Thursday, September 22, 2011

Lock and Go

I just received notice of a new flooring line called FreeStyle Commercial is an interlocking flooring that is adhesive-free and easy to install. It has a durable top layer that comes in a variety of decorative styles and colors. Best of all, FreeStyle is made with a resilient recycled plastic that is resists moisture and installs easily over a variety of problem subfloors.

The company calls it Place N Go™ Interlock System. Place directly over... Problem subfloors - cracks, high moisture, irregular surfaces; Existing floors - without removing asbestos & asphalt tile, resilient, wood, VCT, or concrete.
We are a green, environmental flooring company manufacturing inter-locking, modular, hard surface tiles from recycled materials. We’ve patented a process that eliminates the need to clean and pelletize plastic flake, thereby eliminating wastewater and reducing energy consumption. In addition, we will take back used tile and grind it up to make new tiles, making it 100% “cradle to cradle”. The flooring is eligible for LEED points and our FreeStyle flooring recently co-won the Massachusetts division of the USGBC’s Innovation in Green Design award for Technology/Product.

In addition to being green, our tiles require no adhesive or underlayment/padding. Its flexible composition, combined with its unique interlocking system allow FreeStyle Flooring to be installed over many problem subfloors, including high-moisture concrete, stained, cracked, and irregular subfloors, and old flooring. FreeStyle is attractive and water-proof.

The flooring is unique as it can appear to look as if its Cork, Bamboo or Wood. It can be used in either residential or commercial settings. The prices are reasonable run at $6.33 sf and perusing the website there are some sale bargains as well. Add the savings by not having to remove and dispose of old flooring (particularly if its has hazardous chemical in it - an expensive and arduous process) and the ease of labor installation the choice of Freestyle seems to be an easy one.

No Sex in this City

As in my prior blog entry "A Tale of Two Cities" I discussed how projects in Bellevue a suburb not known for its accessibility has seemingly blossomed into a very green one without much fanfare or notice.

I wrote about the Elements project that incorporated retail, work and live spaces into an urban park environment. Green, visually interesting and user friendly it is something any private space should aspire when trying to encourage use and traffic but also making sure its maintainable - which translates into sustainable.

So now let's look at its rival - the South Lake Union area of Seattle. A once neglected inner city neighborhood of light industrial, cheap housing and hodge podge retail it was purchased a decade ago by Paul Allen under the delusional concept of turning it into Seattle's version of Central Park.

Well 10 years and Seattle's very typical NIMBY approach to that (the long debated Monorail project now officially closed, the debated light rail and the maligned Streetcar proves nothing comes to Seattle nice and easy) the park idea was scrapped and instead Vulcan (Allen's property development company) decided to build commercial buildings both Condos, Apartments and Buildings to attract burgeoning tech and bio tech firms. The biggest "get" was having Amazon agree to consolidate and build their headquarters in the area. And like all projects that have "tech" money linked to it the Carpetbaggers, the opportunists, the entrepreneurs and others flocked to partake in this "urban renewal" project.

The Seattle Streetcar (originally with the amusing if not appropriate acronym SLUT) was built to run ostensibly 5 blocks from the Seattle downtown core to the South Lake Union area (on a good day walking briskly I beat it). This was to harbor the "commuters" who would be coming down to the newly created hood and the adjacent and still existing Restaurants and Lake Union harbor area - it too had an appropriate nickname seemingly in perfect sync with the streetcar - the "Herpes" Triangle. Now ironically a large Hospital Cancer treatment area. Which in turn would benefit from the nearby Bio tech firms.. some long there - and the new ones expected.

All of this began before the economic downturn and in turn some of the Condos became Apartments and some tenants - Microsoft - pulled out leaving the buildings without tenants but gradually the neighborhood began to take shape shoving out the older less shiny tenants both residential and commercial.

I lived there briefly when I first returned to Seattle and I liked its convenience and urban quality but that was gladly before the new tenants arrived and with it rent and traffic increases. It was not for the better in my estimation and today 3 years later I see I was right to leave.

The apartments in the area have such high rents and fees that they turnover annually, the parks and the nearby stores once funky are now replaced with expensive shops. The greenest LEED project in the area was Perkins + Will building an exciting Architecture business that at one point became the smallest tenant dropping staff levels to under double digits. And with that other buildings were done with that credential in mind so you see a mix of old restorations with modern access and whimsy.

But the area's prime focus are the Amazon Buildings and they are the ugliest buildings yet. The only thing I can see green is operable windows. Undoubtedly they are energy efficient but aesthetically they are unapproachable as the plazas that surround them. They "own" the largest portion of the block and they in turn own the egress and area which Amazon is clearly to remind you with a series of signs stating Codes of Conduct and restrictions of use. Parental, condescending and seemingly unnecessary in an area that is mostly only for Amazon's use. Signs for restaurants and coffee shops indicate a public access but only upon entry do you find out you are in a 'private" coffee shop for only Amazon employee use. The doors to all the buildings are open while all staff walk about with key cards. Truly Amazon has managed to illustrate why Seattle is notorious for having a passive aggressive reputation.

The plazas and surrounding areas have no running water or grass which is ironic that Amazon allows staff to bring their dogs to work. So all the Amazon employees have to take their dogs to the PUBLIC parks in the area to relieve themselves. I am not sure its ironic, hypocritical, arrogant or a combination of all the above. As then the Amazon employees leave for the day and leave the dogs memories behind as well. While the neighbors and residents are on careful restrictions when on Amazon property.

The South Lake Union area has all the marks of what makes a bad neighborhood and all the marks of what is a good neighborhood but its not neighborly in the least and that is largely due to the Amazon culture.. its akin to Stockholm Syndrome, the affectation of Hipsters or just simply ignorance. But its the worst thing Seattle has to offer that isn't coffee. And some of that coffee you can't drink as it is reserved for Amazon use "only"

Tuesday, September 20, 2011

When Public Meets Private

As I am right now focusing on the melding of public and private enterprise to retrofit and upgrade America from its infrastructures to its buildings I am looking at what is being done "right" vs "wrong" as I see how the public reacts and responds to the change and how it affects the community as a whole.

When public and private work it should be seamless it should be open and more important accessible. With the private market the end result is profits, with the public market it is affordable. When you merge the two it doesn't always work that way as I will demonstrate in my next blog about South Lake Union - a dynasty emerges and that is where the scale tips in favorite of one vs the other. And when its profit it usually means the public are losers as they pay twice - first in taxes and then in fees or restrictions of use.

So on that note another project that came to my attention via the New York Times this morning. The article caught my eye as I recognized the first building in the picture of a private live/work/retail space built in Emeryville a few years ago. It appears that it is going to be upgraded along with other projects throughout California.

A project that uses tax credits available - or what is called "submerged" programs that Government provides both individuals and businesses to do everything from attend school, get tax deductions and other programs not necessarily thought of as "socialist government programs." All the Energy Star credits of late are just such programs encouraging home owners to make their homes more energy efficient for the future.

