Gov. Andrew Cuomo has faith in SolarCity.
Despite the solar energy company’s financial troubles, the New York governor said Wednesday that the Buffalo factory is part of a broader strategy focusing on the growth of the clean energy industry.
“This is the economy of tomorrow,” Cuomo said in his first comments on the centerpiece project for the Buffalo Billion economic-development program since SolarCity last week disclosed that it was facing a cash crunch and had briefly considered – and subsequently decided against – selling its solar panel manufacturing business.
But with construction nearly finished on the 1.2 million-square-foot factory at RiverBend in South Buffalo, Cuomo said the state’s $750 million bet on SolarCity is about much more than one company, even if it is the nation’s No. 1 installer of residential solar energy systems.
“This is a long-term strategy. What we’re betting on – what the world is betting on – are alternative energy sources, and solar is going to be chief among them,” Cuomo said.
“Getting this facility here and getting this manufacturer here – and this manufacturer dominates the market – I think we are exactly where we need to be,” Cuomo said.
Tesla Motors, in a marriage of corporate cousins linked to Elon Musk, has agreed to buy SolarCity for $2.3 billion, although the deal still must be approved by shareholders. A total of 15 other potential buyers, lenders or investors looked at SolarCity during the weeks after the Tesla deal was first disclosed, and none decided to outbid Tesla, according to a Tesla regulatory filing last week. A 45-day window that allows SolarCity to accept offers from other buyers closes next Wednesday.
In addition, SolarCity’s borrowing costs have been rising, while the company’s lenders have been holding back since the potential merger was first disclosed in June. That’s causing a cash squeeze at a company that relies on having regular access to capital to cover the upfront costs of installing solar panels on customers’ homes.
Cuomo wasn’t about to try to predict how it all will play out.
“This is an economy that changes all the time. That’s the nature of the beast, unfortunately,” said Cuomo, who is pushing for New York State to get half of its electricity from renewable sources by 2030. “But I believe clean energy, that’s not going to change. That has to happen.”
Cuomo added, “This is the state-of-the-art plant in building solar panels, so I am confident we are where we need to be and in the right place in the market in the evolution of the market.”
The South Park Avenue factory, built and owned by the state, is nearing completion, with mostly finishing work needed before SolarCity takes control of the plant Sept. 16. About two-thirds of the plant’s sophisticated panel-making equipment – also owned by the state – has been ordered, said Steve James, the senior vice president of operations for SolarCity’s solar panel manufacturing business. James expects workers to start installing the equipment in December or January.
Last month, SolarCity moved up its launch date for production at the Buffalo plant in anticipation of its yet-to-be-announced solar roofing product offering. It now expects to be making panels with the capacity to generate as much as 250 megawatts of electricity – about a quarter of its official capacity – by the end of June 2017.
The company, which now has about 40 employees in Buffalo, expects to start hiring in the first quarter of next year and have at least 150 jobs by the time production starts, according to James, who thinks that the SolarCity plant will have more than the promised 500 manufacturing jobs once it’s running at full speed. That would especially be the case if the company succeeds in boosting its capacity beyond the 1,000 megawatts of panels that it originally expected to be able to produce.
Howard Zemsky, the Buffalo developer who serves as president of Empire State Development, sounded a confident note.
“This is the No. 1 market share company in the country in solar panels in one of the fastest-growing industries in the world,” Zemsky said. “I think we start, we get up to 500 people, and we keep going.”
The SolarCity factory, with its promise of 500 manufacturing jobs and an additional 1,000 staff, sales and support positions, has been one of the big reasons behind the renewed sense of optimism about the Buffalo Niagara region’s economy, which lately has been growing faster than it has for most of the last quarter-century but still lags behind the national growth rate.
The irony that the SolarCity factory is being built on the site of the long-ago-closed Republic Steel plant is not lost on Cuomo.
“Every time you drove by it, it reminded you of what Buffalo was … and how Buffalo got frozen and rusted in place,” Cuomo said.
“If you want to talk about a picture of yesterday and tomorrow, of past and future, you can’t have a better snapshot than the Republic Steel plant – closed and people moving away – and today the largest solar manufacturer in the United States with the best technology to save the planet and get energy affordable. And it’s happening in Buffalo.
“This is literally a dream come true, and it was a dream that a lot of people said would never happen,” Cuomo told more than 100 construction workers.
“It was just too bold. It was too big. It was too ambitious. We couldn’t pull it off. Buffalo wasn’t the right place. They would never get this manufacturer. And you made the dream come true,” he said. “You didn’t just build a building, you built Buffalo’s future.”