Last month, when local solar power inverter manufacturer PV Powered announced it had to layoff a handful of employees the move appeared on the surface to indicate the solar power industry was feeling the effects of the current recession and that troubled times might lay ahead for Bend-based companies.
Industry insiders say that couldn’t be farther from the truth.
In fact, the sun is just beginning to rise on the solar power industry in Central Oregon, where both regional and state officials are in the middle of a huge push to attract more companies to the region, and where a handful of scrappy startups are trying to carve their own niche in the early days of this burgeoning sector.
Solar power across the state
In the four-state region that consists of Oregon, Washington, Idaho and Montana, more than $3 billion has been invested into solar-related projects since the beginning of 2006, according to Marple’s Pacific Northwest Letter, a monthly publication that has tracked trends in the Pacific Northwest economy since 1949. Those projects include:
- Intel Corp. investing $50 million in a project led by SpectraWatt, a new company developing a 60,000-square-foot manufacturing plant in Hillsboro where 80 employees will make photovoltaic cells used in solar modules.
- A factory making low-cost high-efficiency silicon wafers run by California-based Solaicx opened at the Port of Portland with more than 100 employees.
- SolarWorld AG purchasing the shuttered Kamatsu plant in Hillsboro with plans to consolidate it with the Vancouver operation of Siemens Solar and spend more than $400 million upgrading a combined facility for solar-grade output.
- Portland General Electric (PGE), US Bank and the Oregon Department of Transportation (ODOT) spending $1.3 million to erect solar panels at the Interstate 5 and Interstate 205 cloverleaf in Tualatin as part of the greater Oregon Solar Highway Project with materials and installation being provided by Oregon-based companies, including PV Powered.
Based on these events, state officials have declared solar energy a priority sector in developing the Oregon’s economy, and they are out trying to recruit solar companies to come here and set up shop. One of the key regions for developing the solar power industry is Central Oregon, due in part to its plentiful cool and sunny days, and the number of solar power companies already doing business here.
Local companies in the solar mix
There are five active solar power contract companies in Central Oregon – Abney Solar Electrix, Cascade Sun Works, E2 Powered, Startronics Solar Lighting and Sunlight Solar Energy, Inc. – as well as PV Powered, which is the largest manufacturer of solar power inverter technology in Oregon – at least until SpectraWatt’s Hillsboro facility comes online.
Those contract companies, with an average of four employees, provide solar electric power systems to businesses and homeowners who want to take advantage of the numerous tax credits and incentives offered by the state and use their own solar electric power systems. The systems they install connect users to the existing utility grid and allow them to trade power with the utility. When excess power is made it is exported back to grid and the user gets a credit on their monthly bill. Any excess energy created is used by other nearby homes and businesses, helping neighbors to save energy too, said Chance Currington, project manager for Sunlight Solar.
“Most homes have an analog meter, and on really sunny days you’ll see it spin backwards when they are using solar power,” Currington said.
One local business taking advantage of solar power electric systems is Community First Bank. When it opened its new Mill Quarter Branch at the corner of Arizona and Colorado streets, the bank installed 15-square-foot solar panels on the roof. In July, the bank’s main building used 3,840 kilowatt hours of electricity while generating 1,310 kilowatt hours (the average amount consumed by a house over one month). That means it generated 34 percent of the electricity it used with the panels. CFB’s small drive up building used 1,444 kilowatt hours in July and generated 276 kilowatt hours in the past month, accounting for 19 percent of the building’s demand, according to CFB President and Chief Executive Officer Robin Freeman.
“Since it is summertime, the panels are operating at peak capacity,” Freeman said. “I would expect these numbers to fall as shorter days and cloudy weather reduces production. Sunlight Solar estimated about 20 percent of our electrical consumption would be generated annually from the arrays.”
Currington says Sunlight Solar completed a new installation every week this summer, and that current incentives for businesses to start using solar electric power systems are spectacular; it’s something people should really consider taking advantage of with electric utility rates set to increase dramatically this fall.
“That’s going to spark our industry, and allow a new installation to pay for itself that much quicker,” he said. “We’ve been getting a lot of calls since the rate increase was announced. The same thing is happening with electricity that happened already (with gasoline).”
Solar tax credits and incentives
There are literally dozens of tax credits and incentives available in Oregon to businesses that want to go solar. However, the main ones of interest are:
- Energy Trust Incentive: Customers of Pacific Power receive $1.25 per watt with a maximum incentive of $100,000. Funding is capped at systems 100 kilowatts in size, but larger systems may be installed.
- State Business Energy Tax Credit: Oregon Department of Energy income tax credit for businesses covering 50 percent of installed system costs. If the project exceeds $20,000 it can be claimed over five years at 10 percent a year.
- Modified Accelerated Cost Recovery System: Allows businesses to recover investments in solar over five years through rapid depreciation deductions on federal tax returns.
- Federal Investment Tax Credit (ITC): Available to businesses for projects installed by December 31 and covers 30 percent of installed system costs.
That last one is a major sticking point in the industry at the moment because Congress is on the verge of letting it lapse, which resulted in decreased business and canceled projects for many Central Oregon solar companies, and led to the layoffs at PV Powered.
Solar projects put on hold
Congress is set to vote on renewing the tax credit this month, but some observers say it could hold off voting on the issue until a new administration takes office.