And now comes the Green Build ones for commercial structures. As you can read in the article below what the long range ideas are for this plan. What it could mean is not only are buildings get what they need and communities are getting what they need to be green it hopefully builds both the construction and the renewable industries/trades. Although unfortunately I suspect much of the solar materials will be Chinese produced there may be a move to "build" America. Its possible and let's hope that idea catches on as well.

Tax Plan to Turn Old Buildings ‘Green’ Finds Favor

Published: September 19, 2011

A business consortium that includes Lockheed Martin and Barclays bank plans to invest as much as $650 million over the next few years to slash the energy consumption of buildings in the Miami and Sacramento areas. It is the most ambitious effort yet to jump-start a national market for energy upgrades that many people believe could eventually be worth billions.

Focusing mainly on commercial property at first, the group plans to exploit a new tax arrangement that allows property owners to upgrade their buildings at no upfront cost, typically cutting their energy use and their utility bills by a third. The building owners would pay for the upgrades over five to 20 years through surcharges on their property-tax bills, but that would be less than the savings.

The consortium is led by a company called Ygrene Energy Fund of Santa Rosa, Calif., which has already won an exclusive contract to manage a retrofit program for a half-dozen communities in the Miami area, with the city expected to join in a few weeks. It is in the late stages of completing a contract with Sacramento, and is seeking deals in other cities.

State and city officials are optimistic they may have found a way to tackle one of the nation’s biggest energy problems — waste in older buildings — without new money from Washington. If enough building owners sign on, private capital would be put to work paying for retrofit projects that promise to save local businesses money while creating thousands of new construction jobs.

“We are so used to reaching our hand out and saying, ‘Washington, we need this,’ and ‘Tallahassee, give us that,’ ” said Edward MacDougall, the mayor of Cutler Bay, Fla., a Miami suburb that took the lead in setting up the deal in that region. “This is really a home-grown mechanism where we don’t need to do that.”

The consortium was put together by the Carbon War Room, a nonprofit environmental group based in Washington set up by Richard Branson, the British entrepreneur and billionaire, to tackle the world’s climate and energy problems in cost-saving ways. With the United States government nearly paralyzed on climate policy, he said, his group is seeking a way forward.

“We see this as the first of hopefully many, many, many projects, and a big step in the right direction,” Mr. Branson said in an interview last weekend in New York.

In the past three years, half the states have passed legislation permitting energy retrofits financed by property-tax surcharges, and hundreds of cities and counties are considering such programs. While the situation poses some risks, and programs aimed specifically at homeowners have run into a snag, many jurisdictions are moving forward with plans to focus on commercial properties.

Environmental groups have lauded the trend as one of the most exciting developments in years regarding climate change. They point out that wide use of such programs could cut emissions of heat-trapping carbon dioxide from power plants by reducing electricity demand.

“It’s a big deal,” said James D. Marston, head of energy programs for the Environmental Defense Fund, a group that has worked with Carbon War Room in developing the approach. Over the long haul, he said, “we’re talking about tens of billions of dollars in investments, and energy savings that are 10 times that amount. If you do this correctly, you would be able to shut down a third of the coal plants in the country.”

While that may take a while, there seems to be little question that the new approach could draw substantial private capital into the market for energy upgrades, which have historically been difficult for many midsize and smaller businesses to finance.

As envisioned for Miami and Sacramento, the plans will work like this:

Ygrene and its partners will gain exclusive rights for five years to offer this type of energy upgrade to businesses in a particular community. They will market the plan aggressively, helping property owners figure out what kinds of upgrades make sense for them. Lockheed Martin is expected to do the engineering work on many larger projects.

The retrofits might include new windows and doors, insulation, and more efficient lights and mechanical systems. In some cases, solar panels or other renewable power might be included. For factories, the retrofits might include new motors or other gear.

Short-term loans provided by Barclays Capital will be used to pay for the upgrades. Contractors will offer a warranty that the utility savings they have promised will actually materialize, and an insurance underwriter, Energi, of Peabody, Mass., will back up that warranty. Those insurance contracts, in turn, will be backed by Hannover Re, one of the world’s largest reinsurance companies.

As projects are completed, the upgrade loans, typically carrying interest rates of 7 percent, will be bundled into long-term bonds resembling those routinely issued by governmental taxing districts. Barclays will market the bonds. Retirement funds have expressed interest in buying these bonds, which will be repaid by tax surcharges on each property that undergoes a retrofit.

Perhaps the most serious risk is that fly-by-night contractors will be drawn to the new pot of money, pushing energy retrofits that are too costly or work poorly.

“Contractors are cowboys,” said Dennis Hunter, chairman of Ygrene. He promised close scrutiny of the ones selected for the Miami and Sacramento programs.

Ygrene is one of about a dozen start-up companies around the country pursuing such deals. The company appears to have substantial momentum, but some of its competitors have already stumbled, telling property owners they qualified for retrofits but then failing to deliver the necessary short-term financing. Still, many people are optimistic this approach will get off the ground.

“This is a game-changer,” said John D. Kinney, whose company, Clean Fund of San Rafael, Calif., has raised $250 million to invest in such projects. The company just used the technique to help finance a large solar installation at a development called Sonoma Mountain Village in Rohnert Park, Calif.

Experts point out that, with modern techniques and equipment, a retrofit can typically cut a building’s energy use so much that the project pays for itself in as little as five years. The most famous recent example was the refurbishment of the Empire State Building, which cut energy use by nearly 40 percent, turning it into one of New York’s greenest buildings.

The new financing approach is called Property Assessed Clean Energy, or PACE.

For decades, cities and counties have created special taxing districts to finance improvements that benefit private property, such as street lights or sewers. Bonds are issued to pay for the projects, then repaid with surcharges on tax bills. If an owner sells, the surcharge stays with the property.

Several years ago, the city of Berkeley, Calif., hit on the idea of using that approach to finance energy upgrades on private homes. The idea took off, and 25 states and the District of Columbia soon passed PACE legislation. One of the most successful programs to date has been in Sonoma County, Calif., where retrofit projects exceeding $50 million have been financed.

While the initial focus was on homeowners, those programs slowed last year when an arm of the federal government that oversees the mortgage market took a hostile stance toward such projects on residential property, on the grounds that they add risk to mortgages. In most states, a lien associated with a retrofit project would have to be paid ahead of the mortgage if the property went into foreclosure.

A legal and political battle is under way to try to force the Federal Housing Finance Agency to reverse its stand. So far, it appears that PACE programs for commercial properties pose fewer legal complications.

A Tale of Two Cities

This past month has brought me across the bridge to Bellevue a once sleeper commuter suburb of Seattle now becoming more of a city in its own rights thanks to the growth and development of an "urban" community surrounding its beautiful and green City Hall.

