Spectrawatt halts construction plans for new plant in Hillsboro
by Richard Read, The Oregonian, January 07, 2009
Source: OregonLive.com
http://www.oregonlive.com/news/index.ssf/2009/01/
solarcell_maker_halts_construc.html
SpectraWatt Inc., an Intel spinoff that planned to make solar cells in Hillsboro, may leave Oregon because it can’t find financing to build a plant. Andrew Wilson, SpectraWatt’s chief executive, confirmed Wednesday that the company had suspended construction plans and was searching inside and outside the state for an existing building to retrofit for less money.
The development surprised Gov. Ted Kulongoski’s aides and state economic development officials, who had been negotiating tax breaks for the plant. “Have them call us,” said Jillian Schoene, a spokeswoman for Kulongoski, who is trying to attract more renewable-energy manufacturers to the state.
The setback could spell broader trouble for the governor’s green initiative. Or it could merely reveal one solar startup with unproven technology encountering obstacles and playing off Oregon against, say, New York.
But Desari Strader, executive director of the Oregon Solar Energies Industry Association, faults misunderstandings between state officials and SpectraWatt managers. “It’s just a clash of business cultures,” Strader said. She said impatient venture-capitalist managers at SpectraWatt have unrealistic expectations of Oregon officials, who must ensure the company is financially sound before confirming tax breaks.
SpectraWatt entered the red-hot solar sector with grand ambitions last June, planning to employ 135 workers in a 65,000-square-foot plant. Intel, the world’s largest computer chipmaker and Oregon’s biggest private employer, announced then that it would lead a $50 million investment in the startup to make cells for solar panels.
Intel created SpectraWatt, code-named the Foggy Island Bay Project, with in-house technology. The chip giant put five of its employees on the management team and donated 20 acres for the plant at its West Union campus in Hillsboro. In addition to Intel Capital, investors included Solon AG, PCG Clean Energy and Technology Fund, and Cogentrix Energy, a Goldman Sachs subsidiary.
Wilson said in July that the company planned to build a second, much larger plant in Oregon or elsewhere that would boost its work force to around 1,000 within eight years. SpectraWatt aimed to supply about 5 percent of the world’s solar cells. On Wednesday, Wilson said SpectraWatt still intends to begin shipping solar cells five or six months after the originally planned mid-2009 start date. The original investors remain on board, he said.
“The capacity of our factory, wherever it is, will still be the same,” at 60 megawatts, Wilson said. Asked whether SpectraWatt was considering New York, as Strader said, or Pennsylvania, as rumored, Wilson said: “Both have some nice incentives for this type of facility, and there are certainly others also.”
But the main issue, he said, is financing. “The debt markets have gotten so expensive. Financing the last pieces is problematic.” Chris Johnson, a Portland commercial broker who has assembled large local deals, said credit has been frozen across the board. SpectraWatt’s deal is hardly alone, said Johnson, NAI Norris, Beggs & Simpson executive vice president. “Today it would be unusual if someone would want to loan them money,” Johnson said.
Other solar companies that have come to Oregon, such as Germany’s SolarWorld and Japan’s Sanyo, are established manufacturing companies with proven technologies, said Ron Pernick, managing director of Clean Edge, a Portland-based research and publishing company. SolarWorld retrofitted an unused Hillsboro semiconductor plant, but Johnson said that strategy doesn’t always work. “It’s almost more expensive to retrofit something,” he said, “than it is to start from scratch.”
One candidate for retrofitting in Oregon could be the closed Hynix memory-chip plant in Eugene. But that highly specialized 1 million-square-foot factory is far larger than what SpectraWatt needs, Wilson said.
SpectraWatt’s decision to apply the brakes was abrupt. Hillsboro officials were 85 percent done with reviewing its building-permit applications on Dec. 17, when design and engineering firm CH2M Hill told them to put the project on indefinite hold.