It was a typically cloudy day last October when Oregon Gov. Ted Kulongoski, Rep. David Wu and Sen. Ron Wyden came out to cut the ribbon for the grand opening of the largest solar panel manufacturing plant in North America. Above them, at this 480,000-square-foot facility in Hillsboro — about 20 miles west of Portland — bright yellow-and-blue lettering towered against an overcast sky. “SolarWorld: The sunpowered company.”
The governor has staked much of his legacy in recent years on attracting to Oregon such companies as German-based SolarWorld AG. So far, it’s working. Despite a deepening recession, solar panel makers and other renewable energy businesses are among the few companies expanding right now in a state with some of the highest unemployment in the nation.
In the past two years, seven solar panel manufacturers have launched in Oregon, with at least six more planned for this year. Meanwhile, a Portland-based electricians’ union leads classes on installing solar panels, and more than 200 Oregon companies are involved in some aspect of the solar panel supply chain — all in a state not exactly known for its abundant sunshine.
Oregon’s emergence as a solar cell magnet depended on an established industry, generous tax credits and job programs at local community colleges — things policymakers might seek to duplicate elsewhere in carrying out “green jobs” programs called for by President Barack Obama and many others.
One step ahead
Despite some ambiguity in the term “green jobs”, producing and installing solar panels are definitely the kind of work opportunities in renewable energy that so many people are talking about these days.
By 2011, SolarWorld’s Hillsboro factory plans to have more than 1,000 workers, producing enough photovoltaic panels per year to generate 500 megawatts of power. That’s about the amount of electricity produced by a typical coal-powered plant.
While creating the means for clean energy, the plant consumes a considerable amount of electricity of its own, about 20 megawatts for every 900 produced, and roughly 42 percent of its operating power comes from coal. Less expensive energy —largely from the nearby Bonneville Dam and expanding wind farms — and the capacity to deliver it help draw solar cell manufacturers to the Northwest.
But Oregon’s solar boom is not just about manufacturing. The Portland-based International Brotherhood of Electrical Workers Local #48 has trained 1,000 workers over the past four years to install solar panels on the roofs of homes and businesses. Driving these installations — which can use a boost in a city with 38 inches of annual rainfall — are some of the most generous tax credits and loan programs in the country for purchasing solar arrays.
Clif Davis, business manager of the IBEW in Portland, worries that the push for renewable energy could create pressures to relax the safety laws protecting electricians. “We’re aware of some attempts to loosen electrical laws, and we’re prepared to defend them,” he says. Overall, he notes, the solar industry offers plenty of long-term prospects for electricians.
Local community colleges have also contributed. Portland Community College, for instance, recently graduated the first round of 16 students from a new program that includes training in solar cell manufacturing. Half went to work for SolarWorld.
“This is a fundamental role of the community college,” said Eric Kirchner, department chair for microelectronics. “For a technology program that means making sure you’re doing what benefits the community.”
Rebooting the Silicon Forest
The main reason solar panel makers are drawn to Oregon is its history with the semiconductor industry. Like Silicon Valley in California’s Bay Area, the Silicon Forest of the Pacific Northwest — led by Intel, Tektronix and Microsoft — peaked in the late 1990s. In 2001, employment topped out at nearly 36,000 jobs. Since then, close to 8,000 jobs have been lost, according to Art Ayres, state employment economist with Workforce and Economic Research, Oregon Employment Department.
The processes for making solar panels and computer chips are substantially different, but both rely on silicon wafers. Silicon is extracted from sand in a way similar to the method used in glassmaking. Producing wafers for solar panels involves a far simpler process, fewer dangerous chemicals and lower risk to workers. Only a few engineers don full-body bunny suits at the SolarWorld factory.
Desari Strader, president of the Oregon Solar Energy Industries Association, believes that job gains in the solar industry will more than make up for job losses experienced across the technology sector over the past 10 years. Around 85 percent of workers at SolarWorld, for instance, came from the local semiconductor industry. But recent job gains hadn’t yet turned around the overall decline in employment as of last November.
An estimated 70,000 people currently in the Portland area worked at one time in the silicon industry, a key reason SolarWorld has expansion in its future. The company plans to develop an additional 70 acres around its Hillsboro plant, and the primed workforce saves costs. Says Robert Beisner, vice president and head of human resources, “Without the general silicon knowledge, it becomes expensive to relocate people.”
Also on hand is an existing infrastructure of parts and materials suppliers as well as semi-finished or abandoned facilities equipped to produce silicon wafers. SolarWorld bought its plant in Hillsboro from a Japanese semiconductor startup that never got off the ground.
Strader said she expects the state to be a big recipient of federal investment in green jobs. “The way we’re going, we’re leading the nation,” she said.
Biggest tax breaks in the country
Even with a ready-made work force and infrastructure, Oregon needed one more thing to lure solar cell makers and suppliers: cash.
“We wouldn’t be here if it weren’t for the tax credits,” Beisner said. “This is a way Oregon is able to be competitive with the rest of the world and the rest of the states. I applaud the state for being so forward thinking. We really are doing something about climate change.”
The Oregon Business Energy Tax Credit, one of the highest in the country, covers 35 percent of the project’s total cost — for SolarWorld more than $400 million — spread over five years. The company also benefits from a break on local property taxes. A variety of other businesses can take advantage of the tax credit by simply increasing their energy efficiency.
The credit, which amounts to $70 million a year that would otherwise flow to state coffers as income tax, has not been without controversy. The state’s largest daily newspaper, The Oregonian, recently reported on several businesses that received or sought the credit for things they would have done anyway, such as a rental car company that bought more hybrid cars and a wind farm project that located in the breezy Columbia River Gorge.
A spokeswoman for Gov. Kulongoski, Anna Richter Taylor, said the tax credit will be retooled in the upcoming legislative session. “If anything, the tax credit is working and has done its job in providing an incentive for companies to increase energy efficiency,” Taylor said.
On the demand side, Oregon has an impressive list of incentive programs, some offered by city governments, others through public utilities. The roster includes the Energy Trust of Oregon, which pays rebates to consumers of various renewable energy products, from energy-efficient refrigerators to solar panels.
Established in 2002, the energy trust collects money through a 3 percent surcharge imposed on ratepayers of the two largest investor-owned utilities. In 2007, the trust raised $56 million earmarked for increasing renewable energy. The idea was to finance the state’s goal of consuming 25 percent of its energy from renewable sources by 2025. At least 28 other states have similar renewable energy portfolio standards, though Oregon’s is one of the most ambitious.
Renewable energy producers want the new Congress to turn the federal Alternative Energy Investment Tax Credit into a refund in the upcoming stimulus plan, because investment has slowed, said Rhone Resch, president of the Solar Energy Industries Association. Other new incentives were worked into the $700 billion financial bailout bill passed late last year.
All of these cash incentives keep demand for solar in the United States growing by about 30 percent annually. No one interviewed for this story would hazard a guess as to how long tax credits should continue.
The goal of any renewable energy incentive is to make the price equivalent to that of coal, said Beisner, the SolarWorld vice president. Solar energy should become cost competitive with conventional energy by 2020 across most of Europe, with the United States close behind, according to the environmental group Greenpeace in a September 2008 Solar Generation report. By 2030, solar energy, the report states, will likely supply power to more than 4 billion people worldwide, create jobs for more than 10 million people and reduce carbon emissions by the equivalent of 450 coal-powered power plants.
Beisner, who worked 14 years in the semiconductor industry, feels proud to be working for a company doing something about climate change. “It just feels good to come to work in the morning,” he says.
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