Now struggling to become part of the urban cities light rail if it goes through it will make Bellevue very much part of a larger destination and place to commute to vs from. Bellevue is adjacent to Redmond - home of one of the larger industries in the area - not Boeing - but Microsoft. Redmond has tried to become something more trying to build an urban village called Redmond Town Center - a hybrid of housing units and retail in which to attract young Microsofties to both live and work. An idea duplicated in San Jose in their downtown city core and Santana Row... they have struggled due to the economy (the Sunnyvale project failed) so I cannot be sure what they currently are but when I lived there it was primarily high end shopping (Gucci, Burberry, Tod's) and expensive rental/condo units. From a tour of the website it has gradually incorporated less elite brands and more diversity in style. As for rents they are standard for the area -high but these are "luxury" homes catering again to the tech elite market.

Redmond Town Center now a decade old originally began on a similar note and since then is now much more decidedly downscale and as a result not quite the "suburban" village it aspired. Bellevue too tried that with their Bravern project of high end condos mixed with high end shopping - Neiman Marcus, Hermes, etc. Early on a restaurant pulled out and many of the shops are vacant, the condos now are apartments but it has a nice public area with fireplaces and lounging chairs throughout with sadly few people to populate it.

Immediately adjacent is another more downscale and in fact also public private village called Elements. While still in its nascent stages it has great live feel work to it and its easily open and accessible to the other apartments and residences nearby.

As you can see by the photos it is highly open, airy and mixes urban park with industrial practicality. Two words come to mind: Approachable and Affordable. The French Bakery provides outstanding breads, small spas, work out facilities from a Pure Barre to a Yoga studio and more retail outlets that enable those who live and work variety.

I like the idea of the urban suburban landscape and the focus on green building in Bellevue has been low key yet their City Hall a block away is easily greener than even the famed Seattle City Hall across the bridge. Why? Because its not just asphalt. I will blog further about the two buildings in the future.

I am not against the idea of an urban live/work village and my personal favorite is the 19th street area of Oakland that revitalized what ostensibly was a neglected area of a city often neglected itself to its more famous cousin across the bay - San Francisco. What Oakland did right and San Francisco did wrong (as discussed in prior blog) is the focus on live/work/retail being again affordable and approachable.

And like another failure I believe is Seattle's South Lake Union. I will devote another blog to that neighborhood as I do believe its a public/private partnership that fails on the count of being both what determines success - being affordable and approachable.

As we look to making cities work I wonder why Seattle and San Francisco failed and why Bellevue and Oakland (two very distinctly different cities as well) succeeded. I believe its largely due to one factor - politics. The type of municipality that dictates the needs of its community and its clear that the City of Seattle failed where Bellevue (however no more affordable but not more than Seattle rental wise) is trying not to.

Monday, September 12, 2011

Ray Anderson - The Grandfather of Green

I did not realize Ray Anderson the CEO of FLOR had passed on August 8th. I had the pleasure of hearing Mr. Anderson speak at the 2008 West Coast Green Conference and he was still passionate and positive about the role of green in design and build despite what at that time an immense economic shift was happening.

This morning the Economist provided an excellent eulogy about Ray Anderson, his work and influence in the Sustainable community. The man may be gone but the legacy of his vision and his role in green will live on. As a customer of Flor I can only say that is a fine one to leave.

The carpet-tile philosopher

Ray Anderson, America’s greenest businessman, died on August 8th, aged 77

Sep 10th 2011 |

WHEN Ray Anderson first encountered the concept at an international conference, it took his breath away. It was so smart, so right. It was flexible, practical, beautiful, and made perfect sense. He knew right then that modular soft-surfaced floor coverings (carpet tiles, in other words), could change the world.

Others thought he was round the bend. When he decided to give up his job at Milliken Carpet in LaGrange, Georgia to set up a 15-person carpet company, and was clearing out his desk that February of 1973, two colleagues looked in. “We don’t think you can do this,” they told him. He replied, in his languid, ever-courteous southern lilt, “The hell you say.” Fifteen years later his company, renamed Interface, was the biggest carpet-tile maker on the planet.

This also made Mr Anderson a considerable plunderer of the earth. He never thought about that at first. To his mind he was no more a thief of Nature than when, a country boy during the Depression, he had hooked 20-pound channel catfish, now long gone, out of the Chattahoochee River. His business complied with government regulations. His product, too, was much less wasteful than broadloom carpet, since you could easily cut the tiles to run cables underneath, and replace them one by one as they wore out. They were, it was true, almost entirely made of petroleum in some form or another. Some pretty bad stuff was used in the dye and the glue. More than 200 smokestacks blackened the sky to produce them. But boardrooms laid with Interface carpet tiles looked and felt a million dollars.

The turning point, his “mid-course correction”, came in 1994. He was 60, but not yet ready to retire to the mountains or chase a little white ball. Under pressure from customers to produce some sort of environmental strategy for his company, he got a small task-force together. Someone gave him a book, Paul Hawken’s “The Ecology of Commerce” to help him prepare his first speech on the subject. Thumbing vaguely through it, he chanced on a chapter called “The Death of Birth”, about the extinction of species. Reading on, he came to a passage about reindeer being wiped out on St Matthew Island in the Bering Sea. Suddenly, the tears were running down his face. A spear-point had jammed into his heart. It was the very same feeling, he said later, as when he had first seen carpet tiles, but orders of magnitude larger. He was to blame for making the world worse. Now he had to make it better.

Interface, he decided, would leave no print on the green-and-blue carpet of the world. By 2020 it would take nothing from the earth that could not be rapidly replenished. It would produce no greenhouse-gas emissions and no waste. That meant using renewables rather than fossil fuel; endeavouring to make carpet tiles out of carbohydrate polymers rather than petroleum; and recycling old-carpet sludge into pellets that could be used as backing.

Some of the technologies Mr Anderson hoped for (and half-envisaged, as a graduate in systems engineering from his much-loved Georgia Tech) had not been invented when he started. Several colleagues thought he had gone round the bend again. He had to bring them along slowly, in his quiet way, until they “got it” by themselves. But by 2007 the company was, he reckoned, about halfway up “Mount Sustainability”. Greenhouse-gas emissions by absolute tonnage were down 92% since 1995, water usage down 75%, and 74,000 tonnes of used carpet had been recovered from landfills. The $400m he was saving each year by making no scrap and no off-quality tiles more than paid for the R&D and the process changes. As much as 25% of the company’s new material came from “post-consumer recycling”. And he was loaded with honours and awards as the greenest businessman in America.

Most satisfying of all, sales had increased by two-thirds since his conversion, and profits had doubled. For Mr Anderson always kept his eye on the bottom line. He could be sentimental, ending his many public speeches with an apologetic poem to “Tomorrow’s Child” written by an employee after one of his pep talks, but he was only half a dreamer. His company was his child, too. Profits mattered. This made some greens snipe at him, but it also made Walmart send two of its senior people round to his factory in LaGrange to see what he was doing right. As a success, he could powerfully influence others.

