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Why Austin? This is why...

By Albert Elhage | Broker in Austin, TX

Why Austin? This is why...Time Magazine: Austin Green City.

Red State, Green City
By Bryan Walsh
The solar panels sparkle on the rooftop of HelioVolt's 130,000-sq.-ft manufacturing facility. Inside, an elaborate line of printing machines, lasers, chemical baths and ovens--with help from the occasional white-coated human being--transforms a sheet of glass barely a quarter of an inch thick into a solar module in just over 2 hours. The sheets are a far cry from the thick, polysilicon-based photovoltaic panels that still dominate the solar market. HelioVolt manufactures thin-film solar panels, so called because the modules are made by depositing an ultra-thin--a few micrometers at most--layer of the photovoltaic copper, indium, gallium and selenide directly onto a glass backing. Compared with those for conventional modules, the engineering and manufacturing processes are more complex, and thin-film panels are less efficient at converting sunlight to electricity. But their lower cost has many in the solar world--like HelioVolt CEO Jim Flanary--convinced that thin-film panels are the way to go as the industry matures. "If you can do this really cheaply and really quickly, you've got a winner," says Flanary. "We want to scale up as soon as we can."

It's not just the how of HelioVolt that makes it unusual in the solar space; it's also the where. The company isn't based in southern San Francisco or Boulder, Colo., or the Boston area--the country's bright green regions. HelioVolt calls the Texas state capital of Austin home. B.J. Stanbery, the solar veteran who founded HelioVolt in 2001, is a native Texan who got his bachelor's degree at the University of Texas, just down the road from the company's factory, but he kept his business in Austin for more practical reasons. "The manufacturing skills that workers have here are directly transferable to a thin-film solar company like us," he says. "And the business culture is attractive here because people are used to taking risks in the energy space."

Of course, when people think about the energy space in Texas--home to wildcatters and J.R. Ewing of television's Dallas fame--they probably picture oil rigs and natural gas wells. The current governor of Texas, after all, is the far-right-leaning Rick Perry, who made it known early in his failed campaign for the Republican presidential nomination that he was a climate-change skeptic. "I do believe that the issue of global warming has been politicized," Perry told voters in New Hampshire in August. "I think there are a substantial number of scientists who have manipulated data so that they will have dollars rolling into their projects."

But as conservative as Texas tends to be, it's kept an open mind on renewable energy, which is one reason more wind-power capacity has been installed in the state than anywhere else. It also helps that Texas' size and wide-open spaces are ideal for wind farms. And within Texas, Austin has always been an outlier: a fairly liberal college town that has managed to marry high tech with hipster culture. Now it's paying off in the renewable-energy sector, as Austin contends with Silicon Valley as a top clean-tech hub. Some 15,000 Austin residents are employed in the broader green economy, and the municipal utility, Austin Energy, has pledged to get 35% of its electricity from renewable sources by 2020. Over the past eight years, the number of clean-tech jobs has grown more than twice as fast in the Austin metro area as it has in San Francisco.

For Austin, high tech had to come before clean tech. The city has long been a science-and-technology hub, thanks to the presence of the sprawling main University of Texas, with a student body of 50,000. In the mid-1980s one of those students was Michael Dell, who founded his eponymous computer company in a dorm room before moving Dell to a campus north of Austin. Around the same time, the federal government and U.S. semiconductor manufacturers launched a research consortium based in Austin called Sematech, pooling public and private investment to compete with Japan, which was threatening to dominate the semiconductor industry.

Sematech and Dell helped create a high-tech boom in Austin through the 1990s, luring thousands of talented engineers who came for the jobs and stayed for the Austin lifestyle--best exemplified by the metastasizing South by Southwest festival, an annual pilgrimage of the hip that brings together music, film and interactive media. "It's a great place to live, and that matters in this industry," says Brewster McCracken, executive director of Pecan Street, a smart-grid research project in Austin.
So as clean tech began to heat up in the early part of the past decade, Austin, with its experienced technical workforce, was a logical place for start-ups and entrepreneurs to set up shop. Its critical mass of innovation is one reason SustainLane Government, a network for green business, has ranked Austin the top city in the U.S. for clean-tech incubation.

Austin's progressive-leaning politics also helps. All the municipal government's electricity comes from renewable sources. And consumers and businesses can receive handsome rebates for installing more-energy-efficient appliances and photovoltaic systems--which means clean-tech companies can go to the city knowing there's a built-in market for their products. Austin also has more latitude for experimentation because it owns its utility, an institution that in most cities stands in the way of clean tech. Nowhere is that clearer than in the Pecan Street Project, a collaboration among Austin Energy, the Environmental Defense Fund, the city of Austin and the university. The project aims to gather data on energy and water use at the residential level, which most utilities barely have a handle on, to create a smarter and more efficient grid.

So what could go wrong? A drying pool of venture capital, the forbidding cost of scaling up and the uncertainties around national climate policy. If any of the climate-change-doubting Republican candidates on the campaign trail were to win the White House, it's hard to see much support for clean tech surviving the budget ax. But even if that happens, Austin may well endure. The city takes pride in going against the grain and doing things itself. "I'm a native Texan, and I know about the entrepreneurial spirit here," says HelioVolt's Stanbery. "People believe that if you want to do well, you need to work hard." That's an ethic clean tech will need in the difficult days ahead.

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