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MEMORANDUM

Re: Toledo’s Rising Solar Energy SectorTo: Mr. Keith Edwards, Genesee Regional Chamber of CommerceFrom: Christopher CannaDate: February 26, 2010

IntroductionAs part of the “Reuse of Underutilized Sites for Alternative Energy Industries”

project, the Genesee Regional Chamber of Commerce has asked DPA, Inc. to identify

alternative energy sectors suitable for brownfield sites in Flint, MI, and to suggest ways

of attracting those sectors to the city. The Solar Energy Sector based in Toledo, Ohio

offers positive lessons for developing an alternative energy industry in Flint. Toledo’s

Solar Energy Sector suggests that if Flint wants to build a truly viable alternative energy

sector, not only attract pre-existing companies, it should consider encouraging home-

grown talent. It also provides lessons, however, on how Flint can market its assets to

established alternative energy companies.

BackgroundFlint and Toledo are American industrial cities that have experienced significant job

loss and population decline over the last 30 years. In Toledo, however, the Solar Energy

Sector has helped stem some of that loss by adding 6,000 jobs to the region since

2001, primarily in thin-film solar cell technology (see sidebar).1 The Solar Energy Sector

has not been able to completely reverse Toledo’s economic woes, but it has brought

hope to the area, provided new employment opportunities for former auto-workers

and new markets for area glass manufacturers (see chart on page 2 for breakdown of

solar manufacturers).2

The jobs did not appear overnight, but resulted from three intersecting factors over the

last 20 years: Toledo’s history in glass manufacturing, the University of Toledo’s (UT)

photovoltaic research and support from the State of Ohio and US Federal Government.

Toledo: Glass CityToledo’s past as a major glass manufacturing and research center led directly to the

formation of its Solar Energy Sector. Entrepreneurs from the glass industry founded

many of the city’s solar energy firms. First Solar, the largest thin-film solar panel

manufacturer in the US, was founded as Glasstech Solar, Inc. in 1984 by two local

entrepreneurs looking for new markets in glass manufacturing.3 More recently, Solar

Fields LLC, a leader in thin-film research, was started in 2003 by a former vice president

at Libby-Owens-Ford, another Toledo glass company.4

1 Sopelsa, Brooke. “Toledo Tries to Overcome Rust-Belt Image” CNBC.com. June 30, 2009. & Springer, Lee. Director: Business Development, Regional Growth Partnership. email exchange with author. Feb. 19, 2010.2 Boyd-Barrett, Claudia. “Hot potential: Toledo’s solar industry promise” Toledo Free Press. April 17, 2009. 3 Calzonetti, Frank. “The Role of an Antecedent Cluster...” March 2007. 5.4 Starner, Ron. “Sun Shines Brightly on Toledo” Site Selection. May 2009. 300.

Thin- Film Solar CellsThin-film solar cells are made by coating a substrate, like a thin steel sheet, with a layer of photovoltaic material. The resulting solar cell can be as thin as a few nanometers and can be incorporated into products like roof shingles. Thin-film currently accounts for about 10% of the worldwide solar market, but its low production cost compared to more common silica crystal cells lends it great commercialization potential despite its lower efficiency.(Reichert, interview)

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UT’s expertise in photovoltaic research also stems from Toledo’s history of glass

innovation. The university has been involved in glass research since 1952, and in 1987,

Owens-Illinois, a major glass company, merged its R&D laboratory with the university.5

This facility became Glasstech Solar’s first manufacturing home.

The University of Toledo: Photovoltaic ResearchWhen Glasstech Solar moved onto UT’s campus, the university shifted away from glass

and into solar research in order to support the company. UT began investing in new

faculty and equipment, and in 2001 chose thin-film materials as a primary research

area.6 In 2005, UT opened the Clean & Alternative Energy Incubator to provide solar

and other alternative energy start-ups with business support services and research

facilities.7

UT’s research efforts have fueled the growth of the Solar Energy Sector by providing

office space and research facilities for solar start-ups. This began with Glasstech Solar

and continues today with the Clean & Alternative Energy Incubator and the Wright

Center for Photovoltaic Innovation and Commercialization. The incubator currently has

17 clients that it provides with workspace and business development services, while

the Wright Center focuses on turning research into commercially viable products.8

UT is also directly responsible for creating new solar companies. For example, the

university is part-owner of Xunlight, founded by Dr. Xunming Deng, a UT physics

professor, who started the company as a means of commercializing technologies

developed by UT researchers. Xunlight graduated from the Clean & Alternative Energy

Incubator last year and choose to build its first factory less than a mile from UT’s Scott

Park Campus of Energy and Innovation in order to take full advantage of technology

transfers with UT researchers.9

State of Ohio & US Federal Government SupportFederal funding has been very important for UT’s photovoltaic research, particularly

during its early years. Since 1989, the university has received continuous funding from

the US Department of Energy’s Solar Energy Research Institute, and in 2002 it won a

National Science Foundation Award.