The forest floor

He never dreamed of giving up carpet tiles. Their beauty and variety delighted him, just as Nature’s did. In his office in LaGrange they were laid out like abstract art on tables, while hanks of yarn hung on the walls. His company introduced Cool Carpet®, which had made no contribution to global warming all along the supply chain, and multicoloured FLOR for the home, “practical and pretty, too”. He was proudest, though, of Entropy®, a carpet-tile design inspired directly by the forest floor. No two tiles were alike: no two sticks, no two leaves. They could be laid and replaced quite randomly, even used in bits, eliminating waste. And when you lay down on them you might almost be in Mr Anderson’s 86-acre piece of forest near Atlanta, listening to the sparrows in the long-leaf pines, rejoicing in being a non-harming part of the web of life, like him.

Friday, September 9, 2011

Summer Daze

The end of the summer is approaching for some and its time to think of the things you need to do before winter approaches.

For my pool owner friends (can I come by for a late dip?) its time to think of the maintenance routines you will need to close the pool for winter.

If you are looking for Automatic Safety Pool Covers" go to they have either the PowerTrak and/or the ManualTrak system available and either are the most affordable automatic safety covers on the market.

Are you in seasonable climate that allows you to swim year round? (I'll be right over) and looking for a safety pool cover to protect the pool when not in use and to make sure no uninvited guests use it when you are not around.

Try PCpools for your swimming pool needs. They have free shipping and a customer service person willing to help you determine what you need to keep your pool working all year round.

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Blu the New Green

BluHomes is making a big splash on pushing forward the pre fab home concept. I was once deeply in love with them and then over time thought that the costs simply cannot be sustainable in building affordable green homes.

BluHomes seems to be on a course to change that. They purchased Michelle Kauffman (pre fab's greatest cheerleader and perhaps the mother of its revival) and are working on moving forward; however, I was surprised that given the recent Building Science conference in Denver they had no representative there to provide a discussion about where pre fab fits in the future of building but here is an article from Forbes that addresses their future and role in building affordable and green..

Blu Homes' Apple Approach to Building Green Prefab Houses

Todd Woody, Forbes Staff

In the Sept. 12 issue of Forbes, I write about Blu Homes, a Massachusetts startup that makes green prefab houses that fold up in the factory for shipping and are unfolded on site and bolted to a foundation in a day (see video at end of this post). The company aims to mass-produce environmentally friendly homes like Priuses, taking the cost and hassle out of custom home building.

Prefabricated or modular homes are nothing new – think doublewides. But about a decade ago they began to go upscale as architect-led firms started designing beautiful energy efficient abodes. The idea of so-called modern prefab was to shed manufactured housing’s down-market image as well as the waste and inefficiency of traditional “stick-built” homes constructed on building sites by a slew of subcontractors.

It didn’t quite work out that way. While modern prefab succeeded architecturally, it mostly failed in the factory. Firms often subcontracted manufacturing to different factories and achieved neither economies of scale nor the standardization necessary to mass-produce green homes, according to Allison Arieff, a former editor in chief of Dwell magazine and an influential figure in the modern prefab movement.

“The state of modern prefab is not good at all,” Arieff told me when I interviewed her for the magazine story on Blu. “If you figure it’s already a niche market, and it never claimed to be otherwise, you already have a small percentage of an overall housing market that is crummy.”

Blu’s founders – Bill Haney, a serial entrepreneur, environmentalist and filmmaker (The Last Mountain), and former venture capitalist Maura McCarthy – think they can succeed with an Apple approach to modern prefab: Combine drop-dead design with sophisticated software and control the entire home buying and building experience.

“We’re a technology company that builds homes,” says McCarthy, 31.

Blu has raised $25 million from angel investors like Abby Disney – Walt’s grandniece – and Haney has a 40% stake in the company. Blu used the funding to first solve a conundrum that has long bedeviled prefab firms. As Haney, 49, puts it, “The reason houses don’t get built in factories now is that to transport them they need to be narrow, but to live in them they need to be wide.”

Anything wider than 8.5 feet won’t fit on a standard tractor-trailer and thus shipping costs become exorbitant. Blu’s seven models are framed in recycled structural steel and equipped with hinges that allow a 21-foot-wide home to be folded up in a box and placed on a truck.

But it is software that makes the hardware a reality. Blu licenses an industrial-grade engineering software system called CATIA used by Boeing to design airliners, Virgin Galactic to build its suborbital space ship and automakers to create cars. When changes are made to a Blue model in CATIA, the algorithms not only make the necessary engineering adjustments but also calculate the cost and send the changes and a bill of materials to the machines and workers on the factory floor.

At Blu’s 120,000-square foot factory outside Springfield, Mass., McCarthy showed me the interface for the software that lets customers see models in 3D and choose and preview thousands of options, everything from the type of kitchen cabinets they want to the location of the kitchen.

Every item in the virtual house is a 3D replica of the actual product – down to the flanges in the Anderson windows – so that if client moves a door or chooses a more expensive appliance package, the software makes the necessary structural changes to the plans and updates the cost of the house. CATIA then tells machines on the factory floor how the steel frame should be stamped and where the holes for wiring and plumbing should be drilled.

That allows Blu to control construction costs – which have been halved over the past two years, according to Haney – while maintaining quality. For the customer, it means no endless meetings with subcontractors and visits to the construction site.

“We can give you something that is beautiful, we can give you something that’s done in a much more healthful way and it’s economic performance can be unusually good compared to a reasonable alternative,” says Haney. “We integrate design, engineering and construction and transport it to your site and put it up for you.”

Out on the factory floor, where houses are placed on giant rollers and moved from station to station, a 1,650-foot model called the Glidehouse is in the last stages of assembly, with workers installing sustainably produced wood cabinetry, low-flow toilets and other features that cut Blu homes’ energy consumption by 50%.

Later in the day, I head out to Pittsfield, Mass., in the Berkshires to take a look at an Element model that has been set up on a wooded lot for an 80-year-old customer. The light-filled 1,008-square-foot house clad in yellow siding has 13-foot ceilings and two bedrooms. The current version of the home starts at $160,000. Other Blu models are priced up to about $500,000 (land not included).

While the house offers minimal storage space, what sold her on Blu could be the company’s sweet spot: Sustainability, energy savings and minimal hassle getting a house built. “One of the things that I loved about modular is that they gave me a contract price and that is something I can control,” she says. “What I liked about Blu was that they were starting from a position of sustainability.”

But given the continuing housing meltdown, is there really a mass market for upscale mass-produced green homes beyond the coastal creative class that is Blu’s primary market?

Arieff is doubtful. “I think it’s impressive that Blu Homes has gotten the investment they have but much is stacked against them,” says Arieff, who thinks the key to creating a sustainable modern prefab industry is to focus on multi-family dwellings.

But Haney, who is set to open up a second factory north of San Francisco this year, believes there’s a cultural shift underway born of the excesses that begat the Great Recession that will spark wider demand for modern prefab.

“McMansion is now a joke and Hummer is now a punch line,” argues Haney, who invokes traditional Yankee values when discussing sustainability. “When we began this, we had this notion that the dominant ethic of American culture from 1670 to 1970 was pragmatism and self-reliance and since then we’ve become about materialism and self-indulgence.”

