You could say the Hudson Valley is under an economic cloud. The silver lining could turn out to be the sun itself.
The cloud: Millions in state aid bypasses the region for more depressed areas upstate. To the south New York City and Westchester County are bustling worlds unto themselves. IBM”™s facility in East Fishkill is the exception, drawing a cluster of businesses to its campus. But the shuttering of IBM”™s plant in Kingston more than a decade ago was a long-term body blow. Attempts to bring in large firms with hundreds of jobs ”“ the traditional model of economic development ”“ have failed.
The sun: A couple of business leaders with a track record of success in the semiconductor industry have come up with a new business model that takes a radically different approach. Call it the solar alternative.
Frank Falatyn, president of FALA Technologies, a Kingston firm that provides manufacturing and engineering services to large players in the semiconductor industry, including IBM and Intel, and Vince Cozzolino, a retired vice president at IBM who led a number of innovation initiatives, including launch of the corporation”™s engineering and technology services, have formed The Solar Energy Consortium to jump-start the development of a solar energy industry in the Hudson Valley.
The consortium would be headquartered in a 300,000-square-foot facility at Tech City, the former IBM plant in Kingston, with plans eventually to expand into other buildings at the site.  Â
With many states creating incentives for installation of photovoltaic systems, “the solar industry is on the threshold of becoming a huge new technology for the nation,” said Falatyn, who also is president of the Hudson Valley Technology Council. The third founding member is Dean John Harrington of the School of Science and Engineering at SUNY New Paltz.
Germany has already made huge strides in deploying solar energy technologies, with the market approaching $30 million to 40 million a year, according to David Kulik, president of SunWize Technologies, a Kingston-based solar energy system integrator and wholesaler that plans to participate in the consortium. “The U.S. has lost its leadership in this technology to Germany and Japan, and to me that”™s a shame. We want to make New York the leader. It takes a commitment from individuals and the various government organizations. To me this is a very good step.”
U.S. Rep. Maurice Hinchey, D-Hurley, who has long been a proponent of solar energy, which he believes is key to curbing the nation”™s dependence on foreign oil as well as reducing the CO2 emissions that cause global warming, first met with the group in February. He has just secured $1.5 million in federal funds for the project.
The consortium”™s efforts have already created value, just by bringing all the parties to the table, according to Lance Matteson, president of Ulster County Development Corp., based in town of Ulster. Falatyn and Cozzolino “have been able to put people together and make connections between companies,” he said. “The whole idea is to make solar products and systems more affordable and competitive, so as not to depend on subsidies and incentives.”
The immediate challenge is obtaining $5 million in seed money from the state. Because the federal money would not be available until the spring, “obtaining direct funding from Empire State Development (ESD) is critical to us right now,” Hinchey said. “We”™re trying to persuade them that this strong initiative would benefit the state.”
Besides the initial $5 million, the $138 million project would require a minimum of $15 million from the state each of the next two years. Falatyn and Cozzolino said securing the state grants would give them the credibility they need to obtain additional money as well as attract investment interest large and small.
Assemblyman Kevin Cahill, D-Kingston, has also been actively lobbying ESD, which is the state”™s primary economic development agency. ESD is “interested in new and innovative approaches to economic development,” he said. “This is one of those projects worth the investment.” Cahill said an alternative source for the money is the supplemental budget, although potential funds would not be available until the fall at the earliest.
Tom Kacandes, director of business development at Tech City, said he was frustrated by the reaction he”™d gotten so far from ESD. “I”™ve been calling Albany and saying, ”˜Guys, this is it,”™ and hearing back ”˜It”™s not our model.”™” Kacandes said the $5 million was crucial to attracting a potential partner to the project. The company “is a startup, not a blue-ribbon firm, though it has millions of dollars in the bank from a venture capital company,” and that requires a change in mindset at the ESD.
Kacandes”™ fear is that the potential partner would go elsewhere. “The dollars are on the table from other states,” he said. “Ulster County gets this kind of shot every 15 years. People need to catch up with the new reality.”
A.J. Carter, spokesperson for ESD, responded in an e-mail that the agency has been supportive of the solar industry. “The commercialization of solar energy technologies could provide an exciting economic development opportunity for the Hudson Valley and is consistent with meeting Governor Spitzer”™s renewable energy goals,” he wrote. “In terms of support, we are processing grant requests from operating companies in the industry and assess each on a case-by-case basis. Last week, for example, we gave preliminary approval to a grant for a Hudson Valley solar energy company.”
