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Building a green economy
Eclipsed by rival states in attracting renewable energy manufacturers, Nevada hopes new tax abatements will entice the growing industry. But will the state’s plans work?
Tuesday, May 26, 2009 | 2 a.m.
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It rains nearly half of the year in Hillsboro, Ore. So unlike, say, the broiling Nevada desert, that region doesn’t immediately spring to mind during discussions of solar energy.
Yet the Portland suburb appears set to become a high-profile hub for solar parts manufacturing, thanks to a decision by the German company SolarWorld AG to open a $500 million manufacturing plant there that will eventually employ 1,000 workers.
“We can manufacture whether the sun is shining or not,” SolarWorld spokeswoman Anne Schneider pointed out last week.
Schneider’s point may be an obvious one, but it could also be a telling fact for Nevada leaders in Carson City, who are finishing up long negotiations on a set of bills that will shape the state’s energy future.
Lawmakers delivered to the governor Friday one piece of that plan, Senate Bill 358. The other, contained in Assembly Bill 522, is held up in the Senate.
Those bills include incentives for large solar plants and smaller rooftop installations with the assumption that manufacturing facilities will naturally follow those generating facilities.
Discussions centered on finding a compromise that both spurs development and ensures the state reaps the economic benefits that have been touted as a salve for its high unemployment rate and weakened economy.
The Assembly bill, which faces the possibility of a veto by the governor if it passes the Senate, extends tax abatements for renewable energy generation plants that are set to expire by July, and raises the property tax abatements to 55 percent from 50 percent.
Under that bill, companies receiving tax abatements must hire 30 percent of their construction workers from Nevada, unless they’re granted an exemption. The abatements also require the companies to pay higher than average wages to permanent workers and provide health benefits, and pay at least 150 percent of the average statewide wage to construction workers. A commission will grant the benefits based on whether the financial benefits to the state from the jobs offered will be greater than the tax revenue lost to abatements.
Provisions aimed at spurring a manufacturing base, either by offering abatements for manufacturers of renewable energy components or by requiring power plant companies to buy 30 percent of their products from Nevada-based companies, were tossed out early.
“The undercurrent to what’s been discussed is the idea that if you have policies and incentives that will attract enough of the generators to come to the state, the manufacturing would follow that,” said Jim Baak, who has been closely following energy developments in Carson City for the nonprofit organization Vote Solar.
But some solar developers say the reality could be more complicated than the assumption that manufacturers will automatically follow the renewable energy generation projects lured to the state.
Executives base their decision on where to locate manufacturing plants on a variety of factors, including transportation costs, state incentives and tax abatements, and the workforce, they say.
Although Nevada could score high on transportation if the planned tax abatements for solar plants are signed into law and if the vast solar plants planned for the desert come to fruition, some in the state worry that it may lag behind in other areas, such as training and technical manufacturing experience.
SolarWorld’s Oregon plant makes silicon components for photovoltaic solar panels, which are often used on rooftop arrays. Photovoltaics are also used in some large generation plants, such as the 14-megawatt installment at Nellis Air Force Base and Sempra Energy’s 10-megawatt El Dorado plant.
Many other planned and existing large plants use a different technology — solar thermal — which uses mirrors to turn heat from the sun into steam to power a turbine rather than converting sun into electricity.
The decision to base the SolarWorld plant in Hillsboro hinged on a number of factors, said Bob Beisner, a vice president of the company.
The state offered generous tax abatements. Plus, the company was able to buy a 480,000-square-foot semiconductor facility at a steep discount.
The area is filled with Intel chip plants. Training a workforce with that experience to make cells for solar modules has been easy, he said.
“This area is known as the silicon forest,” Beisner said. “There are literally thousands of people who have silicon experience and the educational system supports the electronics. It has been able to modify very quickly to our needs.”
A location close to solar generation facilities isn’t necessary for that type of production, he said, because transportation costs are low.
