By Matt Kisber

In February 2008, Tennessee Governor Phil Bredesen called me to his office to discuss an idea to attract new capital and create new jobs in the state. A successful health care entrepreneur, it isn’t unusual for Governor Bredesen to talk about new strategies for changing the state’s economy, but the focus of his conversation and the level of his enthusiasm took me by surprise. No one at the time was suggesting Tennessee could take a leadership role in the creation of new jobs around sustainable energy, but clearly the Governor believed it could. And he wanted a strategic plan aimed at moving the state to the forefront.

Following his return from the National Governors Association conference in Washington, D.C., he was clearly fired up about clean energy. After hearing presentations on the topic by General Electric CEO Jeffrey Immelt and New York Times columnist Tom Friedman, Governor Bredesen understood there would be opportunities for those states who created the right environment for clean energy jobs. This was an industry poised for growth and the states moving quickest would be in a position to reap the rewards of high skill, good paying jobs.

Cultivating a thriving clean energy economy is not simply an issue of environmental stewardship, he said, or even of energy assurance and national security. Rather, developing an industry around understanding and deploying clean energy is a critical component of job creation. The states that can grasp that principle and get out in front of it strategically will be the leaders of the 21st century economy.

Sitting across from the governor that morning, he asked me to work with Commissioner of Revenue Reagan Farr to explore this emerging industry and craft a plan to put Tennessee at the leading edge of green innovation and deployment. The result is a series of incentives and programs which is called the Green Energy Tool Kit and a whole series of initiatives that have found broad based support across Tennessee.

There’s no denying the stakes are high and getting higher. Between 2005 and 2030, world energy consumption is expected to grow an astonishing 50%, and that rise in demand will push the cost of carbon-based energy higher than ever. Relying on domestically produced renewable energy will strengthen the national security by providing solid energy assurance, and going green is indisputably the best way to combat the threat of climate change. Finally, in today’s challenging economy, the dollars that will be invested and jobs that will be created by strategically growing the green sector pack a wallop of potential benefit for families and communities.

Tennessee’s Assets

As the team at the Tennessee Department of Economic and Community Development began to explore opportunities and challenges surrounding the development of a clean energy action plan, solar power emerged repeatedly as one of the areas in which Tennessee is well-positioned to succeed. It is fortunate to have myriad existing assets that lay the groundwork for both fruitful research and development and successful green business recruitment.

Over the decades, much of Tennessee’s research legacy has centered on energy. Oak Ridge National Laboratory in the eastern part of the state is a storied institution and currently operates as the U.S. Department of Energy’s largest science and energy laboratory, including the world’s fastest super computer. ORNL, whose annual funding exceeds US$1.4 billion, boasts a staff of more than 4,600 and plays host to some 3,000 guest researchers each year.

In conversation with researchers at ORNL, I discovered Tennessee’s strong solar energy generating potential. Areas of West Tennessee enjoy generating capacity within 15% of the southwestern. U.S.

Additionally, the state and ORNL both enjoy a close partnership with the University of Tennessee, which is classified by the Carnegie Foundation as a Research University. Other innovation assets can be found in institutions of higher education across the state, such as Vanderbilt University, Tennessee Tech, the University of Tennessee at Chattanooga and the University of Memphis.

Beyond Tennessee’s outstanding research resources, the state is primed for the development of a solar energy cluster because of a highly favorable and nationally recognized business climate. The state legislature has partnered with my department and the State Department of Revenue to make more changes to the business incentive package in the last seven years than in the previous 20 years combined. This kind of aggressive customization, along with the proven track record of recruitment and expansion success, led Site Selection magazine to name Tennessee the most competitive state in the nation for economic development in 2008.

Strategy of Tennessee

With that solid foundation on which to build, the team began to craft a point-by-point strategy for growing Tennessee’s clean energy economy. The strategy is based, at the most fundamental level, on leveraging the business climate, existing partnerships and collaborative approach to development. Additionally, Tennessee is committed to developing and utilizing smart, flexible and innovative incentives for clean energy companies.

Tennessee has clearly defined the target sector and are working tirelessly to recruit so-called “transformational” companies. These are companies that will not only lead innovation in their fields, but will attract complementary companies such as customers and suppliers to locate in close proximity. In this way, they have an exponential effect on the economies of the surrounding communities, and Tennessee is able to fulfill the final point of the strategy, which is to build success up and down the solar energy value chain. From the companies that process the raw materials for solar panel manufacturing to the companies that install the cells on consumers’s roofs, Tennessee wants to be a home for the industry from top to bottom.

Energy Task Force

With the strategy coming into clear focus, Governor Bredesen signed Executive Order 54 in March of 2008 to create the Governor’s Task Force on Energy Policy. The Task Force, comprising elected state officials, various members of governmental departments and many private sector experts, met throughout 2008 to develop recommendations for energy-focused legislation.

Their findings centered on four objectives. First, the state should lead by example in the realm of energy conservation, from building maintenance to fleet efficiency. Second, the state should directly combat the reality that Tennesseans waste more electricity per capita than any other state by working to improve residential energy efficiency. Third, Tennessee should expand both the production and use of renewable energy. Finally, the state should work strategically to grow the clean energy sector in Tennessee.

Clean Energy Future Act

The findings of the Governor’s Task Force on Energy Policy resulted in the governor’s proposal and ultimately the passage of the Clean Energy Future Act of 2009. As recommended by the Task Force, the act strongly encourages the accelerated retrofitting of state buildings to meet more stringent energy standards, mandates state use of Energy Star-rated appliances and challenges the state to move its vehicle fleet in the direction of electric power where possible and higher fuel efficiency guidelines elsewhere.

