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Power Of The Sun

Will solar energy production shine a light on the Iron Range?

“Go ahead—walk on it,” says Gary Cerkvenik, senior vice president for Silicon Energy. Cerkvenik, Erin Shea, who handles Silicon Energy’s inside sales and support, and a tall journalist step up onto a solar energy panel that Silicon Energy manufactures in the Iron Range town of Mountain Iron. It supports them all easily. Cerkvenik pounds the point home by jumping up and down on the 4-by-4-foot glass panel. Not so much as a scratch.

Silicon Energy’s product is a BMW among solar panels. Each panel comprises an array of high-efficiency multicrystalline-silicon solar cells encased in tempered glass. There are no loose wires—the wiring is housed in compartments on either side of the panel. It’s attractive enough to be made into carports and glass awnings. What’s more, it has a 30-year power output warranty.

In short, it’s a high-quality product. But might it be too high-quality? Is there really a market for a U.S.-produced, union-made product that costs notably more than the Chinese-made solar modules that dominate the world market?

Silicon Energy still sees an opportunity—with public help. The Marysville, Washington-based company opened its second plant in 2011 in Mountain Iron, with the powerful support of Range legislators and a $1.5 million loan from the Iron Range Resources and Rehabilitation Board (IRRRB). After a cloudy start—the plant had to restructure its IRRRB payment schedule—Silicon Energy’s Mountain Iron facility now employs 16 and will install 2 megawatts worth of panels by year’s end. (Two megawatts can power 350 to 500 homes.) If the Mountain Iron plant reaches its full capacity—three shifts instead of one—it could employ about 60, according to Silicon Energy President Gary Shaver.

Energy Boost

Starting January 1, the Minnesota solar energy business is slated to get a big boost. State legislation passed in May requires large state utilities to derive 1.5 percent of their electricity from solar. In addition, rebate programs have been updated. The legislation requires Xcel Energy, which had planned to phase out Solar Rewards at the end of this year, to maintain the solar-rebate program until 2018.

What’s more, certain large state solar projects are required to buy panels from Minnesota manufacturers. Two panel producers are expected to benefit. One is TenKsolar, based in Bloomington; the other is Silicon Energy.

These are the kinds of boosts Silicon Energy needs to stay in business. “With commodity products, people are focused only on the short term,” argues Shaver. “They’re looking only at the first cost and assuming that these products will last.” The company is therefore “looking at those market niches that can accept this level of high quality.”

That is how Silicon Energy could compete. “A smaller domestic manufacturer of modules can have a [successful] business model if they try to target a more niche part of the solar market, which could be small rooftops or residential installation in the state, where there’s incentive for local manufacturing,” says Finley Coleville, vice president of NPD DisplaySearch, a global market research and consulting firm for the solar industry. At First Solar and Sunpower, the dominant U.S.-based solar companies, “the vast majority of their manufacturing is in southeast Asia,” Coleville says. Coleville estimates that made-in-the-U.S. manufacturers make up less than 5 percent of the global market.

Some might see solar as a boondoggle requiring state utility customers and government agencies to subsidize an industry that can’t support itself. Shaver says “there will be a time” when solar won’t need such support: “Just about everything that’s energy-related right now is receiving some kind of incentive, and some of them are very large.” Until all energy sources operate on a level playing field in terms of how the cost of generation is determined, he says, “we’re going to need support and incentives.”

Incentive Effect

Cerkvenik says that the big challenge the Mountain Iron plant faced early after opening was the “stop and start” of state incentives programs. “Our sales and production, therefore, have been up and down, up and down, since 2011,” he says. With utility incentive programs set for many years, “we’re looking forward to a more sustainable annual growth in the marketplace,” he says. “We think we’ll survive quite nicely when it’s more stable.”

Will the investment in solar energy pay off for Minnesota? Someone will need to crunch the numbers in a year or two. One way that solar could shine is its lower cost of distribution. “The state is going through a process of putting a dollar figure on [solar energy],” Cerkvenik says.

On balance, it’s too early to rain on Silicon Energy’s parade. It’s a clean business, providing clean energy, and it fits in with the efforts of the Iron Range to diversify into energy production. (There’s a biomass plant in Hibbing already up and running.) And the Range certainly needs the kind of jobs that a successful energy manufacturer can produce.

So consider this a test: to see whether solar power is truly ready to step into the light, and can finally withstand the economic elements.

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