Martin Pochtaruk is trying to succeed where few others have - making solar panels in North America and making money doing it.

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U.S. and Canadian photovoltaic panel makers have dropped in recent months like flowers wilting in the sun. Mountain Iron's Silicon Energy left town at the end of April - its parent company dissolved. In the Twin Cities, tenKsolar closed in May after employing as many as 90 people in recent years. In St. Paul, Simple Ray Solar LLC closed after less than a year assembling solar panels.

Nationally, big solar panel makers like Mission Solar, SunPower, First Solar, Sungevity, Beamreach and SunEdison have closed, filed for bankruptcy or both.

Martin Pochtaruk
Martin Pochtaruk
Now, Pochtaruk's Ontario-based Heliene, Inc. has expanded into the old Silicon Energy facility in Mountain Iron. It's one of only two companies making photovoltaic (solar electric) panels in Minnesota and the only one building them from scratch. (The other, Minneapolis-based Itek, assembles panels here from parts manufactured in Washington.)

"We were the first (solar panel manufacturer) in Canada in 2010. Pretty soon there were 11. Now, there are only three of us left," Pochtaruk told the News Tribune. "I think we can survive in Minnesota, too."

Domestics doomed?

So why are so many domestic solar manufacturers failing? The fast answer is cheap Asian-made solar panels that have flooded the North American market. The U.S. imported nearly $8.1 billion worth of solar panels in 2016, U.S. government data shows, nearly 38 percent more than 2015.

The imports - mostly from China, Malaysia, Vietnam and Thailand - have spurred a cry for protection not unlike that of the domestic steel industry. Bankrupt Georgia-based Suniva filed a trade complaint in April seeking new import tariffs on all foreign-made solar cells. Oregon-based (but German owned) SolarWorld AG charged that the so-called dumping of cheap modules has caused it to file for insolvency.

Earlier this month the U.S. International Trade Commission agreed to investigate imports of solar panels for possible harm done to domestic manufacturers.

It's too late for some companies.

In a statement last month announcing they were ending operations, tenKsolar officials said the past 18 months had seen the price of solar panels drop too fast for the company to make money against competition from imports.

"In 2016 alone, solar module prices declined greater than 30 percent," the Twin Cities company said in announcing it was ceasing operations.

This domestic demise of solar manufacturing is confusing because it's happening even as the nation rushes toward more solar energy. In the first quarter this year the U.S. added 4 million gigawatts of solar capacity, hitting nearly 45 million gigawatts total - more than double a few years ago and enough to power 8 million homes.

But with most of those panels coming from Asia, U.S. makers were forced to drop their price to that of the imports. As one analyst concluded, demand for solar panels is growing as prices for solar arrays drop for consumers and businesses. But the falling price of panels is "literally killing manufacturers."

"As companies have floundered, they've been forced to sell product at cash costs or less, bringing down the whole industry with them," Travis Hoium, a solar industry analyst for The Motley Fool, said in a May report. But he added that industry survivors may be able to thrive.

"The upside for the few survivors in the solar industry should be better economics."

Slow, 'organic' growth

Pochtaruk says cheap Chinese solar panels are only part of the issue. He also cited failed business models that depended on government subsidies to turn profits. When those subsidies didn't produce, or were pulled back, companies dropped fast.

His company's small operation, based in Sault Ste. Marie, Ontario, at the other end of Lake Superior, "grew organically" Pochtaruk said, based on real demand.

Before it formally ended operations on April 30, Silicon Energy had in fact been making Heliene Inc.'s solar panels in Mountain Iron since mid-2016. Only about 7 percent of the company's sales of Minnesota-made panels were through the Made in Minnesota Solar Incentive Program state government incentive, he noted. Pochtaruk said his company can turn a profit making panels in Minnesota even though the Minnesota Legislature eliminated the incentive this year.

"We also have diversified products that can serve a lot of needs. I think part of the problem is that (other solar panel makers) had only one product," he said.

Pochtaruk said his panels are "not necessarily more expensive" than Chinese competitors but are higher enough in quality that domestic installers are willing to buy from Heliene.

The company has 78 employees at its Sault Ste. Marie plant. So far Heliene USA has eight workers in Mountain Iron, double the number Silicon Energy employed.

"We'll make about double the number of panels this year than Silicon ever produced'' in Mountain Iron, Pochtaruk said, adding that he hopes to grow the Iron Range operations like he did in Ontario "organically, not exponentially. But we should have 20 or 30 people there fairly soon."

Pochtaruk added that being a Lake Superior-region company lends some knowledge of what will work in Minnesota.

"The black flies aren't going to scare us away," he quipped.

Minnesota demand skyrockets

Solar energy is growing fast in Minnesota, with nearly as much solar electricity generation added in the first quarter of 2017 as in all of 2016, state officials said last month. The state has grown from a total of one megawatt of solar capacity in 2009 to 447 megawatts today, enough to power 63,000 homes. Minnesota is expected to have 800 megawatts of solar capacity running by the end of 2017, state officials have said.

Solar installations in Duluth increased 134 percent from 2014 to 2015. Minnesota Power last week announced plans to add another 10 megawatt solar farm, this one near Royalton, which will use thousands of solar panels producing enough to power nearly 2,000 homes.

"We'd love to get into that one,'' Pochtaruk said. "We have a good sales book. We are doing well. ... We have customers in Canada, Vermont, Massachusetts, California, Hawaii, Nebraska and of course Minnesota."

Out with the old

Officially, Washington-based Silicon Energy and the Mountain Iron Economic Development Authority have terminated their lease for the building in the Mountain Iron Renewable Energy Park. The space and equipment have subsequently been leased to Heliene, USA.

Silicon Energy has paid back most of its debt to the Iron range Resources and Rehabilitation Board, and its former owner is still making payments on a $1.3 million IRRRB equipment loan, said Sheryl Kochevar, IRRRB spokeswoman.

"Our staff has been working diligently to secure a new tenant for the building,'' Kochevar said. "We are pleased that the facility will continue to be utilized as solar panel manufacturer."

 

Legislature ends state solar incentive rebate

The 2017 Legislature's jobs and energy omnibus bill signed by the governor last month eliminates the Made in Minnesota Solar Incentive Program that helped reduce costs for solar electric installation.

The program, which began in 2014, was slated to run for 10 years. The new law means there will be no new projects after this year. However, owners of projects approved for 2014-2017 will still get their annual incentive payments for the promised 10 years. (Solar system owners receive an annual payment for 10 years based on the system's actual electricity production each year.)

All but a handful of the Made in Minnesota project applications for 2017 were for Heliene and Itek modules. The few incentive recipients who intended to install Silicon Energy or tenKsolar modules are being allowed to switch to Heliene or Itek modules instead, the Minnesota Department of Commerce said.