Support from the State of Ohio has also been critical. In 2007, the university

established the Wright Center with an $18.6 million award from the Ohio Department

of Development’s Third Frontier Program. The Wright Center has since become the

nucleus of UT’s research and has received over $30 million in additional funding from

federal agencies, universities and others.10

5 Calzonetti, 5-6.6 Calzonetti, 6.7 Reichert, Megan. Director: Clean & Alt Energy Incubator, the University of Toledo. interview with the author. Feb 23, 2010.8 Reichert, interview.9 Starner, 300.10 Calzonetti, Frank. Professor: University of Toledo. interview with the author, February 18, 2010.

The Big Three6,000 jobs in Toledo can be directly attributed to solar, many of those jobs are in R&D, but manufacturing is also growing at the following 3 firms:

First SolarEstablished: 1984Current Employees: 700 Adding in 2010

Xunlight Employees: 150Adding in 2010: 15

Willard & Kelsey Current Employees: 50Adding in 2010: 400

(Boyd-Barret, Free Press; Springer, interview)

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Individual solar energy companies often share UT’s awards as subcontractors, and the

Third Frontier Program invests in them directly. For example, Xunlight received $19

million in grants and loans from the state to help setup its current manufacturing

facility.11

The State of Ohio has also encouraged Solar Energy Sector development through

regulations and incentives. Ohio’s Renewable Energy Standard, passed in 2007,

requires the state to meet 25% of its energy needs with alternative sources by 2025.

Solar energy is required to account for .5% the state’s total consumption, which has

spurred investment in solar fields built with Toledo-made solar cells.12

AnalysisToledo’s Solar Energy Sector is not an example of a region “attracting” alternative energy

industries. Instead, it shows how new businesses can grow out of local entrepreneurship

and research institutions with support from the state and national government. Based

on this example, Flint’s best option for generating a true alternative energy sector may

be to encourage enterprises built by its own entrepreneurs and institutions. This does

not mean Flint cannot “attract” already existing alternative energy companies, but, in

the long run, a home-grown alternative energy sector may be more viable. Fortunately,

many of the assets that launched Toledo’s Solar Energy Cluster are present in Flint,

although city leaders are only just beginning to exploit them. Agencies like the Genesee

Regional Chamber of Commerce should consider ways to work with local partners to

nurture these assets and ensure they are not squandered.

Lessons from Toledo: Growing Alternative Energy Sectors Toledo’s regional Solar Energy Sector points to three important factors for developing

a home-grown alternative energy sector: previous and/or existing industry, strong

relationships between local entrepreneurs and research institutions and access to

funding sources. All of these factors are currently in play in Flint, and could potentially

be developed into home-grown alternative energy sectors.

Flint’s history as a major automotive manufacturing center is an asset similar to

Toledo’s glass industry that could be leveraged into related alternative energy sectors.

For example, there has been recent investment in electric vehicle technology in

Genesee County. Magna Electronics recently announced plans to expand its local

operations in order to manufacture battery parts for a battery-electric version of the

Ford Focus, while General Motors is developing engines for the Chevy Volt in area

factories.13 Investments like these could be the beginning of an alternative fuel sector

in Flint particularly if companies develop strong relationships with research facilities

like Kettering University’s Center for Fuel Cell Systems and Powertrain Integration.

11 Starner, 301.12 Starner, 301. 13 Burden, Melissa. “Magna Electronics investment announcement...” Flint Journal. December 16, 2009.

Founders of Xunlight, Dr. Xunming Deng and his wife Liwei, with an example of a thin-film solar cell made at their plant in Toledo. (Starner, Site Selection)

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Kettering University, the University of Michigan-Flint and the Mott Center provide

valuable services to local entrepreneurs, just as UT does for Toledo’s Solar Energy

Sector. Kettering University is a particularly strong asset due to its work in Fuel Cell and

Biogas technology, as well as its TechWorks incubator and the Science & Technology

Incubator that will open later this year. The Solar Energy Sector in Toledo shows what

can be done when these assets are scaled up. UT’s photovoltaic research kicked-off

when Glasstech Solar moved into a campus research facility, but since then it has

been the true engine of the Solar Energy Sector in the Toledo Region. Scaling up Flint’s

research assets in strategic areas could similarly fuel a home-grown alternative energy

sector.

