Keeping Greentech Manufacturing in California

How does the U.S. keep solar and other greentech manufacturing alive in this country?  And how do states make sure that companies founded in their region stay in their region?

California is a good example of how to drive manufacturing out of the state.  Solar companies such as Twin Creeks, Solexant, AQT, and many others, all founded in California, have received better offers from other states on land, debt, taxes and employee training than California was able to provide. 

Solexant's CEO, Damoder Reddy, spoke to us about California's attitude.  The CEO spoke of spending a lot of time travelling to Sacramento and getting a tepid response from California lawmakers.  Yet when he traveled to Ohio or Michigan or Oregon, politicians and senators were willing to give Reddy time and try to figure out ways to get the firm to relocate to their state.  Not so in California.  In the CEO's words, "There's something fundamentally wrong in the way California does business."  The firm expects to spend $40 million in capital expenditures and Oregon made the winning overtures in their effort to build a solar manufacturing hub in the state. Reddy seemed to want to keep the firm in California, but said, "I had to do what was right for my company."  

Michael Kanellos reported on Twin Creeks here.  That secretive firm is building a solar factory in Senatobia, Mississippi.  CIGS solar cell aspirant, AQT, is setting up volume production in South Carolina.  MiaSole's next big factory probably won't get built in California.

An exception that might prove the rule is SunPower's Milpitas, California production line at Flextronics.

Perhaps California has figured out a way to slow down the bleeding -- by not charging sales tax on manufacturing equipment purchases.

In March of 2010, California Governor Arnold Schwarzenegger signed SB 71 into law.  SB 71 authorizes the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) to provide eligible projects with financial assistance in the form of a sales and use tax exclusion on property used for the "design, manufacture, production, or assembly" of either advanced transportation technologies or alternative energy source products, components or systems.

 

The following list is the first group of companies to be approved.  More will be considered for the next hearing scheduled for December 15.  Each company has up to three years to purchase Qualified Property up to the amount of funds approved and be exempt from sale and use taxes.  "Qualified Property" is property used in the production of an alternative energy product.

Of note in the list is the sheer size of these potential purchase numbers: $381 million for Solyndra, $140 million for Nanosolar and $105 million for Stion. Thin film leader First Solar makes an appearance with their "secret" Santa Clara facility.  And Dave Pearce's newish CIGS startup Nuvosun also makes an appearance, along with fuel cell aspirant Bloom Energy.

More details in this PDF:  http://treasurer.ca.gov/caeatfa/staff/20101117/4b.pdf

Solar startups need all the help they can get. Solar panel or wafer production basically has three inputs: energy, labor and capital, and all are being subsidized by the Chinese government.  Keeping up with this type of competitive dynamic crushes margins and makes life very difficult for an American startup.  It's difficult to underestimate the impact of China in solar, and state incentives and federal policy can help level the playing field.