“The general notion that we want to be greener, we want to conserve, we want to be healthier – that’s a cultural trend that has not been thwarted by the economic downturn,” he adds.

And in a nod to more traditional architectural values, Blu’s latest model is a departure from the contemporary California esthetic of its other homes. The new model, called the Lofthouse, resembles a classic New England home, pitched roof and all.

Monday, September 5, 2011

Building Better Cities

I read the recent book by Edward Glaeser, Triumph of the City, discussing the importance of cities in the American myth and legacy. And he argues that cities even those in downturn - such as Detroit - serve too significant an importance to be overlooked when it comes to creating Sustainable cities. And many of them have already the infrastructure and design in place that need upgrading or modification to rebuild and renew. The Greenest City perhaps is one that changes as the world around it changes. reports that 180,000 people move into cities daily and in turn requires innovation and ideas to meet the diverse needs, economics and long term plans of what makes the city livable. One way many cities are doing so are by trying "pop up" concepts that require little infrastructure or tax commitment. If they work they are then incorporated into the landscape for the long term.

In my recent trip to Denver I loved the bike rental stations dotting all over the city and the parks that can be used for recreation and transportation. No wonder it has the reputation of the healthiest city in the U.S.

And on that note its important to realize that how a city defines itself and its needs will enable growth but more importantly ECONOMIC growth for its residents.

The article below discusses in cities that neglected the needs of such long term planning led to housing costs that skyrocketed and in turn created a massive exodus out of the cities. That brain drain leads to less innovation and of course diversity at all levels.

San Francisco is a classic example. A city of NIMBY advocates it has become a city of two incomes. The poor and the very rich living side by side and a community that is divided with severe income inequality is not a city worth living in for the long term.

I left San Francisco for that reason and its why I am planning on leaving Seattle - I can see the affects it has on my way of living but more importantly on the city overall and despite the efforts to enhance density here there is just no real work either and that cannot enable me to remain here for the long term.

One Path to Better Jobs: More Density in Cities

Published: September 3, 2011

Ryan Avent is an economics correspondent for The Economist and author of the Kindle Single “The Gated City,” from which this essay is adapted.
Related in Opinion

“HELL is other people,” wrote Jean-Paul Sartre. He nonetheless spent much of his life in Paris, the better to interact with other French intellectuals. Cities have long been incubators and transmitters of ideas, and, correspondingly, engines of economic growth.

That has never made the crowds less annoying. Maybe that’s why people try to tame the city by chaining it down and limiting who can build what where along its quieter streets. We lobby leaders to fight development, aiming to protect old buildings and precious views, limit crime and traffic, and maintain high-quality schools. But what makes a city a city and a not-city a not-city is the fact that a city is dense and a not-city isn’t. The idea of it may chill a homeowner’s heart, but the wealth supported by urban density is what gives urban homes their great value in the first place.

And when it comes to economic growth and the creation of jobs, the denser the city the better.

How great are the benefits of density? Economists studying cities routinely find that after controlling for other variables, workers in denser places earn higher wages and are more productive. Some studies suggest that doubling density raises productivity by around 6 percent while others peg the impact at up to 28 percent. Some economists have concluded that more than half the variation in output per worker across the United States can be explained by density alone; density explains more of the productivity gap across states than education levels or industry concentrations or tax policies.

Put two workers with similar skill levels in cities of different densities and the one in the denser place will be more productive, according to two decades’ worth of research from economists. The resistance to greater density slows job creation in productive places. Take, for instance, the San Francisco Bay Area, a beautiful place, blessed with outstanding climate, scenery and culture. It’s also an economic juggernaut, hub of the country’s tech industry and home to some of America’s highest wages. In 2009, the average Silicon Valley household earned about $85,000. Despite this, over 500,000 residents of the Bay Area moved elsewhere in the 2000s. Many of them left for places like Phoenix, which attracted over 500,000 residents from other American cities, despite wages 40 percent below Silicon Valley levels.

Factors like taste and taxes account for some of the migration, but the biggest reason for the shift is housing costs. The average Phoenix home is worth about 30 percent of the price of a house in San Jose. The difference in prices is mostly due to differences in building. In every year from 1992 to 2009, Phoenix granted permits for two to three times as many new homes as did the San Francisco and San Jose metropolitan areas combined. Around the San Francisco Bay, neighborhoods dead set against change successfully squeezed the housing supply, just as OPEC limits the supply of oil when it wishes to raise its price.

The “Not in My Backyard” philosophy sometimes, though by no means always, supports a high quality of life. Yet the effect is to raise housing costs and make rich cities more exclusive. Real trouble occurs when the idea-generators in cities with that NIMBY approach become so protective of their pleasant streets that they turn away other idea-generators, undermining the city’s economic role. And that is happening. Entrepreneurship rates in Silicon Valley were below the national average during the tech boom because firms couldn’t attract enough skilled workers.

Productivity and wages are rising in these growing Sunbelt cities, but not as fast as in the denser cities that workers are leaving. The average wage per job in Phoenix rose $10,700 from 2000 to 2009, while in San Francisco the increase was $14,500. But, while wages are growing in San Francisco, they would be growing faster if the city allowed the construction of more housing. More workers would be able to take advantage of the good job opportunities in the Bay Area, and the metropolitan and national economies would function better.

DENSITY isn’t a magic elixir. One can’t create wealth just by crowding people together; otherwise the super-dense metropolitan areas in emerging Asian countries would be richer than American cities. Density simply facilitates interaction. Interactions translate into wealth when a population is educated and local institutions support private enterprise and entrepreneurship.

The world’s richest places tend to be dense, with well-educated residents and a free-market-orientation (or tax havens or oil-rich) — think of New York and the Bay Area, of Singapore, Hong Kong and the Netherlands. Without a stock of skilled workers and a relatively open marketplace, density’s impact on growth and productivity will be limited.

What is it exactly that dense cities are doing? Consider a simple example. Suppose that within a population one person in 100 develops a taste for Vietnamese cuisine, and suppose that a Vietnamese restaurant needs a customer base of 1,000 people to operate profitably. In a city of 10,000 residents, there aren’t enough people to support a Vietnamese restaurant. The only restaurants that can operate profitably are those appealing to considerably more than one in 100 people — restaurants offering less daring fare. In a city of 10,000 people, there is little room for specialization, and less for experimentation.

A city of one million people, by contrast, can support multiple Vietnamese restaurants. Not only will this larger city enjoy a specialty cuisine unavailable in less populous places, but its ability to support multiple producers of this cuisine allows for competition, improving the price and quality.

A city with multiple Vietnamese restaurants may attract sellers of the fresh ingredients used in Vietnamese cooking, who then invest in distribution of those products in the larger city. This, in turn, attracts the sort of discerning eaters who favor authentic, high-quality Vietnamese food, reinforcing the concentration of Vietnamese eateries. The larger market facilitates competition, which again boosts quality and reduces prices. This is good for consumers. But competition also means better service from suppliers and growth in the consumer market, which is good for the restaurants. The result is a stronger, more productive and higher-quality microeconomy than in the city of 100,000, where only one Vietnamese restaurant can survive, or the town of 10,000, where there is none at all.

