Business live chat with Molly Young, Rich Read: Talk SoloPower, solar incentives
Monday February 18, 2013
2:59
The Oregonian: 
Hello and welcome to our live chat on SoloPower and solar incentives. Reporters Molly Young and Rich Read will join us at noon Tuesday. Until then, feel free to submit questions and comments. We'll start to feed your posts into the chat at noon Tuesday.
Monday February 18, 2013 2:59 The Oregonian
Tuesday February 19, 2013
11:59
Rich Read: 
Hi, this is Rich Read, I cover the solar industry and other topics for The Oregonian. We welcome your comments and questions.
Tuesday February 19, 2013 11:59 Rich Read
11:59
Molly Young: 
Hi, this is Molly Young. I cover the economy and jobs for the The Oregonian. Thank you for joining us.
Tuesday February 19, 2013 11:59 Molly Young
12:00
The Oregonian: 
Welcome all. Molly, why don't you get us started by talking a bit about how this Sunday's story on SoloPower come to be? Why now?
Tuesday February 19, 2013 12:00 The Oregonian
12:01
Molly Young: 
We found out last week that SoloPower was renegotiating its federal $197 million loan commitment.
Tuesday February 19, 2013 12:01 Molly Young
12:02
Molly Young: 
Then, we learned that top executives had left the company, and Oregon had just greenlighted a $20 million tax credit for the Portland factory.
Tuesday February 19, 2013 12:02 Molly Young
12:03
The Oregonian: 
So we're talking city, state and federal dollars? Can you describe those incentive packages? How much do taxpayers have invested?
Tuesday February 19, 2013 12:03 The Oregonian
12:03
Molly Young: 
The state has extended a $10 million loan, backstopped by $5 million from the City of Portland and PDC.
Tuesday February 19, 2013 12:03 Molly Young
12:03
Molly Young: 
A second $10 million loan is on hold.
Tuesday February 19, 2013 12:03 Molly Young
12:05
The Oregonian: 
Readers, what do you think about the incentives? Are you in favor of public money being used to help the solar industry?
Tuesday February 19, 2013 12:05 The Oregonian
12:05
Molly Young: 
A $20 million state tax credit was also approved for SoloPower in December. It can sell those credits at a discount, and net around $13.5 million in cash.
Tuesday February 19, 2013 12:05 Molly Young
12:05
Rich Read: 
I attended SoloPower's official factory opening in September. Managers said then that in addition to the subsidies, SoloPower had attracted $219 million in private investment.
Tuesday February 19, 2013 12:05 Rich Read
12:05
Molly Young: 
It also stands to save about $17.9 million through an enterprise zone agreement.
Tuesday February 19, 2013 12:05 Molly Young
12:06
Molly Young: 
With PDC.
Tuesday February 19, 2013 12:06 Molly Young
12:06
[Comment From BailieBailie: ] 
Does SoloPower have a significant backlog of orders?
Tuesday February 19, 2013 12:06 Bailie
12:06
The Oregonian: 
Good question, Bailie. Molly and Rich, how is the company performing so far?
Tuesday February 19, 2013 12:06 The Oregonian
12:07
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Tuesday February 19, 2013 12:07 
12:07
Rich Read: 
At the September opening, then-CEO Tim Harris told me his anxiety had switched from "Can I get customers fast enough?" to "How can I get those customers satisfied and take advantage of this opportunity?" But he didn't give backlog figures.
Tuesday February 19, 2013 12:07 Rich Read
12:09
[Comment From JamesJames: ] 
Are the incentives enough for help our industry? Are the solar industry in trouble for the aggressive competition with low-cost products from China?
Tuesday February 19, 2013 12:09 James
12:09
The Oregonian: 
That's a two-parter. Part 1 goes to Molly. Part 2 speaks to Rich's expertise.
Tuesday February 19, 2013 12:09 The Oregonian
12:10
Rich Read: 
Yes, James, SolarWorld won a trade case, as you may know, in which the US government found that China had illegally subsidized Chinese solar exporters, which dumped their product at unfair prices in the United States, depressing prices for the whole industry.
Tuesday February 19, 2013 12:10 Rich Read
12:10
Molly Young: 
It's tough to say whether incentives can save the industry, or any specific solar players. California-based Solyndra failed despite large federal loan guarantee. And many other publicly backed companies have shuttered, too. However, one analyst told me that most thin-film manufacturers like SoloPower would not survive without incentives.
