Oregon Courting The Solar Industry

With so many commercial industries struggling and unemployment rising Oregon is attempting to regain control over its economy by wooing solar researchers and companies onto its turf – something this state has been very good at in the past. Oregon has worked feverishly to build a reputation as one of America’s top solar hubs, and has tirelessly sought out solar researchers, manufacturers and energy generators over the past five or so years.

When times were good Oregon was able to attract numerous manufacturers, researchers and projects to the state. Now that times have changed, however, it’s unclear whether all the time and money Oregon is investing into courting the solar sector will, in fact, provide a barrier against economic turmoil or sink the state further into depression.

One of Oregon’s latest solar victories comes in the form of a $1.34-million grant for solar energy research that was provided by the Oregon Built Environment and Sustainable Technologies Center (Oregon BEST), in conjunction with the Oregon University System, the Oregon State University College of Engineering and the Oregon State University Research Office.

The money will be divvied between the University of Oregon and Oregon State University, which will use it to create the Photovoltaics Laboratory of the Oregon Support Network for Research and the Oregon Process Innovation Center for Sustainable Solar Cell Manufacturing, respectively. While university research will definitely be a big part of the new laboratory and center, the state is more excited about what it can mean for current and prospective businesses.

“From an industry perspective this investment is tremendous,” said David Kenney, president and executive director of Oregon BEST. “The energy industries play a significant part in the Oregon economy, and from a utilities perspective most of our large utility providers are all thinking about renewable energy.”

Though the facilities will be located on the respective universities’ campuses, the laboratory and research centers will be open to other Oregon-based schools, as well as public and private businesses. “Having access to the equipment and laboratories will be a huge resource for [local businesses],” Kenney said. “If a manufacturing company has a solar cell with a defect it will be able to come into the lab and study it under a variety of conditions.”

Aside from these state-of-the-art facilities, businesses will also have access to university researchers and data, as well as a huge workforce population that is well versed in solar energy research and manufacturing. While the actual equipment will not be available until later this year or early 2010, Kenney noted that businesses still have immediate access to researchers and the workforce pool.

Though it’s too early to tell whether these projects will actually bolster Oregon’s economy one thing is certain – the state could use a boost. The state lost 34,700 non-farming jobs in January and February alone, and boasts the third highest unemployment rate in the country, which currently sits at 10.8 percent.

In addition to the grant money, Oregon is also trying to bolster its reputation as an electric car hub. Gov. Ted Kulongoski has aggressively marketed his state as an automotive-friendly destination by widely promoting two bills that would encourage the manufacturing and selling of electric vehicles in Oregon.

One of the bills would allow electric vehicle manufacturing facilities to become eligible for the Business Energy Tax Credit (referred to as BETC or Betsy), which allows energy-conserving businesses to receive between 35 percent and 50 percent off their total green project costs. The other bill would allow a current hybrid tax credit to transfer to zero-emission vehicles, which the governor is hoping will appeal to electric car manufacturers.

So far Governor Kulongoski’s plan has worked. Nissan agreed to introduce its new electric car here in 2010, and Mitsubishi announced plans to partner with the state and Portland General Electric to develop a network of vehicle charging stations that will promote the zero-emission vehicles. The state is still trying to woo Think, a Norway-based electric car company, into establishing its first U.S. manufacturing facility in Portland. Oregon is one of eight U.S. locations that Think is considering.

The state has also successfully swayed a solar electric systems manufacturer into entering the Oregon market. Residential Power Systems, a division of the New York-based SunWize Technologies Distributed Power Group, just decided to open its first branch in Philomath, which is between Eugene and Portland. The company has tapped two local solar industry experts to oversee the new office. It’s also offering residents a discount of $1,000 on any solar electric systems purchased in April.

Staying true to its solar roots, Oregon is also working on a proposal that would create a 71-acre solar energy farm at the Medford Airport, which could potentially power 2,000 homes. The state is hoping to utilize funding from Obama’s stimulus plan for the project.

In previous years Oregon has successfully courted numerous solar powerhouses into its borders that have put the state on the map as a top solar center. In 2008, Solar World USA created North America’s largest photovoltaic panel manufacturing plant in Hillsboro – a move that Germany-based Solar World’s vice president Gordon Brinser said was made possible by Oregon’s many tax credits and willingness to open up their universities’ research facilities.

