Alpen Steel | Renewable Energy

Here Comes the Sun?

Even as clouds loom globally, the solar industry’s prospects in Tennessee brighten

Planned production increases by existing companies. A governor-backed, industry-specific initiative signaling increased investment. At a casual glance, it would seem that if the solar industry's time hasn't come in Tennessee, it's surely just around the corner. But just as Tennessee's investment in the future of solar power heats up, storm clouds on the global economic landscape may just blot out the hoped-for growth.

Sharp Corp., the locus of the state's burgeoning solar industry, is betting that solar will continue to shine, especially in Tennessee. Sharp's Memphis plant, which makes solar-cell modules for the consumer and industrial electric power production markets, is slated for production increases over the next 12 months to coincide with state and federal investment in solar power. (Sharp pioneered the solar power industry in Tennessee when it converted a old-style color television plant to solar-cell module production in 2003.)

On the government front, Gov. Phil Bredesen's Volunteer State Solar Initiative seeks to create even more jobs in the renewable-power production industry. The $62.5 million economic development program creates the Tennessee Solar Institute at the campuses of UT-Knoxville and Oak Ridge National Laboratory. It also includes a 20-acre solar power generation farm in West Tennessee.

At the same time, private industry continues to invest heavily in Tennessee's solar industry. The Hemlock plant under construction in Clarksville and the proposed Wacker Chemie plant in Cleveland each will make semiconductors of the type used in the solar cells Sharp makes.

For now, the 300-employee Sharp plant builds enough product annually to generate 125 megawatts of electricity, up fivefold from the 20 megawatts when production began. Within the next 12 months, production will jump again by 30% to 40%.

"I see a real uptick in the U.S. and North American markets over the next six months," says Ron Kenedi, vice president of Huntington Beach, Calif.-based Sharp Solar Energy Solutions Group.

"Tennessee is really focused on creating jobs in this sector, and with Sharp being the originator of solar in Tennessee, we feel pretty good about being involved in its growth," he says. "This is going to be a real boon to the state, especially now when things are a little rough in the traditional sectors."

But Kenedi's enthusiasm for his industry's prospects in Tennessee notwithstanding, the industry's global outlook is partly cloudy, at best. A worldwide glut of capacity is driving down prices for solar panel components and, subsequently, driving down profits for solar power manufacturers.

The oversupply occurred this year in part after Spain stopped its particularly generous aid for the solar industry. That country accounted for nearly 40% of all new solar installations last year. (The United States is introducing aid to the solar sector, but it isn't expected to shore up demand for this year.)

At the same time, producers in Asia increased solar-cell production in order to compete for market share. As a result, worldwide production is expected to increase 15% this year and will continue to contribute to the market glut, says solar industry analyst Henning Wicht, senior director of iSuppli, an electronics consulting firm based in El Segundo, Calif.

"The effects of this inconsistent and out-of-balance growth will have significant impacts on cell and module supply, demand and pricing," Wicht says.

Germany's Thalheim has already felt the impact, shutting down four production lines and eliminating 500 jobs. Other manufacturers in Europe have reduced production, as well.

Despite the global flux, Kenedi argues that the federal economic stimulus bill presents a major opportunity for his industry. He's bullish on prospects for the Memphis plant, where Sharp rolled out its one millionth solar module last year.

"We've had a downturn like everybody else," Kenedi says. "We're willing to grow that factory at a rate commensurate with the growth of the U.S., North American and South American markets. We own 100 acres in Memphis, so we can easily grow there."

State officials, as well as would be players in the burgeoning industry, can only hope Kenedi's confidence in his industry is well-founded. With Tennessee's unemployment rate topping 10% throughout much of 2009, the state's economic outlook needs all the light it can get.

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