Green Business

China Solar Panel Maker Sets First U.S. Plant


China's Suntech Power Holdings (STP) is no newcomer to the U.S. Last May, President Barack Obama toured the U.S.'s largest solar panel installation at Nellis Air Force Base in Nevada. There, row upon row of shiny black Suntech panels account for about a third of the 14-megawatt solar farm. Suntech landed that project the same way it has raced to the top of the fast-growing global solar market: by focusing on price and scale. Now the world's largest supplier of solar panels is boosting its stake in the U.S. market. On Nov. 16 in Beijing, the company announced its first American manufacturing plant. The facility, to be located in the Phoenix area, will begin production by next October. "The U.S. market is on the cusp of greatness," says Steven Chan, Americas president and chief strategy officer for Suntech. With the announcement, Suntech becomes the first major Chinese cleantech player to bring factory jobs to the U.S. The announcement comes amid President Barack Obama's visit to China focusing on collaboration in green technologies. Suntech's move may soften criticism from U.S. lawmakers worried that low-cost factories in China will snare new green manufacturing jobs before they even have a chance to take root in the U.S. "[Suntech's] decision to bring manufacturing here to the U.S. is a great sign of the increasingly important collaboration between Chinese and American leaders in the renewable-energy industry," said Dan Kammen, a professor in the energy and resources group at the University of California at Berkeley, in a statement provided by Suntech. most U.S. cleantech grants go overseasSuntech's investment comes as anxieties are rising in Washington over foreign domination of the U.S. cleantech space. In late October the announcement of a Chinese-U.S. consortium planning to build a wind park in Texas using imported Chinese turbines led to calls that federal subsidies should be pulled from the project.The same month, a report from the Investigative Reporting Workshop found that in the wind sector, where foreign manufacturers dominate the market, overseas companies have received 84% of more than $1 billion in federal clean-energy grants released since Sept. 1. The study did not focus on solar energy, but the majority of solar panels are also produced by European and Asian companies. By industry standards, Suntech's first U.S. facility will be modest. When its doors open, it will have capacity to make 30 megawatts of solar panels per year, enough to outfit around 7,500 homes. The site will have the flexibility to boost output to 200 megawatts in time. By comparison, U.S. sales peaked at 494 megawatts in 2008. After the recession softened sales this year, U.S. solar sales are expected to climb to more than 1,000 megawatts in 2010, predicts Chan, buoyed by the growing effects of federal and state subsidies for green-energy installations."It's a toss-up as to whether the U.S. or China will be the largest market in the world next year," says Chan. Based in Wuxi, Jiangsu province, Suntech is the top vendor of crystalline photovoltaic solar panels in both countries. Suntech settled on the Greater Phoenix area because of Arizona's strong encouragement of solar energy and research, says Chan. The state has a Renewable Energy Standard, requiring that 15% of all electricity come from renewable sources by 2025. The rules also favor so-called distributed generation, where power is made locally at houses or businesses from solar panels or other renewables. Finalists in the contest for the factory site included California, New York, Oregon, and Texas. "This is the first step in what I see as a long-term strategic investment in the North American market," said Suntech Chairman and CEO Zhengrong Shi in a statement. shorter delivery, lower costsStarting with a staff of 75, workers at the factory will create finished panels from subcomponents. Solar cells, manufactured in Suntech's Chinese facilities, will be imported and assembled by factory workers into grids mounted on metal frames. Once the cells are soldered together, the assembly will be laminated in durable layers of glass and sealants before the finished panel can be shipped and installed on a house or business rooftops. Locating assembly in the U.S. will lower delivery time and costs, as well as reduce the overall carbon footprint of getting finished panels to U.S. customers, says Chan. Suntech is initially budgeting $10 million for the new facility, slated to be approximately 80,000 to 100,000 square feet, but expects to invest tens of millions more as it scales up. Even a slight pricing advantage could help fortify Suntech's market edge. Last year market prices for finished panels collapsed by about 50% across the industry. The fall was good news for consumers. In some high-cost electricity markets, such as Hawaii, panel prices fell low enough to compete on cost with electricity from conventional sources. In California, where three of every four panels are sold in the U.S., the price for a standard four-kilowatt rooftop installation on a home fell by half in the past year and a half, to just north of $10,000, including state and federal incentives. The pricing collapse hurt solar stock prices, though. During the run-up of cleantech stocks in 2007, Suntech was the darling of the solar sector. Its shares peaked at $85 that December before falling by over 50% in the first quarter of 2008. Dragged down by the broader recession, a glut of solar inventory, and worries about excess industry capacity, the shares bottomed out in early 2009 at under $6 and have since been trading between $12 and $20.
Adam_aston
Aston is Energy & Environment editor for BusinessWeek in New York.

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