Density doesn’t work without talent. A small market may only support restaurants producing food that caters to a broad range of tastes. These restaurants will have to hire generalists — cooks who can produce a broad range of cuisines. Specialization and fine-tuning of one’s skills aren’t rewarded; too few patrons will have the specific taste for the particular cuisine to appreciate the quality. Time spent nailing down the nuances of one cuisine is time a chef isn’t using to maintain a good-enough command of a broad range of dishes.

In the larger market, supporting multiple niche cuisines, the calculus is different. Because there may be multiple Vietnamese restaurants competing for patrons, mastery of that specific style is necessary to maintain an edge against the competition. This is particularly true as the concentration of Vietnamese restaurants is likely to attract devotees of the cuisine with a well-developed knowledge of and taste for it. Hence, the larger marketplace pushes for, rather than against, specialization.

Meanwhile, a worker hoping to make a living as a Vietnamese chef will have a much easier time of things in the larger city. Labor turnover may be greater — if there’s only one Vietnamese restaurant in a town, then head-chef spots may only rarely open up — and so the odds of finding employment are higher. The larger city also provides insurance against bad fortune. If you’re a Vietnamese chef working at the one Vietnamese restaurant in a town and the one Vietnamese restaurant goes bankrupt, then you’re obviously in a tough economic situation. You must either take another job for which you’re less qualified, which may mean a reduction in compensation, or move. In the larger city, by contrast, competing restaurants can absorb and reemploy the labor and resources of defunct competitors.

This insurance function is important. It reduces the risks associated with specialization and therefore encourages more of it. By allowing workers to focus on tasks at which they’re relatively better than others, specialization helps drive economic growth. It’s also an engine of innovation. As workers focus on a specific task, they may well find better ways to do it. They might better schedule their days or invent something entirely new — software code written to expedite repeated tasks, or a machine that automates portions of a task. Of course, existing companies can be resistant to innovation. Dense cities, by acting as a source of insurance, enable workers with good ideas to take risks and start new businesses. If these workers fail, they have a good chance of finding employment elsewhere in the city. And if they succeed, the task of staffing the company is made easier by the existing pool of talent, and odds are good that customers and suppliers are close to hand, as well. Big cities provide a climate in which innovation can flourish, and in which innovators have the resources they need to exploit new ideas.

WHAT’S true for Vietnamese cooking is true of skill-intensive industries. The American economy’s famous upward mobility rested in part on middle-class access to rich, entrepreneurial cities. This machinery is breaking down, however, mostly because upward mobility strikes too many residents of rich places as too messy a pursuit to accommodate. During the Industrial Revolution, for instance, millions of workers flooded into fast-growing cities. This produced slums, but it also allowed poor workers to take advantage of opportunities in new industries, a process that helped create the middle class.

Rapid urban growth would mean denser neighborhoods, which makes many Americans uncomfortable. Preventing this density, however, denies workers access to the best opportunities, constraining the mechanism that helps support a strong middle class.

We can hope that as the Phoenixes and Houstons grow and attract skilled workers, their wage levels will converge with those of the slow-growing, high-wage coastal cities. Yet that may simply encourage their residents to pull up the ladder after them as coastal residents have. Eventually, Americans will learn that if they can’t harness their cities as tools of growth and mobility, they’ll have to find costlier ways to address the country’s lingering economic ills.

Green Build - America

Today I read a great article about a builder's challenge to himself.. to build green and to build by using only American made products to accomplish this means.

And what is great about this? Well that a builder is still pushing energy efficiency, green build and still why staying true to his roots. Mr. Lewendal is not a green liberal latte drinker and yet here he is espousing very green views but more importantly views anyone on any side of a political fence can agree - building for America with American products.

And while the challenge has been that he is finding costs are negligibly higher but with that quality and time saved. Shocking? Not really as anyone who has worked with many of the poorly constructed Chinese products of late.

Can this be done? Absolutely because that is something we are definitely not short of commitment and innovation.

I look forward to hearing more about this very Green American Build.

All-American, Floor to Roof? Not So Simple

Published: September 4, 2011

Kat Quinn owns the house Mr. Lewendal is building, and she has reasons of her own for liking his all-American approach.

He is trying to do just that with a new home here on a side street a few blocks from downtown. But it is not as easy as it sounds.

Some things are simple enough. Wood literally grows on trees, of course, especially here in forested western Montana. And no one ships cement or concrete mix any farther than needed.

After that it can get tough. In a global economy, even American-assembled appliances probably have at least some foreign made or mined components, Mr. Lewendal said.

Tiny components like nails, screws and light bulbs, mundane but crucial, are significantly cheaper if bought from China or other developing nations. High-end frills — which tend to be imported, like Italian marble or mahogany — may be doomed to stay on the dock or in the showroom.

And all that does not even address the question of whether using illegal immigrant labor, a mainstay of the construction industry around the nation, counts as foreign.

“Part of the impact of the recession has been healthy, in making people rethink what housing is for,” said Mr. Lewendal, who conceded that perfection in his goal is probably not possible. The locally made cement, he suspects, could have some imported chemicals, for example, and the recycled glass from Yellowstone National Park that he laid down as a base layer under the garage could well have contained an imported beer bottle or two. As for his workers, he said, they are all here legally.

“The point is that little things can add up,” he said. “I think we could solve this recession if everyone shifted just 5 percent of their purchases to U.S.-made products.”

In some ways, it is an old idea, echoing a hard-hat refrain from the 1970s or earlier: Buy American. In other ways, though, it is as current as the environmental message that hangs over every urban farmers’ market: Buy Local.

Mr. Lewendal said that because the 2,280-square-foot, three-bedroom house he is building will conform to high energy-conservation standards — more points are awarded for materials obtained close to the site — the economic and social implications all blur. And in a brutally competitive local market, he added, pitching all-American could also be a marketing niche in tune with the times.

“I don’t see any politics to it at all,” said Mr. Lewendal, 51, who described himself as a conservative and is the chairman of the local homebuilder association’s green building committee. “It’s about jobs.”

The house’s owner, Kat Quinn, also has a complex agenda. For health reasons, she wanted a house built to strict environmental standards, and after she met Mr. Lewendal and heard about the all-American home idea, she became convinced that buying American could put pressure on foreign companies to raise wages for their workers.

She said she does plan, though, on having a Canadian-made trampoline in the house, to use in therapy for a daughter with cystic fibrosis.

Bozeman’s economy was not devastated across the board by the recession. Montana State University, a big local employer, created a base of stability, and the proximity to Yellowstone, about 90 minutes south, kept up a flow of tourists.

But where bad times bit, they bit hard, and that was in construction. The vacation- and second-home market that plumbers, roofers and framers depended on dwindled to almost nothing starting in 2007, taking out more than a third of all the construction work here in Gallatin County in just 24 months, according to state figures.

