Arizona, the south-western state known for vast sunsets, cacti and the Grand Canyon, is well poised for growth in the renewables industry. Its unique advantages regarding climate, operating cost, workforce and research capabilities provide companies in Arizona with opportunities to take advantage of the coming US solar boom, much of which is expected to take place in the state and in surrounding areas.

According to reports such as Market Buzz, the US solar market capacity stood at 220 megawatts (MW) in 2007, and is expected to grow to more than one terawatt (TW) by 2012.

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“The majority of that growth is expected to be in the US south-west regions, largely because of their sunshine and good climate,” says Michael Ludgate, director of business development and engineering at Kyocera Solar.

Companies such as Kyocera, which recently acquired a solar distributor in Arizona, have come to recognise the state’s potential. “Arizona offers a great climate to test our products all year long. The hot environment allows us to test the high extremes. And the overall cost of living in the state is attractive for retaining our employee work base. The workforce in Arizona is strong and we do not have an issue finding competent people to add to the team,” says Mr Ludgate.

Another prominent firm making commitments in Arizona is SOLON Corp. SOLON, a wholly owned subsidiary of Germany’s SOLON AG, located its state-of-the-art production facility for solar modules in Tucson. Phase one of the project, which opened in October 2008, will have an annual capacity of 60MW peak and produce crystalline and thin-film solar modules as well as photovoltaic systems for the North American market. SOLON employs about 100 people at its site in Tucson.

Neil Shea, director of business development and marketing at SOLON America, says that the company chose Tucson because of the availability of an experienced solar power plant team with a track record of building 6MW-worth of systems, the availability of a thin-film technology at Global Solar Energy, the talent of the local workforce, proximity to a world-class university, the relatively low cost of operation, and its vision of the role that solar power plants could play in the state.

Major solar project

Recently, Arizona Public Service (APS), the state’s largest utility, teamed up with Spain’s Abengoa Solar, one of the world’s leading solar companies, for the Solana solar generation project. When completed in 2012, Solana will be the largest solar power plant in the world, providing 280MW of power and incorporating electrical storage technology.

Solana, Spanish for ‘sunny place’, will not emit greenhouse gases and will provide APS with more solar electricity per customer than any utility in the US.

The enthusiasm for the renewable energy arena is evident in the myriad initiatives taking place around the state. For example, the University of Arizona’s Solar Racing Team completed the 2008 North American Solar Challenge, a 3900-kilometre race from Dallas, Texas, to Calgary in Canada.

Arizona is clearly committed to ongoing research in solar energy. The Global Institute of Sustainability at Arizona State University (ASU) is a national leader in solar energy research development, with six major grants from the US Department of Energy, five of which come from the Solar America Initiative. ASU plans campus-wide solar installations that will be one of the largest commitments to solar energy by a university in the US.

Long before solar became the darling of green technologies, ASU had attracted many of the world’s top scientists to its laboratories, largely because its outdoor environment is near perfect for testing and developing solar devices.

Gradually, the university has made significant strategic investments in people and infrastructure to maintain its top position and advance solar technology and assessment at a world-class level. ASU researchers have won more awards from the Department of Energy’s Solar America Initiative than any other university. In addition, the university recently spun out its world-renowned Photovoltaic Testing Laboratory in partnership with TUV Rhineland, a billion-dollar worldwide technology testing company headquartered in Cologne, Germany.

International standing

Co-operation between Kyocera’s head office in Japan and ASU leadership recently resulted in the Arizona division working with ASU. “Our office now has the lead in working with some researchers on future-oriented project ideas.” says Mr Ludgate.

While the research is confidential, he suggests that the research opportunity validates the company’s decision to locate in Arizona. “As competition in this area heats up, it is important for the private sector to leverage the research project that could be the next emerging technology or breakthrough,” he says.

Private sector leadership also plays an important role for partnerships. APS operates the Solar Test And Research (STAR) facility in Tempe, which provides solar resource monitoring, small-scale performance testing of new products, and acts as a staging area to prepare and test equipment being installed for customer service. “We have had multiple discussions with STAR facility,” reveals Kyocera’s Mr Ludgate. “It is a good source of sharing for both entities.”

Financial incentives

Arizona has been proactive in implementing regulatory inducements and financial incentives to create a strong and growing renewable energy market. Existing public policies, aimed at stimulating renewable energy projects and distributed generation projects, are helping to expand opportunities for companies such as Kyocera, SOLON and Abengoa Solar.

Arizona’s proposed Renewable Energy Standard (RES) is promoting the state’s growth in renewable energy development, and the solar generation component of the RES is one of the highest in the US.

Arizona also offers one of the most business-friendly operating environments. The state has a long tradition of taking a minimalist approach to regulation and during the past 11 years has reduced business taxes or taken other steps to make Arizona’s business climate attractive for domestic and foreign capital investment.

Combined with targeted incentives, wages that are generally 86% of the US national average, virtually the lowest payroll taxes of any state, and abundant land for development, Arizona is one of the most desirable locations in the US for FDI in the renewables sector.

The cost of this report was underwritten by the Arizona Department of Commerce. Reporting and writing were carried out independently by fDi magazine.