Although experts believed that the plant could add approximately 1,000 new jobs to Hillsboro over the next three years, much has been made about the tax credits that made this location possible. As previously mentioned, sustainable businesses can apply for Betsy credits in order to alleviate some of the costs associated with going green. Though there’s nothing inherently wrong with Oregon creating a tax credit that should, in theory, drive sustainable companies into the state, many believe a problem does lie within the credit’s pass-through option.

This option allows recipients of the tax credit to sell that credit for cash. What resulted was the sale of $11-million-worth of tax credits by Solar World to Wal-Mart for only $7.3 million. The discount chain can now use these credits over the next five years to offset some of its corporate state income taxes. This will cause Oregon to lose out on substantial income taxes, while Solar World has found a quick way to obtain some cash. In fact, the company has already been approved for another $19.4 million in Betsy credits, which it is again free to sell if it so desires.

Clearly it seems that not all of Oregon’s plans to lure sustainable companies and green-collar jobs have worked out. It is, however, hard to deny that the state hasn’t done a lot to make a name for itself in the solar realm.

Oregon has begun six new solar manufacturing projects over the past year and a half, which the state hopes will create 2,000 jobs by 2011.

It is also home to the world’s largest wind farm, as well as one of the most impressive biodigesters out there. The biodigester is located at the Oregon Health & Science University’s Center for Health and Healing, and was instrumental in the facility becoming the first of its kind to receive platinum certification from the U.S. Green Building Council’s Leadership in Energy and Environmental Design program. Oregon also has more hybrid car owners per capita than any other state.

In these uncertain times there’s no telling what survival strategies will and will not work – both for Oregon and the rest of the nation. Whether its efforts are fruitful during the downturn or not, Oregon has made it clear that the state takes its investment in solar power seriously.

Andy Grove on battery power

... the U.S. must create a strong electric car industry.

By Andy Grove    

(April 18, 2009) -- When gas was topping $4 a gallon last summer, the urgency to find alternative sources of energy to power cars and trucks became clear to most Americans. But with oil prices toppling since, the push for new energy technologies is being shoved aside by the nation's other economic woes. That is a mistake that could cost the United States everything - especially if this recession is followed by a period of fast growth.

Economic growth requires energy. When the world economy starts to grow again, all countries, and especially China and the U.S., will be competing for the same finite supplies of oil and gas. If we had the ability to use varied sources of energy to power transportation, we would have a competitive advantage. We would also have a degree of resilience in the face of threats. And they exist. Just this past year Russia sent tanks into oil-rich Georgia, and an oil tanker was hijacked off the coast of Somalia. In addition, climate change demands that we harness new, renewable sources of energy. Here, too, electricity is key.

The power and efficiency of the internal-combustion engine were at the core of the development of the automobile. In a similar vein, batteries will be a competitive advantage for the auto-makers of the future. Batteries that go farther than the competition's and recharge in a shorter time will win. This does not bode well for U.S. auto manufacturers. Battery technology has been the domain of consumer electronics manufacturers, and that industry migrated out of America decades ago. We must bring this important technology back to the U.S., and we must do it quickly to save Detroit.

If we don't care about our automotive industry, we can let Toyota or Honda build our electric cars, with LG or Panasonic making the batteries. But what if we have only a short time before the oil supply is disrupted? To keep U.S. cars and trucks on the road, we need to do something different - and fast.

Developing a domestic car-battery industry should be the focus of both corporations and the U.S. government. There is a model that may point to the way to build a new battery industry: the early days of the microprocessor. The history of the chip industry is a combination of the private sector overcoming technical challenges, with government playing a supporting role. In 1947 scientists at Bell Labs, which owed its existence to a government-granted monopoly, invented the transistor, the essential ingredient that in time led to the integrated circuit and the microprocessor. Bell Labs licensed the technology to all comers.

As a start, Energy Secretary Steven Chu should organize an industry council - like the World War II Production Board - and run it as if we were under wartime pressure. He can pull in the National Academy of Engineering and the National Science Foundation and have them recommend the technical approach. He can use the National Labs for R&D.

But the critical limitation is going to be battery production. To get an adequate supply of batteries for U.S. automobiles will require new manufacturing capacity that costs billions. Let us create a government-owned foundry organization that supplies, say, the first few million batteries, until the electric car and battery industries reach a critical size. Then let this organization license the manufacturing technology to private companies and let it go out of business.

When the government helped American chip companies, the industry did all right. It hung in as other industries left the U.S., and it still leads globally. We can do the same for transportation. We must. 

The great electric car race

Asian manufacturers are leaving U.S. rivals in the dust.

Did a battery bring down General Motors?

