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April 25, 2018 - 3:53pm

DOE, which wouldn't provide loan guarantee, now threatening 1366 over plant in Asia

posted by Howard B. Owens in 1366 Technologies, news, STAMP, GCEDC, notify.

After an apparent inability to reach an agreement with 1366 Technologies that would have paved a path for the company build its solar wafer plant in the STAMP project in Alabama, an attorney for the Department of Energy is threatening legal action against the startup for planning its factory in Southeast Asia.

John T. Lucus, acting general counsel for the DOE, submitted a letter to trade representatives last week in opposition to a request by 1366 for an exemption from a proposed tariff on solar panels manufactured overseas.

Citing a claim by 1366 in its application for the exemption that it is building a factory in Southeast Asia, Lucus wrote, "1366, however, made U.S. manufacturing commitments to DOE as part of millions of dollars in funding agreements with 1366. Constructing and operating the Southeast Asia facility is likely contrary to 1366's U.S. manufacturing commitments to DOE. DOE takes this matter very seriously and is currently looking into 1366's compliance with its DOE funding agreements."

A spokeswoman for 1366 declined to comment.

"We are not providing comment on the letter at this time as we’re working to consult with the DOE to gain additional clarity," said Laureen Sanderson.

The letter from Lucas makes it sound like the DOE either released funding or followed through on commitments to help fund the $700 million plant 1366 had hoped to build in Genesee County.

In fact, 1366 withdrew its application for funding late last year and announced its plans to build a plant overseas instead of in the U.S. after the DOE failed to finalize a 2011 agreement for a $150 million loan guarantee.

After 1366 selected Genesee County for its facility, the company sought to renegotiate part of the agreement. The negotiations were put on hold following Donald Trump's election and did not resume until well after Secretary Rick Perry was confirmed. According to sources, the DOE was unwilling to make any changes to the agreement, specifically as it related to a requirement that 1366 raise $100 million in private investment. At that point, the company had raised $80 million.

The other part of the agreement used by the DOE to justify withholding the loan guarantee was that the company had not selected a location in the United States for its manufacturing facility even though 1366 had signed documents with both the Genesee County Economic Development Center and Empire State Development naming STAMP as its future manufacturing home.

The 1366 manufacturing process is patented and touted as potentially disruptive to the energy industry because it eliminates waste, lowers costs, and boosts power efficiency. It was developed at MIT.

The factory in Alabama was expected to employ as many as 1,000 people at full capacity making just solar wafers, not solar panels, and the company said all of the initial customers would be overseas and not in the United States.

The letter from Sanderson to the U.S. Trade Representative regarding the Trump administration's proposed tariff on solar panels says the company is seeking an exclusion on the portion of any panels imported into the U.S. using direct-to-wafer technology. The wafer comprises 70 percent of a panel's expense, Sanderson said.

The exclusion application also states that 1366 still plans to build a factory in the United States at some point that will employ 700 to 1,000 people.

The company said the exemption would give the U.S. solar industry "breathing room" in order to compete in the global market.

In the request summary, 1366 states:

The greatest barriers facing U.S. companies today come from a trade imbalance that places U.S.-based firms at an obvious disadvantage, scaring off private investors, stifling on-going U.S.-based manufacturing innovation and forcing U.S. companies to negotiate product sales and technology licensing agreements with foreign, state-funded companies from a position of weakness. The U.S. now has a very real opportunity to correct this imbalance and right the course for U.S. manufacturers and innovators so that they, in turn, can focus on job creation.

SolarWorld, based in Bonn, Germany, and one of two companies (along with Suniva, which has since gone bankrupt) that lobbied for U.S. tariffs of 30 percent on solar panels, opposes the 1366 exemption. While acknowledging the innovative manufacturing process employed by 1366, SolarWorld's Timothy C. Brightbill says the final product is indistinguishable from existing wafers.

SolarWorld itself has received $121 million in state and federal grants and tax breaks and another $61 million in loan guarantees. SolarWorld is also struggling and is currently seeking bankruptcy protection in Germany.

SolarWorld is also opposing an application by Panasonic/Telsa for an exemption for a part used in solar panels manufactured in Buffalo.

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