Quebec lands new silicon plant; Renewable energy from Hydro-Quebec attracts Norway's REC to build the $1.2 billion facility

The Toronto Star: Tyler Hamilton - Aug 26,2008

After a 17-month search that spanned 16 countries and more than 100 possible locations, Renewable Energy Corp. of Norway has picked the small Quebec community of Becancour as the home of a new $1.2-billion solar materials plant.

It's a huge win for Quebec, which will see 1,000 jobs created during the construction phase of the plant, and about 300 permanent "green collar" jobs. The plant will manufacture polysilicon used to make solar cells and semiconductors.

British Columbia was also considered, along with several U.S. sites and one other Canadian location, but you can bet that Ontario wasn't part of the top 100. What attracted Renewable Energy, or REC, to Quebec was its vast supply of hydroelectric power, said chief executive Erik Thorsen.

In signing a 20-year power supply agreement with Hydro-Quebec, REC was able to secure a stable supply of relatively cheap renewable electricity, allowing it to make silicon - and, up the value chain, solar cells and panels - with a low carbon footprint.

Quebec Premier Jean Charest played up his province's advantages yesterday in making the announcement. Its contract with REC assures that a significant portion of the investment will go to Quebec suppliers, generating nearly $20 million a year in tax revenues for the government as part of the expected $100 million annually in economic spinoffs.

"We are bolstering our position as North American leader in the realm of renewable energy," Charest said in a statement. "Quebec has opted for renewable energy and REC Silicon has acknowledged this leadership by choosing Quebec."

Manufacturing polysilicon is an energy-intensive business, and like other such operations they tend to cluster around jurisdictions that can offer cheap power at stable prices. It's why aluminum manufacturers, for example, gravitate to countries such as Iceland, which provide access to low-cost geothermal and hydroelectric power.

Hydro-Quebec has agreed to allocate a block of up to 95 megawatts of electricity as part of the deal with REC, which is based in Sandvika, Norway.

The Becancour site will be developed in several stages and has potential to expand to four production plants. Construction will begin in 2010 and initial production is expected in 2012, REC said.

Thorsen said REC is focusing only on polysilicon production for now. The company also makes silicon wafers and solar cells, and most of the polysilicon it produces goes toward supporting those other businesses.

It won't be the only silicon plant in Becancour, which is about 130 kilometres northeast of Montreal. Toronto-based Timminco Ltd. is also building a plant to produce solar-grade silicon, a lower quality product than REC will be producing.

MacMurray Whale, an alternative energy analyst with Cormark Securities Inc., wondered whether the Quebec government was offering incentives to REC beyond just low-cost renewable electricity. "Power prices are important, but that's a big investment ... I'm sure there are other sweeteners," Whale said.

But Thorsen denied that REC got any special treatment. "Nothing that is not available to the industry in general," he said.

Keith Stewart, an energy expert with environmental watchdog WWF-Canada, said Ontario could learn a lot from Quebec, which isn't just focused on getting green power on the grid, but has been aggressive at developing an industrial strategy around its renewable-energy goals.

"There's too much of an incrementalist approach to renewables in Ontario," said Stewart, adding that Ontario could attract some significant manufacturing jobs if it bolstered its own investment in renewable energy and anchored it around an industrial strategy for the province.

He said interest from Germany's Multibrid to establish an offshore wind- turbine manufacturing plant in Ontario is an example of the "low-hanging fruit" that Queen's Park should be seizing and building on.

And just because Quebec is getting a new polysilicon plant, Stewart added, Ontario is still left with plenty of value-added manufacturing opportunities for the province to pursue.

But as Charest said yesterday, it doesn't come easily. "Attracting such substantial investments demands time, energy, persuasive arguments and a clear determination by the government to do so," he said.

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