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Solar project called biggest local investment since Intel

Aug. 12—New Mexico landed one of the solar industry's global Goliaths when Maxeon Solar Technologies announced an immediate, $1 billion investment in a massive manufacturing facility in Albuquerque.

The company plans to build a 1.9 million-square-foot plant at the Mesa del Sol master-planned community in south central Albuquerque, where it will open the nation's first new domestic factory in over a decade to build both solar cells and panels for sale across the country.

"There are no solar cell manufacturing operations currently in the U.S.," Maxeon CEO Bill Mulligan told a standing-room-only crowd Friday morning at the Mesa del Sol Aperture Center.

"All solar cells are made in other countries today, mostly in Asia," Mulligan said. "We are re-shoring this technology."

The investment — which Maxeon and Gov. Michelle Lujan Grisham first announced on Thursday afternoon — immediately thrust New Mexico into the national public spotlight as the first state to recruit a major solar-cell manufacturer away from competitor countries to set up an alternative manufacturing operation here. That's a key goal woven into the foundation of the federal Inflation Reduction Act that President Joe Biden signed into law last year.

The act established substantial tax credits and other government support programs to rapidly build out domestic clean-energy manufacturing capability to resolve supply-chain challenges that severely undercut solar and other renewable industry development following the global pandemic. And those industry incentives played a foundational role in bringing Maxeon — which currently operates in Mexico, Malaysia and the Philippines — back to the U.S.

Robust state and local government incentives as well — which could total more than $600 million over the next two decades — were also critical in landing the company in New Mexico. Although all state, city and county assistance must still be officially approved, it could include $20 million in direct Local Economic Development Act funding, hundreds of millions of dollars in industrial revenue bonds, rebates on gross receipts taxes for construction, plus other support, such as funding through the state's Job Training Incentive Program, said Economic Development Department Division Director Mark Roper.

"That's anticipated, because it still needs to be approved," Roper told the Journal. "But all the state incentives combined could exceed $600 million."

The company itself may invest up to $2.4 billion over 20 years, including $1.1 billion in construction, and the rest to equip the factory, Roper said.

But so far, Maxeon has only officially announced a $1 billion investment to start, which would create enough manufacturing capacity to produce three gigawatts of solar cells and panels. That's roughly enough generating capacity to power about 460,000 homes for a year.

The company is considering expanding the facility by 50% over time to 4.5 GW of production capacity, something it says it will decide on later this year.

If that expansion does happen, Maxeon could employ about 17,000 construction workers over a 10-year period, with up to 2,000 employees on site during different phases of the build-out, Roper said.

But even at 3 GW of capacity, Maxeon still expects to ramp up its permanent plant workforce to 1,800 employees after the factory comes online in 2025, offering high-wage jobs that will average about $55,000, Roper said.

That would make the Maxeon announcement the state's biggest private sector investment since Intel opened its factory in Rio Rancho more than four decades ago, according to public officials who spoke at the Friday morning news conference at Mesa del Sol.

Lujan Grisham said she and many others remember the groundbreaking at Intel.

"This is as big, or even bigger than that," the governor said.

Albuquerque Mayor Tim Keller said it took Inflation Reduction Act incentives to make the Maxeon project happen.

"It's the first major clean-technology project that's re-shoring to America, and it's happening right here in Albuquerque," Keller told the crowd.

Solar cells, panels and tax credits

There are many companies producing solar panels in the U.S. today, but not solar cells, which are the basic photovoltaic components that go into panels to convert sunlight into electricity.

All domestic solar cell production either shut down or relocated outside the country in the aftermath of the 2008 recession and as competitors in China and other East Asian countries massively ramped up cell production at much lower cost than U.S. producers could achieve.

Maxeon is a spinout company from SunPower, a solar cell and panel maker that launched in the U.S. in the 1980s and later moved its solar cell manufacturing to other countries, where Maxeon now manages those operations.

To move manufacturing back to the U.S., Maxeon and other companies that have announced similar plans for the future are relying heavily on Inflation Reduction Act tax credits to become competitive with Asian imports. That includes up to a 30% manufacturing tax credit applicable for either investments in facilities and equipment, or for mass production of solar components.

Maxeon will access the production tax credit for its facility at Mesa del Sol, receiving a total of 11 cents back on all output, including a 7-cent reimbursement for each panel it builds, and 4 cents for each solar cell, Mulligan said.

"That will bring us to cost-parity with manufacturers in Southeast Asia," Mulligan told the Journal. "We'll still need to import other components and materials and pay tariffs on that, at least to start. But over time, we expect other suppliers in the U.S. or non-tariff countries to create alternative supply lines for materials and components."

Solar developers in the U.S. who buy the cells and panels from Maxeon's New Mexico facility will benefit from lower-cost domestic production, particularly because the Inflation Reduction Act also includes a 10% tax credit for solar and other clean-energy products that are made in America.

"Our customers will benefit from that, because both our cells and panels will qualify for the 'domestic content' tax credit," Mulligan said.

Collaborative recruitment effort

It took an intensive, collective effort among local and state officials, along with critical resource suppliers like Public Service Co. of New Mexico, to bring Maxeon to the state.

"We were conducting a site search nationwide for over a year, and New Mexico only emerged as a potential site late in the game," Mulligan said during the news conference. "We wanted to close on a site in 60 days, and that led to a whirlwind courtship facilitated by the governor. The state, the city, the county and local utilities were all involved, and they worked hard to create ideal business conditions for Maxeon."

In fact, New Mexico wasn't even on Maxeon's short list of potential location sites, said PNM Director of Customer Marketing Elisha Saavedra. But all local entities and agencies pulled together to cooperatively prepare a robust recruitment proposal to meet Maxeon's needs.

PNM, for example, crunched its normal two-month timeline to create a customized power service plan for Maxeon into just two weeks.

Those efforts hiked New Mexico to the top of Maxeon's site-selection list, Mulligan said.

"The state incentive package is very important, but it wasn't the swing factor," Mulligan told the Journal. "We got substantial help on arranging for things like power and water services, and combined with the state incentives, New Mexico became very competitive with the offers we got from other states. We felt like the state, city and county governments pulled out all the stops to make this work. It was a real show of support."