Tuesday February 19, 2013 12:10 Molly Young
12:11
[Comment From BailieBailie: ] 
Are they in direct competition with SolarWorld (Hillsboro) another highly subsidized company?
Tuesday February 19, 2013 12:11 Bailie
12:12
The Oregonian: 
Another side of that question; Are they competing for public subsidies?
Tuesday February 19, 2013 12:12 The Oregonian
12:12
[Comment From JanJan: ] 
As progressively environmentally concscious as we are, shouldn’t we as a state be supporting innovative clean energy companies like this?
Tuesday February 19, 2013 12:12 Jan
12:13
Rich Read: 
SoloPower and Solarworld, the German company with a factory in Hillsboro, occupy different niches in the industry. SoloPower is developing "thin film" panels, essentially sheets of solar material designed to be rolled on our big-box rooftops. SolarWorld is a long established manufacturer of the more conventional style of rigid solar panels, made up of solar cells that the company also manufactures.
Tuesday February 19, 2013 12:13 Rich Read
12:14
Molly Young: 
Good question, Jan. Five years ago, that was one of the arguments for attracting renewable energy manufacturers to Oregon. The manufacturing business energy tax credits were crafted to help spur the industry.
Tuesday February 19, 2013 12:14 Molly Young
12:14
[Comment From GuestGuest: ] 
The reportage has emphasized subsidies for the solar industry, but haven't we been providing tax breaks and public money to anyone offering to bring jobs to the region? Is this really so much about targeting industry clusters (tech, athletic apparel, etc.), picking winners or losers, or is our economic development strategy really offer incentives to anyone willing to locate here.
Tuesday February 19, 2013 12:14 Guest
12:14
[Comment From BailieBailie: ] 
Why does Oregon governments choose to "pick winners" regardless of market forces?
Tuesday February 19, 2013 12:14 Bailie
12:15
[Comment From edguntheredgunther: ] 
any word on what milestones SoloPower has missed? Mfg ramp, efficiency, sales?
Tuesday February 19, 2013 12:15 edgunther
12:16
Molly Young: 
Thanks for the question, Ed. SoloPower's first manufacturing line was set to come on line by spring of 2012. It's new estimated completion date is March-April 2013.
Tuesday February 19, 2013 12:16 Molly Young
12:16
Rich Read: 
The solar industry looked pretty promising, Bailie, when Oregon economic development officials began recruiting manufacturers. The recruiters relied on projections showing rising demand for renewable energy. Oregon's semiconductor workers have skills that align well with solar manufacturers, which use silicon technology.
Tuesday February 19, 2013 12:16 Rich Read
12:17
[Comment From BailieBailie: ] 
I understand they have a different product, but aren't they competing for the same consumer dollar?
Tuesday February 19, 2013 12:17 Bailie
12:17
Molly Young: 
It also said that first line would create 140 jobs, plus R+D jobs. The company won't say how many they employ today, but in September, they put their workforce at 60.
Tuesday February 19, 2013 12:17 Molly Young
12:17
[Comment From edguntheredgunther: ] 
Wow, I thought limited production began in late September?
Tuesday February 19, 2013 12:17 edgunther
12:19
Molly Young: 
Ed, the company did hold a ribbon-cutting in September, but state officials say they are still fine tuning the lines. All of the equipment is in place, they say.
Tuesday February 19, 2013 12:19 Molly Young
12:19
Rich Read: 
Bailie- SolarWorld and SoloPower would tell you that they're targeting different markets. SolarWorld's conventional rigid panels do well on residential rooftops, and also in commercial settings in bigger arrays. But SoloPower maintained that big-box rooftops aren't strong enough to bear the weight of conventional panels. One analyst told me she estimated a $5.4 billion market in 2017 for thin film of the type made by SoloPower.
Tuesday February 19, 2013 12:19 Rich Read
12:19
[Comment From NicoleNicole: ] 
How many companies in the solar industry does the state offer incentives to?
Tuesday February 19, 2013 12:19 Nicole
12:20
[Comment From BailieBailie: ] 
Yeah, the same could be said for the bio-diesel plants that went under. Who pays for these broken plans?
