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Solar manufacturing to get boost as Soitec enters market

French company wraps up $120 million re-work of old Sony building

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In March 2011, Soitec, a French manufacturer of electrical semiconductor materials, announced that San Diego would be the site of its new North American solar-manufacturing headquarters. By December 2011, the company decided on a location and purchased a building that would house its operations. Today, that site in Rancho Bernardo, formerly owned by Sony Corp. (NYSE: SNE) is mere weeks away from becoming a working facility.

Gov. Jerry Brown visited San Diego in December 2011, attending the celebration event Soitec held to mark the occasion of the building purchase. That’s how big a deal it was, Clark Crawford, Soitec’s vice president of U.S. sales and business development, said.

Soitec bought the 176,000-square-foot building for roughly $30 million, and is investing around another $120 million in revamping it to fit its needs and fill it with manufacturing equipment. Soitec’s manufacturing process is highly automated, so much of that cost is related to the equipment needed — such as semiconductor packaging equipment and machines that set printed circuit boards in place — to take the glass sheets coming into the factory and turn them into solar modules.

A great deal of thought went into choosing the Rancho Bernardo site, Crawford said. It was a spot supported by the consultant responsible for helping Soitec locate its production facility in Singapore, and it was for sale in the right place at the right time, Crawford said. To meet its production timeline goals, Soitec needed an existing facility that it could rework rather than build from the ground up.

Germany is home to Soitec’s existing solar manufacturing facility. Planned to be operational in late September and producing modules by the end of 2012, the San Diego facility is expected to produce more than four times as much as the Germany facility.

With a de-centralized manufacturing model, Soitec plans to use the San Diego facility to market its product this side of the Atlantic.

“We’re very bullish about the American market,” Crawford said. “We plan to be in the U.S. utility-scale solar market for many years to come.”

In June, the new manufacturing facility received a $25 million boost from the SUNPATH program, part of the U.S. Department of Energy’s SunShot Initiative.

In taking that money, Soitec has committed to manufacturing in the United States for at least five years, Crawford said. But that’s not to say that after five years, manufacturing will cease at the new facility, he added.

The modules that will come out of the facility are best designed for utility-scale solar projects, such as solar groves. With that, Soitec’s primary customers in the region are companies in the business of developing, owning and operating solar power generation assets, such as San Diego’s Sempra Energy.

“One of the factors that factored into our choice of San Diego is the number of those types of customers that are already located in San Diego,” Crawford said. “There’s a cluster of project developers and independent power producers.”

Other than Sempra, other examples of Soitec’s preferred client base will be NRG Solar — based in Carlsbad, and Rancho Bernardo’s enXco Solar — a subsidiary of the multinational EDF Energies Nouvelles. Development of the major desert-to-city Sunrise Powerlink, which is now operational, also factored into Soitec Solar’s choice to call San Diego its North American manufacturing home.

Even before the building is occupied by Soitec employees, the company has secured contracts that will keep those employees busy, agreeing to produce modules that will go to projects it plans to develop in the eastern stretches of San Diego County for Sempra Energy (NYSE: SRE) subsidiary San Diego Gas & Electric.

“We have a portfolio of five solar power projects that add up to 155 megawatts — SDG&E has signed the (power purchase agreements) for those,” Crawford said.

When operational, the Rancho Bernardo manufacturing facility will be capable of producing enough modules to in turn produce 280 megawatts of solar energy per year. Multiplied by the five-year commitment that Soitec has made to produce out of Rancho Bernardo, a minimum of 1,400 megawatts worth of solar energy modules will be built in San Diego by the end of 2017.

But just as the five-year commitment is a minimum set by Soitec, so is the output. Crawford said the hope is to expand the facility further, so that it may be capable of producing enough modules to in turn produce 500 megawatts instead of the initial 280 megawatts.

Because of the design of the Rancho Bernardo building, solar power generation is not planned on site. But it was considered, Crawford said, for obvious reasons.

“We actually ended up re-roofing the building during construction,” Crawford said. “But we found out that the building, roofing structure, was built early enough that it wasn’t designed for the load of solar panels. But we’ll have a couple of operational units at the back of our factory to be used for demonstration.”

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