A stack of 72 cells that make up a solar module is about 3 inches tall and weighs very little. The company sends the cells to a plant in Camarillo, Calif., not far from Ventura, where they’re assembled into modules.
That means that when the parts are assembled into solar panels in their larger and more cumbersome form, they are closer to markets in California and throughout the Southwest where they’re put into service, Beisner said.
In December 2007, former Ausra executive vice president John O’Donnell triumphantly announced that his company had chosen Las Vegas as its manufacturing base to make parts for solar thermal plants. A year later the city seemed poised to become a hub of manufacturing, “a leader in the clean energy revolution,” Sen. Harry Reid said when the plant opened.
Ausra, which at full production will employ 50 workers, chose Las Vegas, O’Donnell said, after Reid shared with the company his vision of the state as a bountiful solar producer.
The recession has since made financing tricky for solar plants, and the process of getting approvals from the Bureau of Land Management, which controls most of the state’s land, has been slow.
Ausra used the plant’s products to install a 5-megawatt plant in Bakersfield, Calif. But Ausra’s assembly lines are idle right now, a spokeswoman said.
Since Ausra’s arrival, no new solar energy manufacturing plants have come to the state.
Instead, Nevada has been eclipsed by other states — notably New Mexico — in attracting solar manufacturers that want to be close to the expected solar generation boom in the Southwest.
Two weeks ago Schott Solar opened a plant in Albuquerque that employs 300 workers and is expected to eventually employ 1,500.
New Mexico Gov. Bill Richardson wooed the company, which manufactures the tubes used in solar plants to carry the liquid that’s heated by the sun and turned into steam to power a turbine. It also manufactures photovoltaic equipment.
“We call them intangible factors — the support at all levels,” Schott spokesman Brian Lynch said of the state’s efforts to win over the company.
New Mexico used training money to pay for 90 employees to travel to Germany to learn about manufacturing, he said.
Like SolarWorld in Oregon, Schott liked that Albuquerque had a history of semiconductor production, which transferred smoothly into photovoltaic plants.
The Las Vegas workforce, of course, has no such expertise.
If Nevada becomes a generation hub, as expected, its proximity to New Mexico will serve the company well, Lynch said.
Mike Skaggs worked for the economic development organization in New Mexico that helped lure Schott to Albuquerque. Last year he became the executive director of the Nevada Commission on Economic Development.
Skaggs thinks manufacturing will follow generation to Nevada, but he says the state also has to be aggressive.
The place where Nevada really trails, Skaggs said, is in providing training funding, such as the $6,000 per employee allotment that New Mexico gave to Schott. He hopes to use federal stimulus money to provide similar funding in Nevada.
He is currently wooing 20 to 25 such companies. Of those, he says, he expects five to close on deals in the next 60 days.
“The two times we have done something for the economy it’s because we had things that made us unique — mining, which is an indigenous resource, and gaming, which we allowed through legislation,” Skaggs said. “Having this BLM property where we can work on developing solar and geothermal plants is unique.”
And as for New Mexico and other states? “I think it will be a very close race,” Skaggs said.
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The casinos will never allow solar manufacturing in Nevada. Why? The solar companies want an educated work force and the casinos don't.
Considering this town's views on education and the lack of support that parents give for their own children's education, any industry that requires a brain will not come to Nevada.
PV cell production from silicon wafers takes copious amounts of water. Something Nevada doesn't have to spare. I'm OK with not attracting them to the state. A large fabrication facility would use more than half a billion gallons of water per year! (at 5,000 wafer starts per week)
If solar manufacturing and use was such a great energy saver the government would not have to give them economic breaks. What they don't tell you about solar thermal plants is when the sun doesn't shine enough to boil the water to generate power, they burn natural gas and cause pollution. If solar electric production made money, we would not have to give the industry incentives, it would sell itself...
