Hoku to build plant in Idaho, not Singapore
The Kapolei-based company was lured by tax breaks and other financial support
Hoku Scientific Inc., swayed by tax breaks and other incentives, has selected Idaho as the site of the company's planned solar-module and polysilicon plant.
The Kapolei-based fuel-cell technology developer, which announced in May that it was diversifying to other forms of alternative energy, said yesterday that financial incentives offered by the state of Idaho and municipal governments, and the availability of competitively priced electricity, led to its decision to locate its startup businesses Hoku Solar and Hoku Materials there.
"We believe that Idaho is the best location in terms of cost, resources, labor and government support," Dustin Shindo, chairman, president and chief executive of Hoku Scientific, said in a news release yesterday.
Hoku, which had singled out Singapore as a possible site for a $250 million plant, said that besides the tax incentives, Idaho officials have offered financial support for infrastructure improvements around the facilities, and grants to fund the training of new employees.
Shindo said via e-mail yesterday that he didn't want to comment on the cost of the new production facilities or why Idaho had been chosen over Singapore. He said in the news release that Hoku Scientific was looking forward to contributing to Idaho's growing and diversified economy.
Idaho Gov. Jim Risch said he expects Hoku Scientific to have a significant long-term positive impact.
"We have met with their management team, and were impressed with their growth strategy," Risch said.
Hoku said it plans to begin manufacturing of solar modules and polysilicon in the second halves of 2007 and 2008, respectively. Polysilicon is the primary raw material used to make photovoltaic cells for solar modules.
"We would be buying cells made from polysilicon and use them to make modules," Shindo said in his e-mail. "Our plan is to do this before the polysilicon plant is online."
Last week, Hoku awarded a contract to CH2M Hill Lockwood Greene to provide engineering and related services for its polysilicon plant.
Hoku said it is evaluating three sites near the Snake River in southern Idaho, and plans to make a final decision within the next several weeks.
Piper Jaffray & Co. analyst Jesse Pichel, who upgraded the company's stock last Friday to "outperform" from "market perform," said choosing Idaho for the plant was practical.
"It makes a lot of sense because the biggest cost of a polysilicon plant is electricity, and Idaho offers some of the lowest costs of electricity on the planet because it's hydroelectric," Pichel said. "Idaho gets its electricity from the Snake River. It has generators hooked up to the river. That's the biggest source of alternative energy in this country."
Pichel said it wouldn't have made sense to put the plant in Hawaii because of the state's high electricity costs.
Shindo acknowledged in his e-mail that he had held discussions with Hawaii officials.
"When we first considered expanding into solar and polysilicon, we did speak to the state and county," Shindo said. "The people that we spoke to from the state and county were very supportive. Unfortunately, the state of Hawaii does not have the natural resources needed to host a polysilicon plant, so we could not take the discussions very far. We appreciate the effort and commitment that the state and county representatives displayed during our discussions."
State Tax Director Kurt Kawafuchi said he can't talk specifically about Hoku Scientific and any discussions that might have been held, but stressed that the Lingle administration is very supportive of the technology sector in the state.
"We want to do everything possible to help them become successful," said Kawafuchi, noting that the state passed Act 221 and, its successor, Act 215, to provide tax incentives to qualified high-tech companies.
Pichel, who has a 12-month price target of $5 on Hoku's stock, said the company's diversification into solar energy is a good move.
"You need a lot of different technologies to take a bite out of our addiction to fossil fuels," the New York-based analyst said. "Not to mention, the public seems overwhelmingly against nuclear power. In fact, in Germany they're decommissioning the last nuclear plants."
Pichel said Hoku's entrance into solar energy gives the company another market to tap.
"It's a very large emerging market," he said. "In fact, we are more optimistic on solar technology versus fuel-cell technology because solar technology is an accepted and commercialized source of alternative technology; fuel cells are not. Fuel cells are in recent development stage only."
Hoku Scientific, which made its announcement after the market closed yesterday, ended down 6 cents at $4.34 on the Nasdaq Stock Market.