Tuesday February 19, 2013 12:20 Bailie
12:20
Molly Young: 
Good question, Nicole. One of the main programs for solar industry manufacturers is Oregon's MBETC program, now managed by the state's biz development department Business Oregon.
Tuesday February 19, 2013 12:20 Molly Young
12:21
Molly Young: 
Solaicx/MEMC in Portland, SolarWorld in Hillsboro, Sanyo Solar in Salem have all received tax credits through the program.
Tuesday February 19, 2013 12:21 Molly Young
12:22
Rich Read: 
Bailie- When subsidized companies go under, the taxpayers are out the money. Except if a company has operated several years and employed a good number of people before going under, the taxpayers may not have lost anything.
Tuesday February 19, 2013 12:22 Rich Read
12:22
Molly Young: 
Nicole- Some companies, including Centrosolar, Solexant, and FT Material Solutions, were offered the tax credits but ultimately did not receive them.
Tuesday February 19, 2013 12:22 Molly Young
12:22
[Comment From JanJan: ] 
That's 60 employees in the workforce and off the unemployment roles. If the new live date is in the next 60 days, will you be doing a follow up story?
Tuesday February 19, 2013 12:22 Jan
12:23
[Comment From GuestGuest: ] 
Considering the proliferation of cases like this, and the budget crunch state governments are feeling, are governments less enthusiastic about giving out tax breaks -- or is the competition between states still very intense?
Tuesday February 19, 2013 12:23 Guest
12:24
Molly Young: 
Jan, we'll follow the company's progress as it ramps up manufacturing.
Tuesday February 19, 2013 12:24 Molly Young
12:25
Rich Read: 
Guest, in Oregon the BETC tax credit awarded multiple times to SolarWorld, Sanyo and other companies is being phased out. It ended in 2012 for renewable energy generation facilities. It'll end in 2014 for manufacturers.
Tuesday February 19, 2013 12:25 Rich Read
12:25
[Comment From BailieBailie: ] 
Isn't it common sense to wonder why Oregon would subsidize businesses that cannot make it on their own without subsidies? Especially for energy production that is considerably more expensive than other forms of energy production?
Tuesday February 19, 2013 12:25 Bailie
12:25
[Comment From TSTS: ] 
How did you learn that the management has left?
Tuesday February 19, 2013 12:25 TS
12:26
Molly Young: 
TS, state business filings showed that there was a change in leadership, and we followed up from there.
Tuesday February 19, 2013 12:26 Molly Young
12:27
The Oregonian: 
Why did SoloPower leave Wilsonville? Were fewer incentives offered there?
Tuesday February 19, 2013 12:27 The Oregonian
12:28
Rich Read: 
Bailie- Solar execs argue that they need subsidies until they can achieve economies of scale in order to hit grid parity, when the price of solar power drops to the equivalent of other energy sources. Solar advocates also point out that fossil fuel gets huge government subsidies.
Tuesday February 19, 2013 12:28 Rich Read
12:28
Molly Young: 
No, actually Wilsonville city councilors approved an $11 million in incentives for the company, including a $4 million loan from the city's general fund. But residents launched a petition drive to force the move to a public vote.
Tuesday February 19, 2013 12:28 Molly Young
12:28
The Oregonian: 
Readers, we have Molly and Rich for about 10 more minutes. What else do you want to know? Or say about these issues?
Tuesday February 19, 2013 12:28 The Oregonian
12:29
Molly Young: 
At the time, SoloPower CEO Tim Harris said the delay would slow the company's timeline, and it began to look at other sites.
Tuesday February 19, 2013 12:29 Molly Young
12:29
[Comment From BailieBailie: ] 
SolarWorld will be going bankrupt when they won't be able to pay/refinance their bonds in October. How much will Oregon be out when that happens?
Tuesday February 19, 2013 12:29 Bailie
12:30
Molly Young: 
Weeks later in May 2011, the city of Portland and the PDC stepped in with a $5 million loan guarantee.
Tuesday February 19, 2013 12:30 Molly Young
12:30
[Comment From BailieBailie: ] 
What is the primary reason for the "delays"?
Tuesday February 19, 2013 12:30 Bailie
12:31
Rich Read: 
Bailie, You're right, SolarWorld faces huge financial challenges as it undergoes drastic restructuring. Bankruptcy is one possibility, but CEO Frank Asbeck maintains the company will survive. Oregon has given SolarWorld $42 million worth of tax credits so far. The company has employed 1,000 at times and generated business for suppliers and others.
