Building an AZ solar supply chain and industrial cluster

Glenn Hoetker Anthony Evans

Our mission

More investment in solar energy production and supply chain capacity is attracted to Arizona as a result of tighter linkages within the cluster. These linkages extend among the value chains, the talent development systems, the research base, investors, and public policies.

Our approach

• Identify the characteristics of a successful industrial cluster

• Identify factors inherent in robust supply chain development

• Identify core clusters and their supply chains

• Identify critical gaps • Recommend steps to close gaps and

key players to engage • Identify new directions to further build

cluster capability • Set milestones and fill gaps in

collaboration

Membership

Bud Annan, Arizona State University

Fred Buss, Town of Gila Bend

Bennett Curry, Arizona Commerce Authority

Anthony Evans, Arizona State University

Glenn Hoetker, Arizona State University

Michael Neary, AriSEIA

Ron Vokoun, Mortenson Construction

Utility scale

Paloma plant (First Solar, 17 MW PV)

Cotton Center (Solon, 17 MW PV)

Solana (Abengoa, 280 MW Concentrating solar)

Distributed generation

ASU Solar Parasol (Strategic Solar Energy/NRG Solar, 2.5 MW PV)

Partners and stakeholders

AZ solar industry - snapshot

• 300-400 AZ firms easily meet current in-state demand

• Range of solar technologies

– Photovoltaic (PV)

– Concentrated Solar Power (CSP)

– Solar Heating & Cooling (SHC)

• Technology-specific supply chains

Photovoltaic supply chain (pre-construction/installation)

RAW MATERIAL

INGOT WAFER

MFG SOLAR CELLS

SOLAR MODULE

SOLAR PANEL

• U.S. largest polysilicon producer in 2008 (43%) but China, Taiwan and South Korea are now the key players

• Limited U.S. wafer manufacturing facilities

– Hemlock and MEMC

• North America = 7.4% of global cell production capacity (2010)

• North America = 8.7% of global module production (2009)

CSP supply chain (pre-construction/installation)

• Greater opportunities for localized manufacturing

• Components cut across technologies

– Mirrors, reflectors, collector structures, heat transfer fluids, salts, turbines, steel etc.

• 18 CSP U.S. mfg facilities in 2009

• Solana’s U.S. supply chain = 29 companies in 22 states ($730 million)

– 23% invested in AZ

AZ solar-related employment

• Solar Foundation (2011) 4,786 solar jobs at 900 AZ establishments

– 3rd largest state for solar jobs

• BLS suggest 49,717 jobs across all green goods and services (GGS)

– 23rd largest state for GGS jobs

• SEIA survey still in progress

• Seidman survey: 5,500-7,400 solar jobs

• 0.2-0.3% of AZ’s non-seasonally adjusted non-farm employment

AZ solar-related employment

814 17%

1723 36% 574

12%

1292 27%

383 8%

Employment Opportunities by Sector

Manufacturing

Installation

R&D

Sales

Other

Source: Solar Foundation (2011)

AZ competitive advantages

• Solar insolation

• Proximity to California

• Land/resource availability

• Streamlined zoning and permitting

• Solar construction know-how

• On the job learning and innovation

• University research community

• Workforce supply

Cluster potential

• Viable solar cluster drives economic growth:

– Project employment and input impacts

– Attracts new downstream local suppliers

– Encourages certification

– Firms can export know-how out-of-state

• Limited potential for solar PV manufacturing

• Greater supply chain opportunities for other solar technologies

• Construction sector could be a real winner

Supply chain cluster example

• Construction = biggest benefactor

• Supply of steel, concrete, mirrors, nuts, bolts and electrical supplies

• Short-term employment impacts:

– Utility-scale plants = 1000+ jobs

– Commercial DG = 50-100 jobs

– Residential DG = 1-2 jobs

• Key: convert the jobs into job years

Challenges and barriers

• Utilities have almost met RPS targets

• Energy demand increases >1% each year

• Positive construction impacts will dry up

• Residential taxes and incentives are on a per household basis, not per system installed

• New AZ homes still built without solar ready ordinances

• Availability of capital investment

• Lack of optimism within the local industry

• Potential migration to states with opportunities

Cluster solution 1: Export Strategy

• Effective export strategy essential

• Principal target: California

• Significant job creation opportunities

• Galvanize inter-state dialogue to resolve transmission barriers

Cluster solution 2: R&D

• AZ solar R&D center

• Close co-operation between education, utilities, public and private sector

• CA ahead for solar training and courses

• But AZ is starting to catch up:

– First Solar/City of Phx/ASU’s new solar engineering & commercialization certification

– ASU’s new PSM (first in U.S.)