Not by itself, but it helped. For several years GM has been touting the battery-powered Chevy Volt as a sign of the company's vitality and proof of its drive to become a technology leader. Former CEO Rick Wagoner drove one in Washington, D.C., last December when he went hunting for federal aid. Despite the car's limited range (40 miles between charges) and stiff price (estimated at $40,000) GM had made the Volt its standard-bearer and touted it as an antidote to climate change and oil imports.

Earlier this year a GM executive declared, "We think a plug-in offering 40 miles of gas- and emissions-free driving like the Volt is the sweet spot for the majority of customers." (For those who want to go farther, a small gasoline engine acts as a range extender.)

The Treasury Department doesn't share that view. Its auto task force has cited the Volt as one reason it doesn't consider GM a viable company. As usual, the department noted, GM has been paying little attention to competitors like Toyota. The 2010 Prius hybrid, which comes on the market 18 months before the Volt, can go 50 miles or more on a gallon of gas and may sell for as little as $21,000 - a lot less money for a big environmental boost.

Treasury's task force was scathing in its appraisal: "GM is at least one generation behind Toyota on advanced, 'green' powertrain development," it said. "While the Volt holds promise, it is projected to be much more expensive than its gasoline-fueled peers and will likely need substantial reductions in manufacturing cost in order to become commercially viable."

It's just that kind of wrong-footedness that has led GM to the brink of bankruptcy. GM has no commercially successful gas-electric hybrids; it put its long-standing fuel cell efforts on the back burner. GM has failed as badly when it comes to planning for the future as it has in coping with today's market.

It wasn't always that way. GM was the company that introduced the electric self-starter at the dawn of the automotive age, making the arm-breaking engine crank obsolete, and it developed the catalytic converter to treat tailpipe emissions. But for the past two decades it, along with other U.S. manufacturers, has been slaking America's thirst for horsepower with big V-8s while Toyota, Honda, and other Asian manufacturers have developed gas-electric hybrids that keep getting more efficient and economical. Now the Chinese are on the verge of introducing their own battery-powered cars, leaving Detroit further behind the curve.

After driving the automobile for a century, the internal-combustion engine is giving way to electric motors powered by batteries - which burn no petroleum and produce no emissions (though the electric plants that charge them may do both). Early efforts to develop battery power have focused on exotic cars with names like Tesla and Fisker made in boutique quantities, but prices are coming down and potential volumes are growing.

The U.S. has a lot of catching up to do. But just when GM, Ford, and Chrysler need to transform their industry, they have fewer resources than ever to do so. GM, for instance, just asked the government for $2.6 billion to develop three variations of the Volt. The winnowing of brands at all three companies has been accompanied by a decline in revenue and market share as familiar names disappear and dealers vanish. Vehicles and engines will get smaller too, and automakers will have to scramble to recover the profits they used to make with larger ones. The Midwest manufacturing base will also shrink.

The process won't be pretty. The company that Walter Chrysler founded and Lee Iacocca rescued will probably see such iconic cars as the hemi-powered Chrysler 300C disappear, along with the company's private equity owner, Cerberus, whose 81% stake has been rendered worthless. GM is in the process of downsizing or dumping four of its brands, including Pontiac, which it introduced in 1926. Ford, at 106 the oldest American car company, is the healthiest, though it appears so only in comparison with its neighbors. Even it is going through resizing as it sloughs off Volvo and extinguishes Mercury through benign neglect.

Battery power has been around longer than any of these companies; it is as old as the automobile itself. In 1896 an electric car beat five gasoline-powered vehicles in the first motor race held on American soil. By 1900 there were a dozen manufacturers of electric cars; they produced 28% of the 4,192 autos built in the U.S. that year. Powered by lead-acid batteries, electric cars were silent, clean, and simple to operate. Their normal cruising range was 25 to 40 miles at speeds approaching 20 miles an hour - fast enough for the primitive roads of the time.

But battery technology was slow to advance. Electrics were ill-suited to long-distance driving as new highways were built. Henry Ford introduced the economical, easy-to-repair Model T in 1908 and would eventually sell 15 million. Gasoline engines, at first noisy, smelly, and unreliable, became more refined. Sales of electric cars peaked in 1912 and gradually dwindled to a small group of customers, mainly wealthy women and doctors. The last production models disappeared by the end of the 1920s.

