Will Idaho's solar industry go dark?

Jun 05 - The Idaho Statesman, Boise

The market chaos that drove two Idaho solar power manufacturers to stop production and lay off 350 employees is actually an opportunity for consumers interested in purchasing solar systems.

So says Derrick Jackson, who works for Aurora Power and Design of Boise installing photovoltaic solar panels on houses in the Treasure Valley.

Transform Solar, a partnership between Australian energy company Origin and Micron Technology, just announced it was closing shop and ceasing production of its next-generation solar panels and laying off 250 people over the next three months.

A week earlier, Chinese-backed Hoku Materials announced it was cutting staff drastically at its new $700 million polysilicon plant in Pocatello -- where production had not begun -- after contractors filed to foreclose on the plant.

In a matter of days, Idaho's promising solar industry was on the ropes.

It's happening, experts say, as a glut of cheap solar panels floods the market. Aurora can install a 10-kilowatt or larger solar system for $5-to-$6 a watt today, a dollar cheaper than last year and far less expensive than a decade ago.

"It's the lowest I've ever seen it," Jackson said.

Idaho Gov. Butch Otter made building Idaho's solar industry part of his 2010 campaign and has touted the renewable industry for its contributions to economic development.

Idaho used federal stimulus money to install millions of dollars of panels on schools around the state over the past few years.

Otter still backs the industry.

"Clearly this is a setback," said press secretary Jon Hanian. "Some of this might have been expected, given what's happened with this industry.

"The governor said we should be pushing on all fronts, and solar is a part of that."

PANEL-DUMPING CASEADDS UNCERTAINTY

Part of the chaos comes from the broader financial problems facing world markets.

When the economy tanked in 2008, many companies were in the middle of building solar manufacturing plants, driven in part by government incentives and subsidies designed to boost green energy.

In May, the U.S. Department of Commerce ruled that Chinese manufacturers were dumping solar panels at below cost into the U.S. market. The government threatened to impose huge tariffs if China didn't reduce its subsidies.

That added further uncertainty to the market, said Jigar Shah, who co-founded SunEdison in 2003 and helped make it the largest U.S.-based builder of solar power plants.

Today he heads the Coalition for Affordable Energy, a group that opposed the Commerce action against China. He says it will raise prices for solar panels, which is the last thing the industry needs.

Hoku agrees, said Monica Salter, a company spokeswoman.

"For any market, uncertainty slows down investment and purchase decisions," she said.

Transform Solar is ending production, but Salter said Hoku still hopes to be here.

"Hoku Corp. is working on restructuring plans, which it hopes will result in realizing its original strategy of operating the polysilicon facility in Pocatello," she said.

Shah said the U.S. solar industry employs 100,000 people, and most of them are not manufacturing raw products like Hoku's polysilicon or Transform's solar cells. Most U.S. jobs are in assembling solar modules from panels, and selling and installing them.

SOLAR COMPANYPLANS NAMPA PLANT

That's what SolarCascade is doing.

The company founded by Dave Brueggemann of Boise builds solar "micro-grid" systems across Africa, where huge areas have no electric transmission infrastructure.

"Africa is the up-and-coming market right now," Brueggemann said.

He plans to open a plant in the old Lloyd Lumber building on Karcher Road in 90 to 120 days. He expects to hire 100 people to assemble solar modules, and his business model is not based on encouragement or incentives from the U.S. or state governments.

"We expect 80 percent of our work will be out of the country," Brueggemann said. "We have no will here to do renewables."

PRICE IS STILL AN ISSUE

Solar developers say they can compete in many electricity markets today -- especially in markets where rates are far higher than they are in Idaho.

The Idaho Public Utilities Commission approved contracts between several solar developers and Idaho Power. Only one is moving forward, an 80-megawatt plant near Mountain Home.

Robert Paul, managing member of Alternative Power Development Northwest in Boise, said $31 million worth of solar panels have been delivered for the 20-megawatt first phase of the project. But the PUC, pushed by the state's utilities, is expected to reduce the price that energy developers will get for selling alternative power such as wind and solar.

This "avoided-cost rate" is expected to drop because the cost for natural gas-generated electricity -- which alternative sources are intended to supplant -- has dropped.

"These projects will be built, but they probably will be the final solar projects to be built for a while," Paul said.

INDUSTRY ISSTILL YOUNG

Despite the historic low price for solar panels, Aurora's workload has not skyrocketed accordingly, Jackson said. Part of the reason is that Idaho's electric rates are low enough that the economic motivation is not high.

Most customers install solar to reduce their environmental impact, Jackson said, or they are looking at long-term costs. Scott Flynn's Flynner Building does certified Green Home buildings, and he said demand for such homes is growing.

Flynn said appraisers don't consider solar power units when appraising houses, which unfairly reduces the market incentive to install solar.

"You would see more of it if the appraisal industry saw value in it," Flynn said.

Despite the ups and downs of what is still an infant industry, Shah is confident solar will continue to grow nationally and in Idaho.

"I think these jobs are going to come back after the chaos subsides," Shah said.

Rocky Barker: 377-6484

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