Golden State

A Folsom company thrives on SoCal sun

Back Article Feb 1, 2012 By Dixie Reid

It didn’t take German immigrant Martin Hermann long to see California as the land of sunshine. And within that bounteous golden glow, he imagined opportunity.

In 2009, the year after Gov. Arnold Schwarzenegger issued an executive order requiring California’s utilities to buy 33 percent of their electricity from renewable resources by 2020, Hermann launched 8minutenergy Renewables.

His son, Marc, then 13, came up with the company’s name during a family brainstorming session: Sunlight reaches Earth in eight minutes. The teen also dreamed up the solar-inspired logo.

Hermann’s company, with 25 employees and another 25 outside consultants, is headquartered in Folsom and has branch offices in San Francisco, Los Angeles and El Centro. Its business model is to develop — but not own — utility-scale, photovoltaic, solar power plants feeding electricity to California’s hungry power grid.

The company has more than 20 large solar farm projects in the works, mostly in Southern California. Hermann has no plans to develop any in the Sacramento region.

“The issue is that when you go farther south, you have more sun,” he says. “You go to Imperial (Valley), you have 10 percent more sun than here, more sun hours and less diffused light. The light is more pure there.”

The first project to be completed would be the 320-acre Chocolate Mountains Solar Farm, under construction in the Imperial Valley. It should provide enough electricity to light 20,000 households. Also in the works are Calipatria solar farms I and II, both near El Centro in Imperial County. All three 50-megawatt photovoltaic farms are on target to begin transmitting electricity in 2013.

“What we do, on a basic level as a company, is identify locations where we can put large-scale solar farms,” says Hermann, an engineer. “We search and analyze the entire state of California for suitable land. An absolute must is that it not be controversial to the environmental process, so we’re picking land used for growing low-value agricultural products. We take them out of production and put solar farms on them.”

The strategy helps avoid the kinds of lawsuits that have plagued other solar-developers who have encountered opposition from Indian tribes and environmentalists.

Once 8minutenergy secures acres of farmland, Hermann says, “then we do the planning aspects to bring it from the stage where you can procure construction permits. That sounds easy, but it’s a three- or four-year process in California.”
A 50-megawatt solar farm, including land, costs between $120 million and $150 million. The most expensive elements are the solar panels, of which there are tens of thousands, and the accompanying structures and substations.

All 8minutenergy projects are privately funded with investments from the company’s co-development partners, according to company spokesman Kent Streeb. By the time a project reaches the construction permit phase, 8minutenergy steps aside, and the investors take over. They would own the solar farm, see it through to completion and sell electricity to such utilities as Southern California Edison.

The Sacramento Municipal Utility District was a solar-energy pioneer. It debuted the country’s first utility-scale solar array in 1984 at Rancho Seco, in southeast Sacramento County. As old as it is, the array still operates at about 70 percent of design, says Mike DeAngelis, manager of SMUD’s energy research development department. “It’s early-stage technology, but it shows you the inherent reliability of the technology. It’s my understanding that it costs more to operate than its value right now. We’re considering removing it.”

And although Sacramento’s sunshine isn’t clear enough to suit Hermann, in late December 2011, the investment firm Kohlberg Kravis Roberts & Co. alongside Google announced a partnership to develop four solar energy farms to serve SMUD and its customers.

A day earlier, during a menorah-lighting ceremony at the Capitol, Gov. Jerry Brown extolled the virtues of solar power. “When we continue to use our intelligence, we’re going to take that sun through the miracle of modern science and technology, and we’re going to light up California,” he said. “And we are going to reduce significantly every year the amount of money we are sending over to the Middle East.”

Hermann recognized the potential of the sun’s power in 2006, three years after arriving in California. But prices for solar panels were high because there was a proliferation of manufacturers worldwide at the time. The 2008 credit crunch closed a few markets.

“As a result, panel prices went down. I said, ‘where is a good market to enter the industry,’ and concluded it was California.”

In 2001, Intel Corp. acquired Hermann’s German company, CAD-UL AG (a market leader for embedded software development tools) and offered him a job at any of their plants in the United States.

But Harmann wanted to live in California, in a family-friendly community with affordable housing. Folsom fit the bill, so in 2003 he moved with his wife, Karin, daughter Isabel, now 22, and son Marc, now 16. Hermann left that company when he saw an opportunity to harness sunshine.

“This is one of the few renewables right now that has the opportunity to get smaller over time and cheaper — significantly cheaper,” he says. “The reason is that it’s basically a semiconductor. And if you look at a semiconductor, the parts are getting cheaper every year and getting smaller.”

A solar panel in 2008 cost $40 per watt. In 2010, it was $1.50 per watt and dropped to about $1 last year. In five years, he says, the cost could be 50 cents per watt.

“And that’s not the end of it. It can be even cheaper, and the price for return of investment will be lower as well,” he says. “Because of that dynamic, we will have new markets where solar can be used that we can’t even envision today.”

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