Flint start-ups and institutions have access to funding sources in the State of Michigan

and through the US Government similar to those available in Toledo. This year, Kettering

University received a $900,000 grant from the US Department of Energy for research

in biogas technology associated with Flint’s new biogas plant.14 The State of Michigan

also has a variety of alternative energy programs like those offered in Ohio, including

the 21st Century Jobs Fund run by the Michigan Economic Development Corporation,

which targets alternative energy sectors.15 Taking further and full advantage of these

resources is essential to developing an alternative energy sector on the Toledo model.

Lessons from Toledo: Attracting Alternative Energy SectorsAlthough the Toledo region’s Solar Energy Sector is not strictly an example of attracting

alternative energy companies, it does offer insight into the assets alternative energy

companies find valuable when looking for research and manufacturing sites. Flint has

assets similar to Toledo it can market to pre-existing alternative energy companies,

including:

Flint’s abundance of industrial land and community support for industrial

development. Solar Energy Sector officials often sight the Toledo area’s large supply of

industrial brownfields as a valuable industry asset, because companies do not need to

construct sites from scratch, and the local community strongly encourages brownfield

re-development as a source of job growth.16

Flint’s strategic location at the center of North America, the presence of major highways

and railroads in the city, as well as nearby access to Great Lakes shipping routes and

air transportation. The Solar Energy Sector’s primary markets are in Europe and Asia,

and as a result access to transportation routes has been very important to the sector’s

development. Toledo is at the intersection of Interstates 75 & 80, as well as major

international rail lines, but its location on Lake Erie has been particularly important for

reaching overseas markets.

14 Mostafavi, Beata. “Governor Granholm helps celebrate...” Flint Journal. February 18, 2010. 15 http://www.michiganadvantage.org/Targeted-Initiatives/Alternative-Energy/Default.aspx16 Starner, 300.

Former auto-worker, Marty Vick, left his job at an auto-parts plant to work at Xunlight, because he feels the growing solar sector offers greater job security than the declining auto industry. (Boyd-Barrett, Free Press)

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Local research institutions, particularly Kettering University’s new incubator. Thirty

percent of the clients at UT’s Clean & Alternative Energy Incubator are from outside

Ohio, and proximity to UT research has been the main draw.17 Kettering’s older

TechWorks Incubator has already shown it can attract outside companies, like Swedish

Biogas International.18

The Solar Energy Sector in the Toledo region offers city officials valuable lessons as

organizations like the Genesee Regional Chamber of Commerce attempt to attract

alternative energy industries to the city. Flint has many assets alternative energy sector

companies find valuable, such as abundant industrial land, a strategic location and local

research institutions. However, Toledo’s example suggests that for a well developed

alternative energy sector to take hold, Flint should emphasize developing home-grown

industries through local entrepreneurs and resources.

17 Reichert, interview.18 Mostafavi.

Works CitedBoyd-Barrett, Claudia. “Hot potential: Toledo’s solar industry promise” Toledo Free Press. April 17,

2009.

Burden, Melissa. “Magna Electronics investment announcement latest in growing pattern of alternative energy, alternative fuel projects in Genesee County” Flint Journal. December 16, 2009.

Calzonetti, Frank, Professor of Geography and Vice President of Research and Development, The University of Toledo, interview with the author, February 18, 2010.

Calzonetti, Frank. “The Role of an Antecedent Cluster, Academic R&D and Entrepreneurship in the Development of Toledo’s Solar Energy Cluster” March 2007 available at uac.utoledo.edu/nwoerc/FCalzonetti-SolarEnergy.pdf.

Carlton, Jim. “Toledo Finds Energy to Reinvent Itself” The Wall Street Journal. B1 December 18, 2007.

Mostafavi, Beata. “Governor Granholm helps celebrate progress with Swedish Biogas project at Kettering University” Flint Journal. February 18, 2010.

Reichert, Megan, Director, Clean & Alt Energy Incubator, The University of Toledo, interview with the author, February 23, 2010.

Sopelsa, Brooke. “Toledo Tries to Overcome Rust-Belt Image” CNBC.com. June 30, 2009. available at http://www.cnbc.com/id/31385869/.

Springer, Lee, Director, Business Development, Regional Growth Partnership, e-mail exchange with author, February 17 – 19, 2010.

Starner, Ron. “Sun Shines Brightly on Toledo” Site Selection. 300-301. May 2009.