Water Water Water
Environmentalist can kill anything with water issues. Keep the money
Don't forget that we're dominated by Union loafers who seem to get whatever they want, even though we're a right to work state. Until we realize that our labor costs are similar to Cali's, and that we're headed in the same direction-i.e. BK, we'll never get much solar work. Oh well, at least the loafers can work on their tan waiting in line at the UI office...
Why does Arizona and New Mexico have multiple solar companies....why does Oregon and California have more, new, "green" industries? Even Utah and Idaho are getting more of the pie....why?
NVEnergy has lobbyist firm, R&R, ask Tony Sanchez. Southwest gas has R&R, ask the former Chairman of the Public Utilities Commission and today's newest Vice President of SW Gas.
Politics! That is why.
While our elected leaders work on getting re-elected Nevada is falling behind, losing jobs and will ultimately lose the energy revolution.
While other Governors are out there working to bring companies to Nevada, we have Gibbons, insulting the President of the United States and arrogantly doing nothing more than grandstanding on all fronts like a male peacock in heat.
Nevada is falling behind due to politics, lobbyists, and the good old network of protectionism used by the new "mob" (politicians at every level) and the fat-cats that support them and their lifestyles.
Nevada needs to clean house, but it won't be easy with these entrenched political mobsters in control and their hands in so many pockets. Much like the bush regime.
If you have to subsidize a company to come to your state you don't want that company. Let some poor taxpayers in other states pay to subsidize those jobs while we reap the benefits (if any) of its production.
Additionally, has anyone wondered if tax cuts are used to attract businesses, what do tax increases do?
The problem with Nevada and alternative energy begins and ends with NV Energy. Until they are willing to pay a fair price per kilowatt hour to independent power producers, the economy of Nevada will wallow in the dust and the journey of Nevada to become Darfur West will continue.
One of the problems that will soon be upon us here in Nevada, is when the water level at Lake Mead evaporates down below the intakes to the dam. It has about 15 feet to go. There will be a huge drop in electricity available.
So how will we all get our water delivered, since the it takes some serious electrical usage to pump it to everyone connected to the water system?
There is NO backup system. But hey, as NV Energy says: "NOT OUR PROBLEM."
NV Energy needs to be "Nationalized" by the state.
And not because it's a good thing to nationalize any business. But because, their corporate officers are so insane, they want to turn Nevada into a giant dust bowl, rather than do a bit of restructuring and changing the old boy way of doing things.
There is not much time until Nevada runs out of electricity.
or we could truly privatize the system and open it up to competition. No set prices by government, all free market prices.
We did it with the telphone industry, why not energy?
How do you learn to wake ?....one foot in front of the other. How do you begin becoming GREEN?One foot in front of the other.All you have to do is take that first step...obviously Neveda still needs to pull their head out of the sand before that will happen.
Nevada has geothermal that will counter-weigh allcriticisms listed above. We're going to be saved in spite of our backwardness, muddle headed thinking, and sheer stupidity. Yes, fortunately for Nevada, we do know the difference between subsidized green energy and a hole in the ground. The hole is our salvation. A thin earth's crust and forced injection geothermal, and it's easy street....
No problem here with privatizing electrical generation. But the grid then becomes a problem.
It has to be a 'commons' for any privatization to work.
The one thing that never seems to be brought up is that you need to make the 'alternative' energy components from existing energy and natural resources. Delaying the inevitable will just mean they will cost more down the road.
As for geothermal ... each well has a limited amount of energy it can produce. Geothermal works,
we need more of it.
As for subsidizing alternatives, if you took away all the subsidies for coal and oil, the price of electricity would be at least 300% and maybe even more higher.
People need to understand the idea of EXTERNALITY which is always swept under the rug when you start to talk to economists and so-called business people.
We did it with the telphone industry, why not energy?
Worked for the telcom industry in the mid 80's when big Ma Bell was "broken up". Broken about described what happened. As my father asked when he heard about deregulation "what does this mean to me?" the answer was very simple; you are going to pay more for the same service. In the long term deregulated tends to bring inovation that would not have been as fast, but it also drives short term pricing up. Enron anyone?