The Act also establishes a statewide residential building code for the first time. The final provision of the legislation, in keeping with Tennessee’s commitment to innovative, flexible incentives, allows clean energy companies to qualify for the state’s emerging industry tax credit.

Major Clean Energy Investments

Tennessee’s aggressive strategy to build a clean energy sector is already producing results. In just three short months between December 2008 and February 2009, the state welcomed the location of the world’s two largest manufacturers of polycrystalline silicon, a major component of photovoltaic cells. Hemlock Semiconductor announced that they would build a US$1.2 billion plant and create 500-800 jobs in Clarksville, Tennessee and German company Wacker Chemie AG announced a US$1 billion facility and 500 new jobs in Bradley County, Tennessee.

Either one of these companies choosing to locate in Tennessee would have been a watershed milestone for the state, but the fact that both set their sights in Tennessee within such a short period of time is truly unprecedented. These projects are strong confirmation of Tennessee’s emerging prowess in the solar energy sector, and the governor and I feel confident they will lead to a ripple effect of related investment in the months and years to come.

Hemlock and Wacker are huge momentum-builders for Tennessee’s solar industry, but they are only the most recent success stories. Solar-oriented companies have been flourishing in all three regions of the state for years. In Memphis, longtime Tennessee company Sharp shifted its manufacturing capacity from microwaves and other electronics to solar panels in response to rising demand. At the other end of the state, AGC Flat Glass in Kingsport is an innovative producer of photovoltaic glass. Shoals Technologies Group, a maker of solar energy panel components, located its headquarters and a manufacturing facility to Gallatin in May 2008.

In addition to manufacturers, solar panel installers have found a favorable climate in Tennessee. For example, Lightwave Solar Electric in Nashville saw its revenue grow by 500% to US$4.7 million annually between 2006 and 2008.

As the industry takes root, Tennessee’s focus continues to be the promotion of growth up and down the solar supply chain. Ideally, solar panel manufacturers will be able to buy their raw materials in Tennessee, and installers will mount solar displays with panels made and purchased in Tennessee, as well. Major leaps forward like the Hemlock and Wacker projects, combined with the foundation of companies specializing in solar, leave no doubt that Tennessee is well on its way to achieving that goal.

Volunteer State Solar Initiative

The American Recovery and Reinvestment Act in response to the challenges the economy is facing has offered the state an opportunity to advance the solar initiatives in accord with President Obama’s ambition of increasing renewable energy use nationwide. In September 2009, the U.S. Department of Energy approved Governor Bredesen’s Volunteer State Solar Initiative, a two-pronged strategic plan to spend US$62.5 million in ARRA funds to promote solar energy in Tennessee.

The first aspect of the Volunteer State Solar Initiative is the Tennessee Solar Institute at the University of Tennessee, to be managed jointly by the university and Oak Ridge National Lab. The Solar Institute will be a center for excellence to spur accelerated growth in Tennessee’s burgeoning solar industry and serve as a crossroads for a wide-range of solar-related activities in the Volunteer State. Among other purposes, the institute will bring together scientists, engineers and technical experts with business leaders, policymakers and industry workers to help speed the improvement and deployment of solar photovoltaic technology. In this way, Tennessee will be able to leverage the innovation resources which is already enjoyable to forge meaningful progress in this emerging industry.

The second portion of the Volunteer State Solar Initiative will create a five megawatt Solar Demonstration Farm along Interstate 40 in West Tennessee. The Farm will serve as a demonstration center for how solar power works. A welcome center will educate visitors about the technology and raise awareness of the role renewable energy plays in Tennessee’s environment and economy.

The power generated at the facility will be sold to the Tennessee Valley Authority, and the revenue will be invested back into expansion of the solar array and technological innovation. The investment will generate exponential returns, and that’s why the facility is called a farm.

Planning is currently underway for both the Solar Institute and the Solar Demonstration Farm.

Deliberate Strategy, Long-term Payoff

In Tennessee, it is proved unequivocally that green jobs are the future of America’s economy. This is not a trend, not an emotional hot-button issue that will fade from memory as power changes hands. Renewable energy is here to stay with people.

And as the economic impact on deck for Tennessee as a result of the Hemlock and Wacker projects shows, economic development and environmental sustainability absolutely can go together. Green jobs are the future of economic growth, and early adopters of that principle can and will come out ahead of the pack economically.

Thanks in large part to the success Tennessee has experienced early on, it is ideally positioned to succeed in this growing arena. Tennessee has got the human capital, the industrial base and the mounting reputation to lead the clean energy sector not only regionally, but nationally. In fact, the Pew Center for the States called Tennessee one of only three states with a “large, fast-growing” clean energy economy.

But the success--now and in the future--is no accident. Tennessee has taken pains to craft the strategy, refine the goals and hone the approach. It has aggressively taken steps to cultivate a culture friendly to green business. It has been forward-thinking about the incentives and the recruitment. And now, I believe Tennessee have not only achieved remarkable success, but it has also set the stage for future progress. Today’s accomplishments in Tennessee are only the beginning of what I expect to be long-term, sustainable growth in the solar industry for decades to come.

Here comes the sun, indeed.

Matt Kisber was appointed Commissioner of the Tennessee Department of Economic and Community Development by Governor Phil Bredesen in 2003. Kisber has since seen the creation of more than 172,000 new jobs, the investment of US$28 billion in capital and the location of 48 corporate headquarters in Tennessee, including three US$1 billion projects. Before his appointment as commission, Kisber served 20 years in the state legislature, including a chairman of the powerful House Finance, Ways and Mean Committee.

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