Research prowess powers Texas solar industry

As Austin-based Astro­Watt's founders prepared to launch their solar technology company in 2008, they tallied the competition.

Solar energy startups were emerging around the world, fueled by global discussions about climate change and new government funding for renewable energy industries. The AstroWatt team wasn't the only one with a technology idea and the capital to invest in the booming industry of polysilicon solar energy.

"From Day One, we knew this was going to be a bloodbath," said co-founder Dharmesh Jawarani. "We counted 60 new entrants for polysilicon manufacturing in China alone."

At least three U.S. solar manufacturers have collapsed under the weight of that competition in recent weeks, including California-based solar-panel maker Solyndra.

Its bankruptcy is a hot political issue because the Obama administration touted the company's potential to create clean-energy jobs after it got $535 million in federal stimulus loans.

Those failures have led some industry watchers to conclude that China's low-cost panels have won the solar battle. But others still see hope for America's solar industry and suggest the flooded market is just shaking out the weakest companies.

The key, some say, is investing less in building panels and more on engineering them.

"It has become very hard to compete with Chinese manufacturers. Their labor costs are so low and they've been receiving giant subsidies from the Chinese government," said Keily Miller, a research associate for the Energy Forum at the James A. Baker III Institute for Public Policy at Rice University. "If the U.S. government is going to promote this form of energy, they should be promoting research and development."

Such a focus could be a boon for Texas, where high-tech research facilities and a skilled workforce have been attracting solar startups, like AstroWatt.

While Texas has been a leader in wind energy, it has fallen behind other states in solar. Proponents blame a lack of tax benefits and financial incentives for consumers and companies involved in solar energy development.

A 2010 report by the Solar Foundation estimated that Texas has about 170 solar-related companies employing some 6,400 workers. The majority of them are solar installers, as opposed to manufacturers, according to the report.

Incentives sought

Texas exempts companies that manufacture, sell or install solar panels from the state franchise tax. But it doesn't offer additional benefits like equipment and utility rebates on a statewide level, said Natalie Marquis, executive director of Texas Solar Energy Society, an advocacy group.

"Our state government is not pushing for solar manufacturing and solar companies," Marquis said.

"There are so many other states that want to have that industry and the jobs, so they are offering great incentives," she said. "Texas is not doing that."

The state of Michigan gave Dow Chemical Co. $141 million in tax credits last year when the company decided to locate its new solar shingle manufacturing facility near its Midland, Mich., headquarters. The company also received a $12.8 million federal grant to develop a more advanced and lower-cost version of its solar shingles.

Dow expects the facility to create 1,275 jobs by 2015.

But where Texas has lacked the financial capital to attract the solar industry, it has provided human capital, says Ron Van Dell, chief executive officer of SolarBridge Technologies.

SolarBridge, which develops advanced technology for solar energy systems, moved to Austin in 2009 from Champaign, Ill. Van Dell said he wanted to draw from the skilled workforce of Austin's high-tech industries to build SolarBridge's staff. The company now has 60 employees, most of them from Austin, he said.

For AstroWatt, Texas provided the low-cost research facilities and equipment attractive to small startups. The company conducts its research and development of solar cells at the University of Texas at Austin's Microelectronics Research Center.

"That's the key to survival for startups: being capital-efficient," Jawarani said. "Most of the companies that went bankrupt … started with big investments in specialized equipment and new factories."