The Right Way to do Solar Manufacturing in the US

I was reading with sadness about the decision by BP Solar to shut down the Frederick, MD manufacturing facility. As many of you may know, I worked for BP Solar and this facility was the first real large scale solar mfg facility in the United States. Solarex (bought by BP) perfected the use of polycrystalline silicon (vs. mono) and pioneered it at this facility. More importantly, BP Solar will keep the R&D staff and function — this is important because they are some of the best in the world.

I was asked by the Obama Administration back in February 2009 to, “help bring solar manufacturing to Michigan”. My response was:
  1. Solar is practically illegal in Michigan (see solar bill of rights here)
  2. US hasn’t had a manufacturing policy in years and I wouldn’t imagine why anyone with half a brain would mfg in the US when you can achieve such a low cost of mfg in Germany, China, Malaysia, etc
  3. US has to invest some time in this space to help elected officials understand the drivers of our cost cycle. In fact, labor is not the dominant COGS for solar PV (although it is not insignificant). The biggest drivers that the government could help with are:

  • Fully automated plants (crystalline) costs about $2.5/Wdc or $2.5B for a 1,000 MW plant. So the government needs to match the 50% capex subsidy other governments provide as they have for battery mfg
  • Property taxes can be a killer that local governments can help with
  • Electricity prices. With our rising electricity prices, other governments offer $0.04/kWh
  • Tax abatements. The Obama adminstration must be out of its mind when it suggested raising taxes on Corporations. We are one of the highest tax places in the World. Raise taxes on the rich and everyone else but for heaven sake we have to reduce corporate taxes by at least half in this country. Malaysia and others offer a 10 year tax holiday for new mfg.

The reason manufacturing matters is that the US is huge and uses alot of stuff. To take the approach the UK has done and just become a service economy won’t work. Further manufacturing has a much larger multiplier of other jobs that support each plant from suppliers to logistics, to local services.
We squandered Billions of stimulus money on consumption for new solar and wind projects. Instead we should have spent that money on Solar and Wind manufacturing. On the projects side all we need is for the Federal government to use the bully pulpit to embarrass State public utilities commissions who keep approving higher cost electricity projects from new Coal, Nuclear, and Natural Gas compared to much lower cost distributed generation from solar, fuel cells, energy efficiency, targeted smart grid, and targeted storage.
By the way the Obama administration has done some great things like working on reducing health care costs for small businesses. Now it is time to get them to focus on this issue.
Jigar Shah
CEO, Carbon War Room
Founder SunEdison LLC
2 replies
  1. Mike Galiazzo
    Mike Galiazzo says:

    Well stated comment on BP Solar and public policy. Many public policy-makers are unaware of modern manufacturing in the US and that manufacturing supports the economy and provides good paying jobs. Fewer policy-makers understand that manufacturers make the products, like solar panels, that make a difference in creating a cleaner environment. Even less are aware that within manufacturing there are ever increasing efforts to be more sustainable. Policy-makers and manufacturing leaders should focus on creating wholly sustainable companies and policies that promote all key elements of sustainability. Wholly sustainable companies create cleaner products, processes and “greener” jobs.Mike Galiazzo, PresidentRegional Manufacturing Institute of Maryland

  2. John Whitney
    John Whitney says:

    Mr. Shah:
    I would like to develop a clear and comprehensive schedule of incentives and pre-existing conditions (example: low cost electricity) that can be presented to economic development agencies. Kind of a "You do this and you will get the attention of the international renewable energy manufacturing companies."

    I've been doing my research and can put together a preliminary list. Would you be interested in sharing your expertise?

Leave a Reply

Want to join the discussion?
Feel free to contribute!