Local plant runs at full capacity as falling cost of electricity generation heats up market

By all measures, 2016 is turning out to be a monster year for the solar industry, and by extension, for solar panel makers such as First Solar Inc.

The U.S. solar market is expected by year’s end to have grown 119 percent over 2015 numbers, with the number of panels installed providing a whopping 16 gigawatts of power, more than doubling last year’s previous record-breaking 7.3 gigawatts, according to Boston-based GTM Research.

Currently, the six production lines that employ 1,400 workers at First Solar’s solar panel manufacturing plant in Perrysburg Township are running at full capacity, producing commercial grade, thin-film solar panels for utility-scale solar power plants.

First Solar, based in Tempe, Ariz., has no room to expand its only plant in the United States even if it wished to do so.

According to GTM, which stands for GreenTechMedia, utility solar projects will be 74 percent of installations this year.

But Sean Gallagher, vice president of state affairs for the Solar Energies Industry Association, said the market is booming for the consumer rooftop industry too.

Overall, the industry is being driven by continued falling prices in the cost of power generation from solar panels, an extension at the end of last year of federal tax credits for using solar, blossoming state policies mandating more use of green technologies such as solar and wind, new rules allowing those who have solar power to interconnect with the power grid, and the growing use of net metering — the act of someone with solar panels being allowed to use the power that they generate at any time.

“The growth has been strong year over year. As these facets continue to take hold, and the cost comes down steeply, that increases the ability of customers to go solar and that increases the likelihood of bigger projects getting done,” Mr. Gallagher said.

The surge this year in demand for solar panels is being driven, in part, by the previous uncertainty of the federal Solar Investment Tax Credit, or ITC.

The credit was set to expire at the end of this year, prompting many large-scale solar projects to be fast-tracked and pushed to go in 2016 for fear of losing the valuable 30 percent tax credit.

At the end of 2015, the credit was extended through 2023, easing some of the pressure to get projects done this year, experts said.

“There may be a slight dropoff in 2017 because of the effect of the ITC,” Mr. Gallagher said. “A lot of projects were pulled forward by companies trying to get projects done this year. But we foresee strong growth in the market after 2020. By that time, we predict an annual market of 20 gigawatts of new solar projects.”

The residential market too is soaring, thanks to a new industry practice that began a few years ago — the leasing of panels.

“You already have lower prices so more customers can afford solar panels. But there’s increasing acceptance of third-party leasing models, like a car lease,” Mr. Gallagher said. “That takes down the upfront cost that many customers previously couldn’t afford.”

However, Ohio is a lagging participant in the surging solar market in the United States.

Only about 10 megawatts’ worth of new solar power was installed in Ohio in 2015, according to Solar Energy Industries Association.

One megawatt of solar power is enough to power about 164 homes.

GTM Research said in 2015 the state ranked 28th overall in solar installations.

For 2016, the solar energy association estimates Ohio will add just 15 megawatts, and in the expected upcoming boom years, just 25 megawatts for 2017 and 43 megawatts for 2018.

Jason Slattery, who is the director of solar for solar projects installation firm GEM Energy, one of the companies in the Rudolph/?Libbe Group, said Ohio, whether deliberately or not, is reluctant to embrace green energy like solar.

“From our perspective — and we do solar development all over the U.S. — when looking at the surrounding states, Ohio is like the solar donut hole,” Mr. Slattery said. “We’re doing activity on solar projects in all the states surrounding Ohio. But Ohio is challenged.”

In 2014, the state legislature and Gov. John Kasich put a two-year freeze on mandates requiring utilities to find at least 25 percent of their power from solar, wind, and other green sources by 2025 and reduce overall energy consumption by 22 percent.

This year, a bill has been introduced that freezes Ohio’s renewable portfolio standard mandate permanently, although Mr. Kasich has said he is against it.

Mr. Slattery said the freeze and a permanent one make no sense when most other states are going in the opposite direction.

“Solar in Michigan is booming. Indiana’s booming. Pennsylvania, I would not say it is boom there, but it is doing more than Ohio,” Mr. Slattery said. “And New York is really booming.”

“Ohio is the first to freeze their [renewable portfolio standard],” he said. “And yet, what we’re seeing is the other states are increasing their [standards]. They’ve already met their goals and they’re increasing their requirements.

“Ohio is the oddball, which totally baffles my mind,” Mr. Slattery said.

However, the slowdown in solar expansion in Ohio has not affected state-based companies involved in the industry.

GEM Energy will grow 30 percent this year, Mr. Slattery said. “There is activity in development solar projects in Ohio, not as many as we’d like, but there is some growth planned over the next few years,” he said.

And the company is actively bidding on multiple projects in the surrounding states, Mr. Slattery added.

First Solar began noticing a jump in demand a year ago, prompting it to hire 60 more workers to push production at the area plant to nearly 600 megawatts and make it the largest solar module assembler in North America.

The growth spurt for 2016 and beyond means it is highly unlikely any dip in employment will occur at the Perrysburg Township plant over the next five years and possibly longer, company officials said.

The extension of the federal Solar tax credit, in particular, has given industry a huge boost and in turn, made the fortunes of First Solar and others in the industry look sunny.

“We already have a longer-term pipeline of projects that was quite strong,” Steve Krum, a First Solar spokesman said.

“The ITC extension rushed some projects in the early stage of development out a little further because there’s no need to get under the wire anymore,” Mr. Krum said.

“But the bigger thing is I think it has created a greater confidence in the industry on the whole. People can now go forward without the anxiety of a shoe dropping and curtailing things,” Mr. Krum added.

First Solar, which in 2011 began building a second U.S. plant in Mesa, Ariz. but then sold the nearly-unused facility in 2012 after the market was saturated with unsold panels, is now talking again about adding a plant if demand continues to grow.

The company would need a new facility to build its Series 5 and Series 6 solar panels — larger products now in prototype stage that have three times the wattage of the standard Series 4 panels now made in Perrysburg.

First Solar is developing the Series 5 at its plant in Malaysia. But Mr. Krum said that if the company decided in the next few years to go ahead with a new plant, it could be built anywhere.

First Solar chief operating officer Tymen de Jong, said in April during the company’s annual presentation to Wall Street analysts that it has the machinery for a new plant.

“We do have eight lines of stored tools that we purchased back in 2009. So if we choose to, we can do something like this: starting in late 2017 we can deploy four lines of Series 4 technology; we take them out of storage; we upgrade them to [Series 5] technology node,” Mr. de Jong said.

• [Editor:tianyawei]