Justin Tribbitt, a former general contractor now working in computer software, lost his company; three of his five former employees left town. Mike Wilhelm, an electrician, went from six employees to two. Rock Larocca, also a contractor, survived with the aid of a chainsaw, helping cut down trees killed by a beetle infestation.

“It’s kind of like getting a drink out of the garden hose and suddenly the valve shuts off and it’s dry,” said Mr. Tribbitt, 32. “It was gone just like that.”

Mr. Lewendal conceded that perfection in his goal is probably not possible.

Some who managed to hang on said that whether the all-American home idea is good marketing for Lewendal Construction or good economics for the country, or both, it feels right to them. Mr. Lewendal, admirers said, is taking action.

“More power to him,” said Ryan Engbretson, a builder who said that his company had survived mainly by doing repair work.

Economists say it is hard to verify Mr. Lewendal’s assertion that about 75 percent of the average American home is made in the United States already, mainly because it does not appear to be something anyone has deeply studied. His estimates that going American will add only 2 percent to 3 percent to the $265,000 construction cost of the Bozeman house by the time final purchases are done — he is still shopping for things like light fixtures — are also difficult to independently confirm.

“The truth is that we are in a global economy and it’s very interconnected, for good or bad,” said Albert Saiz, an assistant professor of real estate at the University of Pennsylvania and co-editor of the journal Housing Economics. “It’s very hard to know the impact of your purchasing decisions and the consequences of what you do.”

Professor Saiz said the fluid nature of labor markets could also make the implications of all-American more complicated. In much of the nation, for example, though less so in this working-class corner of Montana, houses are built with Mexican or other foreign-born labor, which is a kind of foreign input since a part of the wages often goes back across the border.

And if demand for, say, nails or screws made in the United States did go up, Professor Saiz said, the basic manufacturing industry jobs created — low skill and probably low pay — are the kind that American workers are often disinclined to take anyway.

But Mr. Lewendal, who earned an undergraduate degree in economics before going into construction, said costs and benefits are more complicated than a spreadsheet can convey. The nails he bought from a company in Illinois are about $5 more per box, for instance, but he said they jam the nail guns less often than the cheaper Chinese brands, which are less uniform.

“If a guy has to get down three times a day to clear the gun, that’s time wasted,” he said.

Some elements of his experiment are certain to endure, if only inside the home itself. Mr. Lewendal, in showing a reporter around the house, which he hopes to complete this fall, repeatedly illustrated his ideas with diagrams and math equations, scrawling with a black marker on the bare beams and panels — writing that will be preserved, like a time-capsule message to the future, behind the wallboard when the work is done.

Friday, September 2, 2011

Green Jobs Dying on the Vine?

After Van Jones left the White House no other person has occupied the position of Green Jobs Czar and since that Mr. Jones has organized a new group that focus on restoring the Middle Class through series of ideas - green jobs only a part of that equation.

So what happened to Green Jobs - the President that promised to harness the wind, the sun and the water to generate energy and make our planet cleaner and less dependent upon fossil fuels. Well the message is a mixed one.

Currently the Keystone XL Pipeline project a 1700 to transport tar sands oil from Alberta, Canada to Texas a project Along its route from Alberta to Texas, this pipeline could devastate ecosystems and pollute water sources, and would jeopardize public health. And yet we can't have high speed light rail.

And today this was just announced: President Barack Obama unexpectedly asked the Environmental Protection Agency on Friday to withdraw a plan to limit smog pollution, handing a big win to business and Republicans who have argued the initiative was a job killer in uncertain times.

And while Obama was indeed supportive of Solar Projects this week brought devastating news to the fragile industry and economy with the bankruptcy and subsequent closing of Solyndra. And in turn defaulting on a federal loan of over 500 Million.

There is no question its failure along with two other US Solar manufacturers this year gives fuel to the fire about providing Government subsidies to risky new green industries. And the current anti bailout divisive climate does nothing to aid in growing any green business. Funny however that when it came to banks and auto makers despite their mismanagement, corruption and greed the ones who did get Government aid came through more profitable than ever. So there is more to the story as to why Solydra was "too small to succeed." The coincidence that GE (a potential competitor) is on the job committee I am sure had nothing to do with it.....

This from Bloomberg News..

President Barack Obama is standing by his support for renewable energy after Solyndra Inc., a maker of solar panels that received a $535 million U.S. loan guarantee, shut its doors, a White House spokesman said.

Solyndra suspended operations and plans to file for bankruptcy reorganization because it couldn’t compete with larger rivals, the closely held company said in a statement yesterday.

Obama had touted Solyndra as part of the U.S. effort to aid development of alternative energy sources, and its failure was cited by Republican lawmakers who say the subsidies are misguided. It’s the third U.S. solar company to go under in a month, as plunging panel prices and weak global demand drive a wave of industry consolidation.

“While we are disappointed by this particular outcome, we continue to believe the clean-energy jobs race is one that America can, must and will win,” White House spokesman Eric Schultz said today in an e-mailed statement. Obama visited the Fremont, California-based company in May 2010, and said the U.S. was in competition with China and Germany for supremacy in renewable energy.

The Energy Department’s portfolio of dozens of other government-backed investments “continues to perform well and is on pace to create thousands of jobs.”

Solyndra is likely to file for Chapter 11 protection in Delaware on Sept. 7, as it evaluates options including selling itself or licensing its technology, David Miller, a spokesman for the Fremont, California-based company, said in an e-mail. About 1,100 full-time and temporary employees have been dismissed. The company didn’t say how much it owes creditors.

Couldn’t Compete

“Solyndra could not achieve full-scale operations rapidly enough to compete in the near term with the resources of larger foreign manufacturers,” the company said in the statement. Its problems were exacerbated by a global glut of solar panels and slowing demand “that in part resulted from uncertainty in governmental incentive programs in Europe.”

The company may have trouble finding a buyer, said Adam Krop, an analyst at Ardour Capital Partners in New York.

“I don’t see anyone swooping in,” he said in an interview. “I don’t see this technology as very viable in the long-term. I see someone maybe buying the facility.”

Solyndra produces cylindrical panels that convert sunlight into electricity using copper-indium-gallium-diselenide thin- film technology. Standard solar panels are flat.

“Manufacturing and assembly costs associated with a Solyndra module aren’t particularly scalable,” Krop said.

The company has borrowed $527 million of the $535 million covered by the Energy Department loan guarantee, Damien LaVera, a department spokesman, said in an e-mail.

Solyndra plans to include the Energy Department loan guarantee in its bankruptcy filing.

‘Dubious Investment’

Solyndra’s failure calls into question Obama’s renewable energy policies, according to two Republican House members.

“It is clear that Solyndra was a dubious investment,” Representatives Fred Upton of Michigan and Cliff Stearns, of Florida, said in a joint statement yesterday. The company “is just the latest casualty of the Obama administration’s failed stimulus.”

Investments in start-up companies inevitably involve some risk, Dan Leistikow, director of the Energy Department’s Office of Public Affairs, said in an article on the agency’s website. “The changing economics have affected a number of solar manufacturers in recent months, including unfortunately, Solyndra,” he said. “We have always recognized that not every one of the innovative companies supported by our loans and loan guarantees would succeed.”

