Despite three recent bankruptcies, the US solar manufacturing industry is doing just fine, according to Mark Riedy, founder and general counsel to American Council on Renewable Energy (ACORE) and a partner at the Mintz Levin law firm.
“I’m not worried about it and I’ve been in the renewables space since 1975, year in and year out,” Riedy said.
He told Breaking Energy that as the market thickens, only the best companies will pull through and beat the competition. Having a good financing plan and knowing how and where to take advantage of government incentives can be far more important than the operability of the technology itself, he said.
His advice to renewables entrepreneurs: “Incubate projects in the US and mature them offshore.”
In other words, develop a technology and secure US government financing. America is the only country that will underwrite a technology risk, he said. Then, once a year has passed and the technology can be safely proven to be commercially-viable, manufacturing should be moved offshore when need is great for electricity and money is available.
“Guys who have reached that point, they ought to look internationally, because there are a lot of countries that need a lot of energy,” he said. Once that stage is completed, it becomes even easier to finance the next round of projects.
Companies like Solyndra failed, Riedy said, even with federal funding, because executives were not careful about finances.
“You have to be careful so that you realize your rate of return,” he said. “You have to look at some of the ways people are doing it successfully.”
But figuring out how to finance renewables projects also requires a lot of creativity, he said. He noted that Mintz Levin has developed a financing system of credit-enhanced bonds that allow investors to see earlier rates of return. Another option is the “wrapping” insurance policy-finance route that solar company Q.Cells has been employing. That method uses a “wrap” to provide investors a guarantee against potential losses.
Riedy said that in his opinion distributed generation renewables will ultimately be more successful than large-scale solar or wind farm style projects that were only built in the first place because those were the kinds of projects that federal loan guarantees supported.
But with tough economic times, it really will be the most nimble entrepreneurs who live to tell the tale.
“Patience, focus and creativity–that will win the day,” Riedy said.
Photo Caption: This photo taken on July 14, 2011 show Chinese laborers working at an electrical products factory in Hefei, east China’s Anhui province.
