget of up to $15 million for 10 years, of which up to $250,000 per year is reserved for solar thermal rebates. About 50% of the incentives will go to residential systems and about 50% to commercial.

The certification will allow local customers a production incentive of $0.28/kWh for residential solar installations, $0.15/kWh for commercial tax-exempt, nonprofit and government installations, and $0.13/kWh for commercial for-profit projects.

The $15 million-a-year program is funded through two sources. Each of the state’s public utilities - Xcel Energy, Minnesota Power, Otter Tail Power and Alliant Energy/IPL - contributes 5% of its annual conservation improvement program budget. The remaining funds - approximately $12 million per year - are provided from Xcel’s renewable development fund.

According to the Minnesota DOC, at the time of the legislation, there were two solar PV manufacturers, one solar hot water manufacturer, and three solar air heating manufacturers in Minnesota. The state does not have any fossil fuel resources of its own - spending an estimated $18 billion annually on the importation of fossil fuels. Thus, it made sense to develop a plan to reduce Minnesota’s dependence on imported fossil fuels and to grow the native clean energy sector.

“Minnesota is a good fit for solar manufacturing for a number of logistical and local market conditions,” says Libby Caulum, a spokesperson for the Minnesota DOC. “Minnesota is centrally located for distribution to all of North America. There is a deep water port located in Duluth, with a well-established distribution network of rail, air and highways.”

As solar becomes more of a commodity, the argument goes, low distribution costs will increase a company’s competitive advantage. Minnesota claims a diverse supply chain is already established in the state. There are nearly 500 companies in the state that are currently involved in the solar supply chain or have products similar to those used by most solar manufacturers and could easily adapt existing products to meet the needs of national and international solar companies.

The DOC says Minnesota has seen a very positive response to the program. The 2014 application class was oversubscribed. The programs and policies place the state on the cusp of a breakout solar market where solar capacity will grow by several hundred megawatts over the next few years.

Ontario-based solar panel manufacturer Heliene Inc. says it is set to begin production at its new St. Paul, Minn., facility, which will qualify for the Made in Minnesota program.

Heliene and U.S. partner SimpleRay LLC will produce standard form-factor medium- to high-efficiency 60- and 72-cell modules ranging in output from 250 W polycrystalline panels to 335 W monocrystalline panels. Final assembly and testing will take place at the St. Paul facility.

SimpleRay and Heliene say they plan to initially add 12 to 20 employees to their assembly plant and corporate offices to accommodate the expanded operations.

“We are delighted to be part of the Made in Minnesota program and to expand our operations into the Minnesota market,” says Martin Pochtaruk, president of Heliene. “We see this as a great opportunity to move into both Minnesota as well as the U.S. market in a big way.”

In January, Washington-based solar module manufacturer itek Energy earned its Made in Minnesota certification with a new module production facility it is developing with local partner SPYE LLC Inc. itek Energy started production in its new Minneapolis facility in November 2014. This year, itek forecasts producing between 2 MW and 4 MW of 60-cell solar panels at the facility.

The Made in Minnesota program is just one of a number of programs and policies adopted in 2013. These include adoption of a solar electricity standard, updates to net-energy metering, establishing the methodology to value solar and a new community solar program. The state and a growing number of electric utilities recognize solar deployment as a priority.

Having the consistency of a 10-year incentive program and ongoing policies such as the solar standard, community solar gardens (see “Community Solar Programs Open New Doors For Developers And Consumers,”) and progressive net metering make a significant difference to companies that are considering re-locating or expanding their business. The DOC has been contacted by many companies over the past year. A number of those companies contacting the DOC are foreign-based and looking to establish a North American base of operations. The Made in Minnesota solar incentive program garners the attention of these companies.

Unlike traditional forms of energy production, which require high input and operational costs, solar is much more labor intensive on the front end with very low input and operational costs. The bulk of PV employment is in construction/installation and module manufacturing. These two sectors represent 89% of the jobs related to the solar industry. This program addresses a number of concerns for Minnesotans - energy independence, job growth, strengthening the state’s manufacturing sector - while also being for the environment.

The Minnesota DOC, citing The Solar Foundation’s (TSF) jobs census, says that in 2012, there was a one-year employment growth of 73% in the Minnesota solar industry compared to an overall state job growth rate of 2% over the same period. Numbers recently released by TSF show 936 more Minnesota jobs were added in 2014. Most of these jobs were in the installation and development sectors, but as the new manufacturing ramps up, the DOC expects to see those numbers grow substantially in 2015.

“Over the long term, PV manufacturers need to be able to compete in the national and global markets without incentives,” the DOC’s Caulum says. “Made in Minnesota provides a springboard to help them get to the scale they need to be competitive. When you combine the program with the state’s central location, transportation network, educated workforce, progressive solar policies and the depth of the existing Minnesota supply chain, you can see how Minnesota is an attractive choice for solar manufacturing.”

 

City by city

Not every incentive program that brings PV manufacturing is detected from the federal or state level. Charlie Hemmeline, executive director of the Texas Solar Power Association, says recent investments in solar manufacturing in the San Antonio area are the result of local officials trying to capitalize on the large-scale Alamo series of solar projects OCI Solar is building for CPS Energy of San Antonio.

Dino Barajas, a partner with Akin Gump Strauss Hauer & Feld LLP, describes the Alamo projects as the largest solar development currently being built in the U.S. and says that it serves as a model of the potential that municipal utilities have in shaping the future of renewable energy development. The aggregate construction costs for the investment are estimated to be $1 billion, and the overall economic impact for San Antonio is estimated to be $700 million annually.

Last September, Mission Solar Energy LLC opened its solar panel manufacturing facility in San Antonio. The 240,000 square-foot facility produces n-type solar cells and 72-cell 320 W modules for Korea-based OCI Co. Ltd., which is developing four large-scale projects in the region, including the Alamo projects, for CPS Energy. The plant reportedly can produce up to 50 panels per hour and has an annual capacity of 200 MW.

CPS Energy has endeavored to attract solar manufacturing and generating projects to the San Antonia area through its New Energy Economy program. Sun Action Trackers, another partner and a subsidiary of Korea-based Paru Co. Ltd., has opened a 38,500 square-foot facility in the city to produce dual-axis tracking systems.