For several decades battery development moved haltingly. There was no Moore's law positing a doubling of battery capability every 18 months. The chemistry is complex, and demand was slight. Then, as concerns grew about climate change and imported oil, interest was rekindled. In the 1970s electric-powered delivery trucks, small vans, and rudimentary passenger cars like the Sebring-Vanguard CitiCar appeared. Best suited for retirement communities, the plastic-bodied CitiCar had a top speed of 44 miles per hour, a range of 50 to 60 miles, and a ride like a farm wagon.

Federal regulators stepped in to give the technology a boost. The passage of the Clean Air Act in 1970 and its subsequent amendments were designed to improve air quality by reducing exhaust emissions. They got the attention of GM chairman and CEO Roger Smith, who had a fondness for great leaps in technology. In 1990, Smith drove a battery-powered concept car called the Impact at the Los Angeles auto show and announced four months later that GM would put it into production as a demonstration of its concern for the environment. Smith retired later that year, but his successors pushed ahead with the plan, despite doubts about its feasibility. Nearly seven years later the car, renamed EV1, went on the market at select dealerships in Southern California and Arizona, available for lease at $640 a month. The lozenge-shaped two-seater was quiet and powerful. But despite more than 1,000 pounds of lead-acid batteries, early models could travel only 55 to 75 miles per charge, thus creating "range anxiety." Recharging took eight hours.

GM upgraded the EV1 with nickel-metal hydride batteries and extended its range, but with gasoline prices low, interest was scant. California regulators read the tea leaves and dialed back on a requirement that automakers produce zero-emission vehicles (ZEVs). Losing thousands of dollars on each car, GM discontinued production of the EV1 in 1999, thereby earning the enmity of environmentalists. In 2003, GM recalled all the cars to get them off the street, thereby inciting conspiracy rumors and creating a story line for the popular documentary "Who Killed the Electric Car?" GM later claimed that the EV1 taught it about software and electric motors, but that hardly justified the cost of the program, estimated at $1 billion.

Rubber hits the road

With climate change now a popular topic and memories of last year's gas price spike still fresh, nearly all the major car manufacturers have declared plans to put electric cars on the road by 2012. China has let it be known that it wants to become one of the leading producers of all-electric cars in as little as three years. China's BYD, already one of the fastest-growing battery makers,   in an effort to become the world leader in cars and batteries.

In the U.S. a company called Ener1, run by a former investment banker, is trying to establish itself as an American presence in batteries. Former Intel CEO Andy Grove believes that the U.S. needs to invest more in what he calls a critical technology and argues for a government-led consortium in battery research. Eyes will be on Obama's climate czar, Carol Browner, this summer as she coordinates the administration's effort to push a comprehensive energy bill through Congress.

New lithium-ion batteries - lighter, denser, and rechargeable more times - have improved the cost-benefit equation of electric cars. "The day you have a mass-marketed zero-emission vehicle, how are conventional cars going to look?" Carlos Ghosn, CEO of Renault-Nissan, asks Fortune. "I'm going ahead with the lithium-ion battery." The battery's biggest weakness is a tendency to become unstable under stress. In 2006, Sony recalled several million laptop batteries because of a manufacturing defect that caused some to burst into flames.

The first lithium-ion-powered cars should start appearing next year. BMW is testing an all electric version of the Mini Cooper with a driving range of 150 miles, while Toyota is developing a city car that can go 40 miles on a charge. Spurred once more by regulation, American manufacturers are coming to the party too. Batteries are the only suitable technology to meet California's 2014 ZEV standard. Ford will introduce a new small car powered by a lithium-ion battery in 2011. Chrysler has shown an electric minivan and an electric Jeep at auto shows and says it will introduce an unidentified electric car in 2010.

It will be at least a decade before electric cars make a significant impact on the overall market. Battery-powered cars are still handicapped by their limited range and the length of time they must remain at the plug for recharging. Their adoption will have to first gain traction in metropolitan areas where driving distances are short, and expand from there.

Cost also remains a big issue. "I don't see battery electric vehicles selling in significant numbers within the next five years," says powertrain forecaster Michael Omotoso of J.D. Power & Associates. "Gas prices would have to go to $5 a gallon before the average buyer sees an electric vehicle as a sensible option."

Long before then, it will be clear how GM's investment in the Volt paid off. Projections call for the production of 10,000 cars during its first year, 60,000 in the second. By comparison, GM sold 1.8 million Chevrolets of all kinds last year.

GM says that as the Volt's sales volume increases, its cost will come down, but it isn't expecting to make a profit until the car has been redesigned at least twice. "First-generation technology is expensive, but you can't have a second generation without a first generation," said GM vice chairman Bob Lutz, in one of his last statements before retiring. "Volt will survive and prosper."