Chinese investments are being made in Arizona’s solar sector, mostly via private, behind-the-scenes deals that have some free-trade and solar skeptics concerned about the kinds of jobs that will be created here as a result.
Economic developers and solar energy firms in the Valley have welcomed Chinese and other foreign investment as a way to help the region recover from the recession, create new jobs and finance projects when traditional and domestic funding sources have run dry.
Rob Sanchez, editor of the Job Destruction Newsletter in Chandler, said linking Arizona’s solar growth with China could mean manufacturing and engineering jobs will be based in Asia, where costs are lower. That would leave more service- and distribution-oriented jobs in Arizona.
“Arizona promoters are deluding themselves if they think foreign investors are going to sink money into photovoltaic research and production centers when they can build them anywhere in the world that is cheaper than Arizona,” said Sanchez, who is critical of free-trade policies in general. “Sure, Arizona has lots of sunshine, but so does the Gobi Desert. If the Chinese invest money in Arizona, it will be for marketing offices and maybe a few small production facilities where prefab parts are put together.”
Suntech will create 75 jobs in Goodyear, but those jobs will involve assembling products manufactured in China, said Mary Teagarden, a global business professor at the Thunderbird School of Global Management in Glendale.
Teagarden, an expert in international economics, said investors and businesses — some of which are linked to the Chinese government — are making heavy investments in solar industries in the Northeastern and Western U.S., including Arizona.
She said U.S. financing streams are tight because of the economy, but the Chinese are spending money on green energy and solar investments worldwide. Unlike Suntech’s public announcement of its West Valley plant and foreign solar investments from Spain and Germany, Teagarden said most Chinese deals are much more low-profile.
“There is ample Chinese financing out there, but it is in the background,” she said.
Others in the solar industry and those familiar with investment deals agree.
Ryan Hurley, a renewable energy expert and attorney with Scottsdale-based Rose Law Group PC, said he is seeing private investment and other deals between Chinese solar panel manufacturers and installation companies in Phoenix and other markets. He said Chinese manufacturers invest in U.S. solar installation outfits so those businesses will use Chinese products.
Monique Hanis, spokeswoman for the Solar Energy Industries Association, said solar panels used to come mostly from German and Spanish companies, but the Chinese have been producing more of them and are beginning an aggressive entrance into the U.S. market.
One solar deal maker in the Valley, who asked not to be identified, said the Chinese take varying tacks to keep their investments and involvement in U.S. solar energy companies and projects on the down-low. That includes putting investment dollars into U.S. venture capital and private equity funds, which then bankroll solar projects in markets such as Arizona.
The Chinese also act as junior and minority partners in some solar deals, resulting in their involvement not being disclosed or evident in government filings and applications, according to several real estate executives, attorneys, consultants and others familiar with such deals.
Neither Suntech nor Yingli Green Energy would comment on their Arizona investments. Suntech has said in the past that its decision to locate in the Valley was as much about logistics, getting the company’s panels to market and the state’s energy policy as it was about incentives.
Yingli officials, who are negotiating for the best deal between Phoenix and Austin, did not want to comment on their decision process.
Numerous investors, businesses and solar industry consultants involved or familiar with Chinese and other foreign investments in Arizona’s solar landscape declined or refused to comment on the nature of that financing and why many of the deals are kept private.
Doug Bruhnke, CEO of Scottsdale-based business development firm Growth Nation, said the Chinese are taking the same low-profile approach to U.S. investments as the Japanese and South Koreans. He said U.S. political sensitivities about China’s human-rights practices and authoritarian government could play a role in how that country does business here.
Rebekah Friend, director of the Arizona AFL-CIO, said she doesn’t necessarily care where foreign investment is coming from; she just wants to ensure that the jobs created by those investments are high-wage and the workers are treated well.