New Solar Panel Factory Is Destined for Oregon

Over the past year, states have jockeyed to create so-called "green jobs" by showering incentives on renewable energy companies seeking to set up factories. Oregon is the latest state to notch a big win in that effort: A Silicon Valley solar company has announced plans to build a large factory near Portland.

Solexant is getting a $25 million loan and $18.75 million in tax credits for the plant, which will be able to produce 100 megawatts of solar panels per year. The startup company is developing a rather unusual technology to build its thin-film solar panels, which will be made up of nanocrystals of cadmium and tellurium for converting sunlight into electricity. This type of panel gets its name because they are thinner than the more commonly seen solar panels, which are made from silicon, the same material used in that chips that run computers, cell phones and iPods.

The incentives, which come from state of Oregon and the city of Gresham, are critical for a small company such as Solexant that is attempting to commercialize its technology. The company, founded in 2006, has a 2-megawatt pilot production line at its headquarters in San Jose, Calif., that it uses to test its manufacturing process, but it needs a larger factory in order to produce solar panels in greater volumes and cut manufacturing costs.

Aside from Oregon's incentive package, Solexant will rely on the $41.5 million in venture capital it raised recently to build the factory, which it plans to complete next year. The project would generate as many as 200 jobs, the company says.

Oregon already is home to another large solar panel factory, owned by Germany-based SolarWorld (SRWRY). SolarWorld earned a slice of the media spotlight last week when it debuted a video at a large solar energy trade show in San Francisco featuring actor Larry Hagman. In the video, Hagman, who played a Texan oilman in the once hugely popular prime time soap Dallas, extolled the virtues of solar power and quipped "Shine, baby, shine," in a reference to Sarah Palin's chant of "drill, baby, drill."

Incentives Only Go So Far

Other states that have successfully lured solar panel makers to set up factories -- or at least announce plans to do so -- include California, Michigan, Arizona and New York. In some cases, the solar panel makers were able to secure large federal loans or loan guarantees for their factory-building plans. Solyndra, for example, has received $535 million in a loan to build a plant in Fremont, Calif. Most recently, the U.S. Department of Energy announced $400 million in loan guarantees for Abound Solar to build new production lines in Colorado and Indiana.

But getting government incentives is no guarantee that a factory will get up and running as planned, generating clean energy and jobs.

Yingli Green Energy (YGE), for example, decided in May this year to postpone its plan to build a 100-megawatt factory either in Arizona or Texas, says Helena Kimball, a spokeswoman for the Chinese solar panel maker. Yingli has approval for $4.5 million in federal tax credit for its planned manufacturing operation.

Concerns about the weakness of the euro against the U.S. dollar and worries that its European customers wouldn't pay for the more expensive panels from the U.S. factory prompted the company to put that factory plan on hold, Kimball says. Europe is Yingli's largest market.