The solar panel factory slated to be part of the RiverBend clean-energy hub in South Buffalo could be more than five times bigger than originally planned, after the California-based company agreed Tuesday to be acquired by one of the nation’s biggest installers of solar power systems.
Instead of creating 475 jobs, as originally promised by the solar panel-maker Silevo, the $200 million deal and the expansion of the Buffalo factory could create “well over 1,000 jobs” under the company’s new owner, SolarCity Corp. of San Mateo, Calif. Its chairman is Tesla Motors founder Elon Musk.
“We’re interested in going bigger and as fast as possible,” said Christopher Beitel, Silevo’s executive vice president, who has been coordinating the company’s development efforts at RiverBend. “We don’t want to derail some of the work that’s already been done at the site.”
Silevo is one of the two companies that have agreed to open a factory in the $225 million RiverBend complex, one of the key initiatives in Gov. Andrew M. Cuomo’s Buffalo Billion economic-development initiative.
“It’s going to dwarf what had been discussed,” Beitel said in an interview.
If the expanded plans come to pass, Buffalo could be home to one of the largest solar panel factories in the world.
Beitel said the plant’s expansion likely will lead to a redesign of the RiverBend complex, which originally was envisioned as a series of buildings running along a central spine. With the solar panel factory now envisioned as five times larger, the complex now may have fewer but bigger buildings than originally planned.
Cuomo hailed the announcement. “It is truly a sunny day in Buffalo,” he said in a statement. “The prospect of thousands of new solar energy jobs coming to the region, marking another landmark investment and economic game-changer taking place in the new Western New York.”
Alain E. Kaloyeros, CEO of the SUNY College of Nanoscale Science and Engineering in Albany, said the deal is a validation of the Cuomo administration’s efforts to establish a clean-energy and technology hub in Buffalo, using the same model that the state successfully used over the last two decades to establish a thriving semiconductor industry in the Capitol District.
The SolarCity acquisition of Silevo will lead to a “significantly expanded relationship with New York,” he said.
“Talk about getting on the map with the solar industry in a hurry,” said Buffalo Mayor Byron W. Brown. “This project will move even more quickly now.”
Musk, SolarCity’s chairman and its biggest shareholder, is founder and CEO of electric car-maker Tesla Motors and CEO of Space Exploration Technologies Corp., a private space travel company. SolarCity carved its niche by offering rooftop power systems to customers who sign long-term contracts to buy the power generated.
The company, which had $164 million in sales last year, is forecasting rapid growth in the demand for the solar energy systems it installs, rising from an estimated 550 megawatts this year to as much as 1 gigawatt in 2015.
“Solar is going to continue to grow,” said Shyam Mehta, an solar industry analyst at GTM Research. “Solar is only going to get cheaper and, at best, electricity from fossil fuels will be stable.”
Howard A. Zemsky, co-chairman of the Western New York Regional Economic Development Council, said the merger is a vote of confidence by SolarCity in Silevo’s technology and a key step in creating the critical mass the state is seeking for the solar power industry.
“It’s good to see such a significant player like Musk and SolarCity validate New York state’s confidence in the technology of Silevo,” Zemsky said. “And, of course, SolarCity’s larger size and more varied market segments open up more opportunity for Western New York.”
Peter J. Rive, SolarCity’s co-founder and chief technology officer, said in an interview that the Buffalo site has several advantages, including the expectation that the factory will receive low-cost electricity from the Niagara Power Project. Its location near significant rail lines, highways and Great Lakes shipping lanes makes it easy to ship products in and out. And the company also liked the engineering talent available from local colleges and universities, including the University at Buffalo.
Under the deal, SolarCity agreed to buy Silevo for $200 million in stock, with the potential for $150 million in additional payments if Silevo meets certain performance and cost targets.
The acquisition will allow SolarCity, already one of the nation’s biggest solar power companies, to branch out into manufacturing as part of a push to improve the efficiency of solar energy systems and drive down their costs to make them more competitive with electricity produced by fossil fuels such as coal and natural gas. Silevo’s panels can convert about 21 percent of the sun’s energy into electricity, compared with about 18 percent for conventional solar modules, and SolarCity executives said they think Silevo’s efficiency eventually could reach 24 percent.
“I think this acquisition will come as unexpected to some, probably to most,” Musk said during the conference call. SolarCity had stayed away from solar panel production in the past because “we didn’t think until now there was a need to do this.”
But with demand for its rooftop solar panel systems soaring – rising by 78 percent in the first quarter – SolarCity executives changed their minds. “If we don’t do this,” Musk said, “we felt there was a risk of not having the solar panels we need to expand the business in the long term.”