Solar industry's promises bring environmental challenges for Tenn.

As the state tries to reap the benefits of a growing solar industry that could bring thousands of new jobs and billions in new investment, the massive projects also bring with them environmental challenges in the form of intensive manufacturing operations that will draw a tremendous amount of electricity from the state's power grid used to run sprawling chemical reactors.

With just two investments -

Meanwhile, the state also is pitching a third site in West Tennessee for solar, and it is putting together plans to build a $35 million "solar institute" at Oak Ridge National Laboratory that will research the industry.

At least at the outset, these solar companies' demand for electricity may actually increase the state's dependency on polluting, coal-fired power plants operated by the Tennessee Valley Authority.

The plants also raise possible environmental and safety hazards, as potentially dangerous chlorine-based gases and liquids are heated to temperatures exceeding 3,600 degrees, then stored and recycled.

Many officials have been quick to describe these plants as "green," based on the fact that the materials they produce will eventually be used to make solar panels that can curb the nation's dependence on coal and natural gas.

But the state's budding solar sector also is an outgrowth of its established chemicals industry. The companies themselves cite access to cheap and reliable power and proximity to chlorine suppliers as main reasons for putting their plants in Tennessee.

Keeping these plants safe and economically viable will require strict enforcement of state and federal laws, scientists and environmentalists say.

The state itself also bears a financial risk. Besides extending $100 million or more in direct subsidies and infrastructure improvements, the state has promised to cover the cost of any carbon offsets that the plants may need, if the U.S. Congress passes a cap-and-trade plan to combat global warming.

"I think the reason we got the plants was Tennessee promised them we'd hold them harmless from whatever federal environmental regulation there would be," U.S. Rep. Jim Cooper said in an interview soon after the investments were announced. "We need to be getting a handle on that."

Supporters acknowledge those challenges but are quick to say the costs are worthwhile. With very little solar panel production in the United States right now, the state is poised to get in on the ground floor of an industry with nearly boundless potential, they say.

"The governor talks about these plants as being the anchors around which we're going to develop a whole industry," said Matt Kisber, the state's commissioner for economic and community development. "Landing Hemlock and Wacker together is a transformational opportunity for Tennessee."

Strategy was departure

Tennessee's bid to become the center of the solar industry started not quite two years ago, when Gov. Phil Bredesen asked Kisber and Reagan Farr, the state's revenue commissioner, to come up with a strategy to promote the green energy sector. The strategy represented a departure for the state, which for more than two decades has focused its efforts on heavy manufacturing, particularly the automobile industry.

Tennessee, however, had some assets it could use to its advantage. A central location makes it convenient to other markets, and a system of subsidies and tax credits for job training and infrastructure improvements meant companies could build a plant and reap a profit more quickly.

The state also had a portfolio of large industrial sites near railroads, highways and high-tension power lines operated by the Tennessee Valley Authority.

It's that last element that is perhaps the most important for the solar industry. The raw material used in solar panel production is polysilicon, a purified form of silicon that is cut into thin wafers and covered with glass. Polysilicon is made from quartzite, one of the most common rocks on the planet, but making it requires heating the quartzite to more than 3,600 degrees in a massive electric arc furnace, then refining it for more than a week.

Another asset has been Tennessee's well-developed chemicals industry. Breaking quartzite down into pure silicon means exposing it to some kind of catalyst. Usually this is a chlorine-based chemical, such as hydrochloric acid.

In announcing its investment in February, Germany-based Wacker said that the East Tennessee presence of its chlorine supplier, Olin Corp., helped clinch its decision to locate its $1 billion polysilicon plant in Bradley County, 30 miles northeast of Chattanooga.

The two Tennessee plants will be among the first in the nation dedicated solely to producing polysilicon for the solar industry.

The market for polysilicon is uncertain, and prices have fluctuated wildly, along with other energy prices during the recession. But demand for polysilicon is expected to grow, as states and the federal government take steps to encourage the instillation of solar panels, said Cai Steger, an economist with the Natural Resources Defense Council in New York.

Solar has quick payoff

Environmental groups, such as the NRDC, have embraced solar enthusiastically. Besides being renewable, solar panels have a quick payoff. Studies show that within two to four years a solar panel turns out more power than was used to create it, and the greenhouse gas emissions from production of a solar panel are 80 percent to 90 percent less than those turned out by a coal plant.

But no solar power will be used to produce polysilicon in Tennessee, at least initially. Neither Hemlock nor Wacker has committed to purchase power from green energy sources. Instead, they will buy electricity from TVA, which generates most of its power from coal, dams and nuclear plants.

The state's third potential solar site, in Haywood County in West Tennessee, could feature a solar array. To encourage development there, officials in the Bredesen administration have asked the federal government to approve roughly $30 million in stimulus funding for construction of a solar array. That request is still under review.

The source of Hemlock and Wacker's power is not just an environmental matter. It also could have an impact on the state budget.

A state law passed last year says that Tennessee will pay for any carbon-emission taxes placed on solar plants like the Hemlock and Wacker facilities through a federal cap-and-trade system. The law places no limit on how much the state will pay out.

State officials say the law was needed to persuade Hemlock and Wacker not to locate outside the United States, where there is not a threat of a carbon tax. They say they plan to lobby Congress to carve out an exception for plants that make solar and green energy generation equipment.

"Governor Bredesen is a budget-minded guy ... so I'm confident he's looked at that," Cooper said in an interview last week. "It's important to keep in mind that Congress hasn't approved the carbon tax, so that part of the increase may not apply."

Safety records are good

A second challenge is handling the chemicals needed to make polysilicon.

Generally, the polysilicon industry's environmental and safety record has been good, said Seth Kaplan, the head of the climate advocacy group at the Conservation Law Foundation in Boston. Although polysilicon production for the solar industry is relatively new, the material has been produced in large quantities for the semiconductor sector for decades, with few incidents.

But that may be the result of tight regulation, Kaplan said.

"You are potentially dealing with stuff that you've got to do right," he said. "And for whatever reason, silicon production previously has tended to be located in places with pretty rigorous systems for dealing with that, places like California, Massachusetts and Germany."

The state will spend millions to train workers for the solar industry. Hemlock alone is expected to receive $5 million for job training, and $6.4 million will be used to create a chemical technology program at Austin Peay State University, where 150 to 175 students a year will be trained in proper handling of chemicals and heavy equipment. Hemlock will contribute $2 million to that program.

Because their product has to be so pure, silicon producers have an incentive to run clean, efficient operations that minimize safety and environmental hazards, said Robin Reed, the Austin Peay chemistry department chairman.

Hemlock and Wacker say they plan to recycle the chemical byproducts from their operations. Hemlock says its final discharge is a salty brine that can be handled by the city sewer.

But Reed said the jump to solar production also provides an opportunity to improve the state's environmental laws.

"The state has its ability to go above and beyond what the federal government has done," Reed said. "Personally, I would like to see Tennessee step up its efforts in terms of its stewardship of the environment and chemicals handling."

Meanwhile, work has already begun on Hemlock's facility in Montgomery County. Three miles east outside Clarksville, bulldozers are flattening a 1,200-acre farm, preparing the ground for an October start on construction.

Eight hundred people will work at the plant once it opens, and perhaps thousands more from spinoff facilities.

"Look at Spring Hill, what Saturn did for them, and what Fort Campbell has done for our community," Clarksville Mayor Johnny Piper said. "It's just the gift that keeps on giving."