Erick Petersen, vice president of sales and marketing for PV Powered, said layoffs at his company were directly tied to Congress’ indecision regarding the ITC — which totals as much as $2,000 for residential projects and 30 percent for commercial projects — but many projects are being put on hold or canceled as business owners take a wait and see approach before investing in new solar electric power systems. Observers say solar power projects across the U.S. are being delayed in anticipation of Congressional action.
“We are already seeing an impact — this is happening in real time,” Petersen said. “We are expecting a 50-60 percent decline in business, and people are already canceling jobs. Even if Congress comes back in September and extends the ITC before the (presidential) election, the damage really has been done. It’ll be shorter lived if it’s passed again, but a lot of these big projects take months of planning and then weeks or months to do the installation work.”
Petersen said PV Powered’s status as a small company means it can’t afford to wait out the Congressional vote any longer, and that it was forced to make a decision about how to reserve working capital while demand for its products was suspended.
“No matter what happens with the ITC, this is a short-term problem,” he said. “The solar power market is still an incredible opportunity with long-term potential, and there is no real concern that the ITC will not get passed (eventually). In fact, we might even get a better ITC next year. PV Powered remains bullish on where all this is going long term — plenty of opportunities remain here in Bend — but unfortunately in the short term we are experiencing a squeeze.”
Bruce Laird, a consultant with the Oregon Economic and Community Development Department who is working to attract companies here, agrees with Petersen, saying the ITC will eventually be renewed and that current negative effects felt by the industry are nothing more than a hiccup.
“The tax credit is a sore subject in the renewable energy world,” Laird said. “It’s being held up in Congress by certain parties who attached it to a bill on drilling in Alaska, and it is materially harming the development of the industry. It’s really unfortunate because renewable energy, and especially solar power, is one of the brightest sources of new job creation here in Oregon. Not only that, but it would allow the population here to begin generating its own electricity rather than buying and importing it.”
The future looks bright
Right now, the focus in renewable energy across Oregon is existing projects in wind, geothermal, and hydro-electric power, but with the tax credits and incentives that are available, small contract companies on the rise, and an existing “green” mode of thought prevalent across Oregon, the solar industry is on the rise, Laird said.
“Oregon is the leading contender in environmental consciousness, and that matters a lot to the solar industry,” Laird said. “We also have an aggressive renewable energy policy where we want 25 percent of all power generated in the state to come from renewable sources by the year 2025. That creates demand for the product, which in turn creates the need for industry. Oregon is using all of these things to pull solar power companies in.”
Governor Ted Kulongoski recently held an energy summit to discuss the state’s energy future. Gov. Kulongoski brought together leaders from the business community, energy suppliers, consumer advocates, the environmental community, labor leaders and economists to provide their perspectives on Oregon’s needs as the state transitions to a renewable energy economy. At the summit he announced his intention to create an Oregon planning and energy council through executive order in the coming months. The council will meet and report regularly to the governor and legislature with recommendations for legislative and budgetary needs to secure Oregon’s energy future.
Meanwhile, here in Central Oregon economic development leaders are using all of these points to attract new companies to the region. With this in mind, Roger Lee, executive director of Economic Development for Central Oregon, joined state officials this week (Sept. 1-5) at the European Photovoltaic Solar Energy Conference & Expo in Spain, where he plans to tout his home region as the perfect place for companies to come and establish themselves.
“A lot of our effort centers around working with people from the solar industry we already know because they know a lot of leaders in the solar industry and when they talk about what its like doing business in Central Oregon it helps our efforts to attract new companies here,” said Eric Stroble, director of business development for EDCO.
What’s really needed at this point to attract larger solar power companies to Bend is land zoned for industrial development, Strobel said. The region has been overlooked for a lot of solar projects in the past because there have not been any open land parcels big enough for a large company to come here and build a manufacturing plant, research and development facility or a testing center, Strobel said.
“When Juniper Ridge eventually opens up for industrial development there will be some larger parcels that facilities of these kinds of companies can use because they need a lot of space,” he said. “But there are other features unique to Central Oregon working in our favor. For instance, one of the best ones is that we already have (PV Powered) a first class solar company operating here. And we have an available workforce, relocation incentives, and plenty of sunshine. Businesses are starting to take notice, and I think that eventually, possible sooner rather than later, we could become the leading solar power region in the U.S.”
Bend Solar Power Companies
ABNEY SOLAR ELECTRIX
Specializes in renewable energy systems for rural residential units not already connected to the power grid.
Address: 11244 NW Kingwood Dr., Redmond
CASCADE SUN WORKS, INC.
Provides contracting, engineering, installation, service and maintenance for all areas of the renewable energy field.
Address: 2444 SE First Street, Redmond
Specializes in renewable energy systems for residential and commercial applications with an emphasis on efficiency, aesthetics, and innovation.
Address: 550 SW Industrial Way #22, Bend
STARTRONICS SOLAR LIGHTING
Lighting installation and products for backyard sheds, public restrooms, transit shelters, signs, mailbox kiosks, cabins, storage containers, traffic warning signals and outdoor area applications.
Address: 63065-D Sherman Road, Bend
SUNLIGHT SOLAR ENERGY, INC.
Provides grid-tied, solar electric installation for homes and or businesses, as well as photovoltaic design and installation.
Address: 4 NW Franklin Avenue, Bend