Success of Buffalo Billion-backed SolarCity factory remains elusive

Both houses of the New York State Legislature plan to approve a budget by April 1 that, among other things, gives Gov. Andrew M. Cuomo $500 million more to pump into Buffalo Billion economic development programs in the western part of the state.

In return, state lawmakers want more transparency in how this behemoth of a project is progressing.

That’s largely because the Buffalo Billion’s main event — the $750 million, 1.2 million-square-foot SolarCity Riverbend solar panel factory in Buffalo — has been facing some challenges.

First, several New York state lawmakers called for state and federal officials to scrutinize the finances behind the SolarCity project in Buffalo. Once completed, the factory is expected to become the largest manufacturing facility in the Western Hemisphere when it opens sometime this year. And the project has also become Cuomo’s poster child for upstate economic rebirth in New York.

Then in February, the three Buffalo businessmen with LPCiminelli Development — arrested last fall in a federal bid-rigging investigation that entangled Cuomo aides — filed documents to have the case against them dismissed, or at least moved from Manhattan to Buffalo. The three execs left their positions in January, but are employed by an affiliated company. They face a 14-count indictment charging them with multiple counts of wire fraud and bribery. Five other individuals also have been charged.

As state lawmakers hammer out the 2017-18 budget, they have asked Cuomo for more transparency to take place in how state money gets spent. In the Senate, for example, there should be more public reporting about how economic development funding for programs like the Buffalo Billion gets spent, lawmakers said. And in the Assembly, the members of a regional council who advise Cuomo’s economic development agency on Buffalo Billion funding should have to disclose their personal finances in order to avoid any conflicts of interest, just like any other state board member.

The federal trials over the alleged bid rigging of the SolarCity Riverbend construction contract are not yet scheduled, but will probably begin sometime in May or June, said John Kaehny, executive director of the state-government watchdog group Reinvent Albany, who has been closely monitoring what’s happening with SolarCity in Buffalo.

At the local level
Locally, progress appears to be moving along at the plant. Production of solar cells is scheduled to begin this summer, equipment is being moved in, and hiring is supposed to start within a few months.

“I have not heard about anything that is keeping it off track. We are very happy Gov. Cuomo and his team brought this project to our area and we expect the plant to be operational very soon,” Brendan Mehaffy, executive director of the City of Buffalo’s Office of Strategic Planning, told Daily Energy Insider.

As part of the Buffalo Billion initiative, the state approved $750 million in funds for the High-Tech Manufacturing Innovation Hub at RiverBend where the SolarCity GigaFactory is located. The facility will have one gigawatt of annual solar capacity when it reaches full production and is expected to produce about 10,000 solar panels per day.

Cuomo’s office has said that the San Mateo, California-based SolarCity, the nation’s largest solar power provider, is required to spend or incur approximately $5 billion over the next decade on its Buffalo facility and create more than 1,460 direct manufacturing jobs at the new facility.

Kaehny hopes the deal is all it’s cracked up to be.

“First, as New York taxpayers and people who want the best for Buffalo and New York, we want the Riverbend SolarCity plant to prosper and employ large numbers of New Yorkers and generate economic activity for decades to come. The governor has already spent our money, let’s hope we get a good return on this very risky bet,” Kaehny told Daily Energy Insider.

However, Cuomo’s decision to spend $750 million in taxpayer funds “to build a highly automated factory for SolarCity to create just 500 manufacturing jobs was ill considered and reckless — that’s a $1.5 million subsidy per manufacturing job, which is simply ridiculous,” Kaehny said.

It’s a very risky investment for New York taxpayers because it’s a giant bet on the success of one young company — SolarCity, which is manufacturing a commodity product in a highly volatile global marketplace, he added.

“PV panels have a rapid innovation cycle and require huge amounts of capital. Should New York State taxpayers be competing with gigantic, state-backed Chinese PV manufacturers? It will take decades for New York State taxpayers to recover the cost of this investment. Will SolarCity be around in 10 years? 20 years? Will this Riverbend factory?” Kaehny asked.

A representative for SolarCity did not respond to a request for comment.

Kaehny is also doubtful that the SolarCity Riverbend factory will help create a “cluster economy” of high-tech manufacturing in South Buffalo.

“The actual fabrication and assembly line machinery used to manufacture the PV panels is all being imported into New York — so the engineering and technology innovation is taking place outside of New York. This state-owned factory will create very few start-ups or outside jobs that provide either engineering expertise or are part of the supply chain,” Kaehny said.

But city officials do expect a new economy to form.

For instance, Mehaffy said the city is hopeful that the project will attract back former Buffalo residents with such high-tech experience who will return to find work and stay in the city. And he said local institutions of higher education also may start related training programs that will keep younger residents in the area and working.