Chinese Solar Panel Firm to Open Plant in Arizona
By Kate Galbraith
Suntech Power, China’s largest solar panel manufacturer, plans to open its first American plant near Phoenix, the company announced on Monday. It would be the first time a Chinese solar company has built a manufacturing plant in the United States, experts said.
The plant will begin production in the third quarter of 2010 and will build panels from solar cells shipped from China. Those cells, in turn, contain substantial amounts of a substance called polysilicon manufactured at a factory in Texas.
Roger Efird, a managing director of Suntech, said in a telephone interview that shipping costs were an important factor in the decision to put a factory in the growing American market. Solar panels, with substantial amounts of glass and aluminum, are heavy, he said.
“As the price of solar panels has reduced dramatically in the last 12 months, the shipping costs have become a larger and larger portion of the overall cost of getting these projects to market,” Mr. Efird added.
Suntech estimates that it already has about 12 to 13 percent of the market in the United States, according to Mr. Efird, with a goal of reaching 20 percent by the end of 2010.
Jesse Pichel, an analyst with Piper Jaffray, called the Arizona move a “very smart strategy for the company to embrace the U.S. market and have a ‘Made in the U.S.A.’ product.”
For example, he said, some federal buildings might require American-made panels. Suntech said that production from the Phoenix-area factory — whose exact location will be announced in coming weeks — would qualify as American-made.
In addition, the politics of foreign manufacturing compared with domestic for renewable energy have intensified recently, with some politicians calling for more of the technologies deployed on American soil to be made at home too.
This month Senator Charles E. Schumer, Democrat of New York, called on the Obama administration to block stimulus money for a large wind farm in western Texas that would use turbines manufactured largely in China.
Other foreign-owned solar companies, including several from Germany, have set up manufacturing plants in the United States recently.
Yingli, another Chinese solar manufacturer, has also said it was looking at American sites, according to Mr. Pichel.
Mr. Efird said that Arizona offered strong incentives, as well as being in the heart of the Sun Belt. “For us, Arizona sits kind of in the heart of where we see a big chunk of the future market in the U.S.,” he said. “The desert Southwest, we believe, is going to be home to some huge projects.”
About 15 states, according to Mr. Efird, were initially considered as possible sites, but the final choice was between Texas and Arizona. Initially, 75 people will be employed, probably rising over time to 200, he said.
Suntech would not say how much the plant would cost to build. The company has applied for a 30 percent investment tax credit from the stimulus package that applies to solar manufacturing in the United States, Mr. Efird said.
Suntech has been under scrutiny because American manufacturers fear being overwhelmed by cheap Chinese panels. Suntech’s chief executive, Shi Zhengrong, told The New York Times in August that his company was selling panels to American customers for less than the cost of the materials, assembly and shipping, in order to build market share. However, he swiftly reversed those comments.