Tuesday February 19, 2013 12:31 Rich Read
12:31
Molly Young: 
Bailie, neither company leaders or state officials have talked about what's causing the delays. But analysts tell me that it's common for solar panel manufacturers developing a niche product to experience challenges as it attempts to ramp up to commercial production.
Tuesday February 19, 2013 12:31 Molly Young
12:32
[Comment From GuestGuest: ] 
Seems almost beyond picking winners and losers. So with the state giving incentives to both SolarWorld and SoloPower despite divergent and one might observe competing technologies, was this a kind of hedge strategy? The the State figure one technology would triumph and having backed both technologies, the State would hope its gain on the winning technology offset it's loss on the losing technology?
Tuesday February 19, 2013 12:32 Guest
12:33
[Comment From JanJan: ] 
Subsidies are given to big oil every day even though they continue to reap record earnings and $3.50 gas prices. We can give innovative companies subsidies on a much lower scale to ensure we are competitive, renewable energy sources in the NW and the US. Kudos to SoloPower
Tuesday February 19, 2013 12:33 Jan
12:33
[Comment From JayJay: ] 
Does any state agency track the job creation or return on investment in tax dollars of these subsidies? Does Business Oregon?
Tuesday February 19, 2013 12:33 Jay
12:34
Rich Read: 
Guest, state officials recruited some established manufacturers, such as Sanyo from Japan and SolarWorld from Germany. They also targeted some longshots, such as SoloPower, a startup with unproven technology.
Tuesday February 19, 2013 12:34 Rich Read
12:34
Molly Young: 
Jay, Business Oregon does track the job numbers tied to the projects. Businesses must meet certain benchmarks for five years to comply with their manufacturing BETCs.
Tuesday February 19, 2013 12:34 Molly Young
12:34
[Comment From BailieBailie: ] 
Molly, is the primary reason because there is not the anticipated demand for product? That would be my guess.
Tuesday February 19, 2013 12:34 Bailie
12:34
Molly Young: 
But, Business Oregon says those employment counts and manufacturing levels are trade secrets and exempt from public disclosure.
Tuesday February 19, 2013 12:34 Molly Young
12:35
[Comment From GuestGuest: ] 
How is Sanyo performing?
Tuesday February 19, 2013 12:35 Guest
12:35
Rich Read: 
Sanyo? Quietly. We need to check in on them.
Tuesday February 19, 2013 12:35 Rich Read
12:35
Molly Young: 
Sanyo has received 2 $20 million tax credits for its site, first approved in 2009. They were later granted in 09 and 10.
Tuesday February 19, 2013 12:35 Molly Young
12:36
Molly Young: 
I misspoke -- they were issued in 10 and 11.
Tuesday February 19, 2013 12:36 Molly Young
12:36
[Comment From BailieBailie: ] 
Or, better yet, how is SolarWorld performing?
Tuesday February 19, 2013 12:36 Bailie
12:37
[Comment From GuestGuest: ] 
So Sanyo received about $2 million less in incentives than SolarWorld? Were they involved in the trade dispute?
Tuesday February 19, 2013 12:37 Guest
12:37
Molly Young: 
Sanyo wasn't involved in the trade dispute, Guest.
Tuesday February 19, 2013 12:37 Molly Young
12:38
Rich Read: 
Bailie- SolarWorld burned through nearly 60 percent of its cash reserves during the first three quarters of 2012. It lost $322 million before taxes during that period. It had $1.4 billion in debt. It's hardly alone in that predicament. Many Chinese solar companies are zombies, propped up up government bailouts.
Tuesday February 19, 2013 12:38 Rich Read
12:38
Molly Young: 
Also, I'm not sure where the incentive figure comes from, Guest, but SolarWorld is in line to receive significantly more through the MBETC program than Sanyo.
Tuesday February 19, 2013 12:38 Molly Young
12:40
The Oregonian: 
How about a quick state-of-the-industry update. Is solar bouncing back?
Tuesday February 19, 2013 12:40 The Oregonian
12:40
The Oregonian: 
So how about a quick state-of-the-industry update. Any signs that solar is bouncing back?