Provided the funds are forthcoming, Falatyn said the first step is hiring basic staff and providing assistance to solar companies. The project would initially result in 300 new jobs, including 40 on-site researchers, with possibly thousands more generated in the region and the state as the solar energy systems are developed and manufactured.
ESD itself has recognized the need for change. Last April it published a study examining the state”™s problems in attracting economic development and outlining new strategies to recharge the state”™s economy. According to the study, a crucial tactic is investing in industry sectors ”“ “clean tech” is one ”“ that bring in jobs centered or enabled by technology, compete globally, and utilize New York”™s strengths, such as the cultural and corporate powerhouse of New York City and the state”™s rich educational resources.
The not-for-profit consortium meets all three criteria. Taking a page from such high-tech dynamos as Silicon Valley and The Center of Excellence in Nanoelectronics and Nanotechnology in Albany, Falatyn and Cozzolino said an important advantage of their approach is the role they”™d serve in fostering networking among companies, researchers and potential users of the technology.
That kind of cross fertilization is what feeds innovation in today”™s dynamic markets, said Falatyn. “We think we can be the bridge between R&D and the manufacturer,” he said. He noted the Hudson Valley was the ideal home for such an industry, given the region has taken the lead in the state in number of solar installations for homes and businesses.
The consortium is wooing small, nimble companies with cutting-edge technologies. It also wants to maximize the educational resources in the region and create links with remote state-of-the-art research centers.
Researchers and scientists from universities across the state would work with engineers, installers and application specialists at the center to develop solar products and technologies for the marketplace. Expertise from the Albany nanotech center and other tech centers might play a part in the development process. The new commercial applications would be produced at the consortium and piloted in energy-hungry New York City. The tested systems would then be distributed to western New York manufacturing centers.
Companies like SunWize, which already have market-ready technologies, could provide valuable access to the marketplace.
Other initial partners in the region are Prism Solar, which utilizes holographic optical elements on curtain glass walls of buildings, transforming them into solar energy generators, and Atlantis Energy Systems, which produces photovoltaic roofing slates. The International Brotherhood of Electrical Workers Union plans to offer solar-installation training at the consortium facility.
Competition among the states to attract solar energy companies is fierce, Falatyn said. “Most places offer free rent. A few million dollars is not a problem.” However, the idea of establishing a consortium is unique, he said. “When we say we can give you assistance, help you hire a program researcher, provide access to the marketplace, hook you up with fellow engineers, and teach architects how to apply the technology, that”™s a partnership.”
Another advantage is the consortium”™s close proximity to New York City. “With its huge demand for electricity, the city offers some of the greatest opportunities to make a difference with renewable energy,” said Paul Tonka, the newly appointed president and CEO of the New York State Energy Research and Development Authority, based in Albany. “We will work with the consortium to see how best to grow the marketing opportunities and best provide them with effective and efficient outcomes as a manufacturing organization.”
Another advantage of the New York market: The city “has a large number of Fortune 500 companies, which have the financial ability to invest in solar,” Falatyn said. Kulik noted New York City represents an R&D opportunity as well: “There are some breakthroughs needed in terms of how you deploy solar in a dense urban environment. There”™s lots of shading from the buildings and very small rooftops.”
From the state perspective, “the economics for solar energy are more attractive than in the Southern states, since energy costs are so high,” Falatyn said. Tonka said the consortium fits in with Gov. Eliot Spitzer”™s goal of reducing electric consumption by 15 percent by 2015 and cutting back on CO2 emissions.
The consortium has met with firms from all over the nation, as well as several German solar energy companies eager to break into the U.S. market. “Many states want to be solar energy hotbeds,” said Falatyn. “The German companies are trying to figure out how to be a player in the marketplace.”Â
The consortium is already strategizing on how to foster the growth of jobs in the state once it is up and running. Falatyn noted that solar energy costs $8 per kilowatt. Half of that cost is for the manufacture of the panels and cells, while the remainder is for the installation of the systems. The manufacturing would doubtless migrate offshore to China or other countries with low labor costs, but the installation portion could obviously not be outsourced overseas. Implementing best practices for efficient installation and integration of the systems into buildings would be one way of stimulating this job growth, said Falatyn.
“We”™re taking the initiative and risk of creating an environment where ideas can grow,” he said. The model of seeding new companies in partnership with venture capital companies “may look risky in the beginning. However, if the companies are homegrown and given a little assistance, the likelihood of them staying in the state and valley is much higher.”
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