Ceding to China

Representative Henry Waxman, a California Democrat, said the U.S. must continue to support renewable energy. Recent bankruptcies of U.S. solar companies are a warning and “we should be doing everything possible to ensure the United States does not cede the renewable energy market to China and other countries,” he said in an e-mailed statement.

SpectraWatt Inc., a solar company backed by units of Intel Corp. (INTC) and Goldman Sachs Group Inc. (GS), filed for bankruptcy protection Aug. 19, and Evergreen Solar Inc. (ESLR) did so Aug. 15.

SpectraWatt of Hopewell Junction, New York, received a $150,000 grant in June 2010 from the National Science Foundation, and a grant of $500,000 in June 2009 from the Energy Department’s National Renewable Energy Laboratory.

Solyndra canceled in June 2010 plans to raise as much as $300 million in an initial public offering.

Solyndra’s backers include Argonaut Private Equity, GKFF Investment, CMEA Ventures, Redpoint Ventures, Rockport Capital Partners LLC, US Venture Partners, Virgin Green Fund, and Artis Capital Management LP, according to the company’s December 2009 IPO filing.

Despite what is a surplus of technology to China regarding Solar Technology the US is slowing losing ground on the actual production and manufacturing of solar products. Once again not because China is superior on innovation or even cheap labor its the amount of Government funding that is building and sustaining this industry. As this article in today's New York Times discusses. (Below for your review)

As GE is claiming to be a foreward thinker on alternative energy and Jeffrey Immelt, the CEO who uses China as a noun, adjective, verb and adverb as often as he can is ironically Obama's current "job czar" no color provided. I wonder if that means GE brings good things to light in China by developing the technology they need to build what in turn they will sell back to us.

Even Solyndra realized that despite their setback the technology itself is valuable. But for job creation the value is lacking

China Benefits as U.S. Solar Industry Withers

Workers install solar panels at a power station in Hami in the Xinjiang Uyghur Autonomous Region of China.


Published: September 1, 2011

HONG KONG — The bankruptcies of three American solar power companies in the last month, including Solyndra of California on Wednesday, have left China’s industry with a dominant sales position — almost three-fifths of the world’s production capacity — and rapidly declining costs.

Some American, Japanese and European solar companies still have a technological edge over Chinese rivals, but seldom a cost advantage, according to industry analysts.

Loans at very low rates from state-owned banks in Beijing, cheap or free land from local and provincial governments across China, huge economies of scale and other cost advantages have transformed China from a minor player in the solar power industry just a few years ago into the main producer of an increasingly competitive source of electricity.

“The top-tier Chinese firms are kind of the benchmark now,” said Shayle Kann, a managing director of solar power studies at GTM Research, a renewable energy market analysis firm based in Boston. Pricing of solar equipment is determined by the Chinese industry, he said, “and everyone else prices at a premium or discount to them.”

Besides Solyndra, the other two American manufacturers that filed for bankruptcy in August were Evergreen Solar, of Massachusetts, and SpectraWatt, a New York company. Another company, BP Solar, halted manufacturing at its complex in Frederick, Md., last spring.

Those bankruptcies and closings represent almost one-fifth of the solar panel manufacturing capacity in the United States, according to GTM Research.

Solyndra and Evergreen in particular suffered because they pursued unusual technologies whose competitiveness depended on their using less polysilicon, the main material for solar panels. That has become less important because polysilicon prices have tumbled more than 80 percent in the last three years as output has caught up with demand.

Analysts say that two American companies remain strongly placed. One is First Solar, the largest American manufacturer, which uses a different technology but has its biggest factory in Malaysia. The other, SunPower, is much smaller but is an industry leader in the efficiency with which its panels convert sunlight into electricity, so that they sell at a premium to Chinese panels.

But with Beijing heavily supporting its industry, the Chinese companies are forging ahead.

“There is no question that renewable energy companies in the United States feel pressure from China,” said David B. Sandalow, the assistant secretary for policy and international affairs at the United States Energy Department. “Many of them say it is cheap capital, not cheap labor, that gives Chinese companies the main competitive advantage.”

China’s three biggest solar power companies — Suntech Power, Yingli Green Energy and Trina Solar — have all in the last two weeks announced second-quarter sales increases of 33 to 63 percent from a year earlier.

Yingli and Trina were also profitable in the quarter. Suntech posted a loss, mostly because it broke a longstanding agreement to buy solar wafers — critical components in the manufacturing process — from a Singapore affiliate of MEMC Electronic Materials of Missouri. Suntech aims to make more wafers itself.

Shares in large and small Chinese solar power companies have mostly rallied in the last two weeks on the New York and Hong Kong stock markets, as investors have welcomed their strong quarterly results and the prospect of dwindling competition from Western rivals. Besides the bankruptcies in the United States, solar power companies in Germany, another big producer, have been laying off workers and retrenching.

The recent strength of Chinese stocks “truly reflects the low cost base of the Chinese solar manufacturers, and it is great to see their positioning, particularly relative to their American and European counterparts,” said K. K. Chan, the chief executive of Nature Elements Capital, a Chinese clean energy investment company based in Beijing.

He attributed the Chinese industry’s low costs not to inexpensive labor in China — high-technology solar panel manufacturing is not labor-intensive — but rather to free or subsidized land from local governments, extensive tax breaks and other state assistance.

Solar panel prices have plunged by 30 to 42 percent per kilowatt-hour in the last year as manufacturers have sharply increased capacity, particularly in China. Meanwhile, demand has been somewhat weak in the main markets in the United States and Europe.

Costs for electricity generated by utility-scale solar installations now approach costs for natural gas in some markets, like California’s, when subsidies of as much as 30 percent of the price are included. However, costs remain well above the cost of electricity from coal.

The United States and the European Union have tried to build demand for solar power by subsidizing the buyers of solar panels. But increasingly those subsidies are being used to buy solar panels from China.

The Chinese government has pursued a different policy course. Instead of subsidizing the purchase and use of solar power, China has focused on building the competitiveness of the country’s manufacturers. As a result, China exports 95 percent of the solar panels it produces. The United Steelworkers union filed a legal complaint a year ago with the United States government, asking the Obama administration to investigate China’s clean energy subsidies and other policies and to bring cases against them at the World Trade Organization. The organization’s rules strictly prohibit export subsidies, to prevent countries from buying market share in foreign markets for their producers.

The administration did challenge one Chinese government practice: giving subsidy grants of $6.7 million and $22.5 million to Chinese wind turbine manufacturers that agreed not to buy imported components.

China agreed in June to discontinue the practice, but by then it had already built the world’s largest wind turbine manufacturing industry over the last five years and now has highly competitive Chinese producers for almost every component.

Nkenge L. Harmon, a spokeswoman for the United States trade representative’s office, said on Thursday that the agency’s investigation continued into whether other Chinese green energy policies might violate W.T.O. rules.