Energy costs, tax credits make solar panels hot

By Thomas V. Bona

BusinessRockford.com

How photovoltaic solar panels work

Wanxiang Group’s proposed solar panel assembly plant here may be the Chinese corporation’s first U.S. foray in that field, but it’s got company.

Domestic manufacturing of photovoltaic panels and units — which convert sunlight directly into electricity — increased 74 percent in 2007, according to the Solar Energy Industries Association (see data for annual domestic shipments). Meanwhile, the number of installed units — when measured by the electricity they create — increased by 45 percent. It’s the latest in several years of significant growth in the use of solar power in the U.S.

“What’s really happening is that we’re seeing rising energy costs affecting everyone, businesses and families. They’re very motivated to find new alternatives,” said Neal Lurie, spokesman for the American Solar Energy Society. “It used to be 40 percent (annual increases) of a small number, now it’s 40 percent of a large number.”

Solar energy still only accounts for 1 percent of the country’s energy supply, according to federal data. But the fact that major international companies like multibillion-dollar Wanxiang Group are now investing here means they see potential. It’s similar to how U.S. manufacturers of construction equipment and infrastructure are setting up shop in China — they see almost infinite possibility.

Lurie said federal tax credits, which took effect in 2006 but are set to expire this year, have helped boost demand. State initiatives around the country have done the same. The increased demand, in turn, gives companies the economies of scale to make their products cheaper, which sends prices down and further boosts demand.

Also, the technology keeps improving, so solar panels can produce more electricity than they used to.

Still, industry groups hope Congress can agree to extend the federal tax credits to keep the momentum going.

But companies like Wanxiang know the risk and wouldn’t spend millions of dollars on facilities if they didn’t see a market here, said Monique Hanis, spokeswoman for the Solar Energy Industries Association. Because of its size, the U.S. is the most sun-rich developed nation, she said.

“Everywhere from Maine to California is good for placing solar panels,” Hanis said. “Germany has the solar resources of Alaska, but yet they’re No. 1 in the world in terms of use.”

Even northern cities like Rockford are good sites for solar panel assembly plants, she said, because there can be relatively decent demand in this region. Plus it’s still cheaper to ship the panels across the U.S. than to import them from overseas.

Wanxiang officials said they want to build their facility near Chicago Rockford International Airport by next spring if they can reach a deal with city, county and airport officials. They want to have it up and running as soon as possible because they feel they’re behind the demand curve.

The facility would be about 40,000 square feet and employ 60 to start. If they were building in Europe, Wanxiang officials said, they’d start with a 400,000-square-foot facility.

But first things first, and if there’s more demand here, the Rockford project would expand over time. And that could mean a long, sunny relationship.

Reach staff writer Thomas V. Bona at 815-987-1343 or tbona@rrstar.com.