Tuesday February 19, 2013 12:40 The Oregonian
12:41
[Comment From BailieBailie: ] 
SolarWorld's stock price has gone down from $35.00 to $1.00 in the last five years.
Tuesday February 19, 2013 12:41 Bailie
12:42
The Oregonian: 
How about a quick state-of-the-industry update: Any signs that the solar industry is bouncing back?
Tuesday February 19, 2013 12:42 The Oregonian
12:42
[Comment From JamesJames: ] 
All of us know that solar energy is one of the most effective tools to ensure energy and avoid pollution in the future. Why is it so difficult for the solar industry? What should be changed?
Tuesday February 19, 2013 12:42 James
12:42
[Comment From BailieBailie: ] 
"Is solar bouncing back"? You must be kidding.
Tuesday February 19, 2013 12:42 Bailie
12:43
Rich Read: 
James- The solar industry faces competition not just from China, which can take advantage of a loophole to evade tariffs, but from wind (which got its federal tax credit extended) and natural gas, ever cheaper what with fracking. That said, low panel prices are great for consumers. Solar companies left standing after the current fallout could enjoy a big market.
Tuesday February 19, 2013 12:43 Rich Read
12:43
[Comment From GuestGuest: ] 
Does the State still have to delover the credits if the Company is in default of its debt covenants. With the ability to sell those credits, an out of compliance borrower could basically use that the way a bankrupt compnay uses debtor in posession financing. Essentially it becaomes a taxpayer funded restructuring.
Tuesday February 19, 2013 12:43 Guest
12:43
[Comment From MikeMike: ] 
Appreciate your reporting on this subject, both of you.
Tuesday February 19, 2013 12:43 Mike
12:44
Rich Read: 
Thanks, Mike. It's been a wild ride.
Tuesday February 19, 2013 12:44 Rich Read
12:44
[Comment From BailieBailie: ] 
What is the difference between U.S. subsidies and Oregon subsidies?
Tuesday February 19, 2013 12:44 Bailie
12:44
Molly Young: 
Bailie, the difference between state and federal subsidies varies for each manufacturer. SoloPower, for instance, received a $20 million state tax credit, $10 million state loan (another $10 million is on hold) and a $197 million federal Department of Energy loan guarantee. That money was meant to help it ramp up production lines 2-4.
Tuesday February 19, 2013 12:44 Molly Young
12:45
[Comment From JanJan: ] 
Thank you for covering this issue. I look forward to a follow up to see how their launch fairs
Tuesday February 19, 2013 12:45 Jan
12:46
Molly Young: 
Guest, the state has the ability to delay or deny the credits if companies don't meet their terms. One of the reqs for final cert is that it shows it will be operating for five years.
Tuesday February 19, 2013 12:46 Molly Young
12:46
Rich Read: 
Bailie- SolarWorld's trade coalition maintains Chinese subsidies are far larger than US subsidies, and illegally support a massive export drive designed to corner markets abroad.
Tuesday February 19, 2013 12:46 Rich Read
12:46
The Oregonian: 
Looks like we're about out of time. Molly, Rich, readers, any last thoughts before we go?
Tuesday February 19, 2013 12:46 The Oregonian
12:47
[Comment From GuestGuest: ] 
Yes. This is a very important story. I hope you continue to pursue it since I think it's got a ways to run yet.
Tuesday February 19, 2013 12:47 Guest
12:48
Molly Young: 
Thank you for all joining, this was a great discussion. Feel free to email me at myoung@oregonian.com if any more questions arise.
Tuesday February 19, 2013 12:48 Molly Young
12:48
Rich Read: 
SolarWorld is pinning hopes on not only financial restructuring but on potential European tariffs on Chinese products, to be decided this spring. Meanwhile SolarWorld and other European companies are under pressure as government subsidies there decline.
Tuesday February 19, 2013 12:48 Rich Read
12:49
Rich Read: 
Thanks for the chat. I'm at richread@aol.com, for any news tips.
Tuesday February 19, 2013 12:49 Rich Read
12:50
The Oregonian: 
Thanks all for joining today's chat. Keep up with reporting from Rich and Molly at www.oregonlive.com/business. And join us weekdays at noon for more live chats on OregonLive.com
Tuesday February 19, 2013 12:50 The Oregonian
12:50
 

 
 
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