Arizona to world: Do we have solar!

Barry Broome slipped into San Francisco on a mission: Lure California-based solar companies to Arizona.

“I think there’s a lot of compelling technology in Silicon Valley that’s going to be able to be put to work in Arizona,” the chief executive of the Greater Phoenix Economic Council said recently in a downtown office tower lobby across from the U.S. headquarters of Yingli Solar, a Chinese solar module maker.

For decades, border states have raided California, enticing companies to pull up stakes by offering tax breaks, low-cost workforces, affordable housing and business-friendly bureaucrats.

But Broome says he was in California to deliver a different message: Arizona comes in peace. Yes, the state wants a share of California’s burgeoning solar industry, but it also wants to develop a cross-border solar industry that will benefit both states.

“We’re not interested in succeeding at the expense of California,” he said. “California’s going to need Arizona as an energy market and we need an export industry. We can’t continue to just live off housing and tourism.”

Arizona’s construction-dependent economy cratered with the collapse of the housing boom. The solar industry could anchor a more sustainable green economy, Broome said.

“When those solar power-plant projects are built, the amount of materials in them is staggering and there will need to be a place for component manufacturing,” he said. “A billion-dollar concentrated solar power project creates about a thousand construction jobs. So if you put $5 billion to $10 billion in the ground, it’s a nice set of jobs in a state that has a big slump in construction.”

Arizona and California increasingly find their renewable energy fortunes tied to each other.

Arizona-based companies First Solar and Stirling Energy Systems are building giant solar farms in California to supply electricity to Southern California Edison and Pacific Gas & Electric Co.

San Francisco’s NextLight Renewable Power plans a massive photovoltaic power plant in Yuma, Ariz.

And SolarCity, a Silicon Valley rooftop solar panel installer, launched operations in Phoenix after striking a partnership with the city, a local bank and utilities to finance residential solar systems.

Talk to executives at most any solar company in Silicon Valley and they probably have been approached by Broome.

MiaSole is a start-up that has developed “thin-film” solar cells that can be applied to flexible materials. The company operates a pilot factory near its Santa Clara headquarters but has been talking to about two dozen states about locating its next manufacturing facility outside California.

“Arizona by far wins for being most aggressive,” says Joseph Laia, MiaSole’s chief executive, who has met with Broome and other Arizona officials. “Arizona has clearly been forward-looking in how do they monetize the desert.”

With plenty of suburban subdivisions and sun-drenched desert land, Arizona aims to create a market for rooftop photovoltaic panels and big solar-power plants for companies that open manufacturing operations in the state.

Broome has his sights on Silicon Valley start-ups like MiaSole that have developed cutting-edge solar technologies particularly suitable for deployment in the desert. Although these companies have built their first factories close to home, he expects in the future they will build in lower-cost areas closer to their markets.

Chinese solar giant Suntech maintains its U.S. headquarters in San Francisco but late last year announced it would build its first American factory in Arizona, citing the state’s location at the heart of the desert Southwest solar market.

Broome has been targeting other California-based Chinese companies that plan to begin manufacturing operations in the U.S. Over the last year, Chinese solar panel makers have captured nearly half the California market.

“We think that the Chinese can be very comfortable building a U.S. base in Arizona,” he said. “Hopefully, with Suntech’s announcement we’ll be able to convince other Chinese companies to invest in Arizona.”

Executives at Trina Solar, a Chinese panel maker that opened a U.S. headquarters in San Jose last year, said Arizona already had come calling.

After meeting with solar companies in the Bay Area recently, Broome hopped a plane for Shanghai to court Yingli and other Chinese solar companies. Yingli, which has nearly a third of the California photovoltaic market, plans to open a U.S. factory in Phoenix or Austin, Texas.

“The key thing is proximity to market,” said Robert Petrina, Yingli’s managing director for U.S. operations. “We also look at how welcoming is the community for a business such as ours.”

Not long ago, Arizona appeared ready to yank the welcome mat when a committee in the state Legislature approved a bill that would have let utilities meet renewable energy targets without buying solar-generated electricity. After an outcry from the solar industry and some politicians, the legislation was withdrawn last month.

“Arizona offers a lot of advantages but seeing a bill like that pop out from nowhere is very disconcerting,” Petrina said.

For MiaSole’s Laia, Broome makes a persuasive case, but “if you’re a manufacturing guy, at the end of the day it’s all about cost,” he said. “Phoenix is doing a good job but whether they have all the tools they need or whether their Legislature gives them all the tools they need, I don’t know. The jury’s still out.”