By Nolan Hicks
San Antonio Express-News
SAN ANTONIO — With ceremonial hard hats on and shovels in hand, city officials and executives from CPS Energy and Nexolon broke ground Wednesday on the company’s solar panel manufacturing plant at Brooks City-Base.
The plant, which is expected to employ more than 400 workers in San Antonio, is a key component of a plan that calls for building a series of solar power facilities capable of generating a total of 400 megawatts of energy. City-owned CPS has agreed to purchase the power.
While Nexolon, whose parent company is based in South Korea, has been battered by a downturn in the solar industry, officials looked on the bright side Wednesday.
“We believe that we have a once-in-a-generation chance to be a world leader in an industry that is growing stronger and stronger by the year,” Mayor Julián Castro said. “This is very exciting for me because I see our new energy economy in San Antonio really taking off.”
Castro also complimented City Manager Sheryl Sculley and her staff for negotiating the deal that brought Nexolon to Brooks, calling it a “well-negotiated agreement that was good for all sides and ensured that this investment was made in San Antonio.”
As part of that deal, the Brooks Development Authority approved giving Nexolon access to 86 acres of land at the former Air Force base valued at $17 million for just $5 million. The city pledged to make $12 million worth of infrastructure investments at Brooks to make up the difference.
But Nexolon’s involvement in the project has become controversial because of the company’s poor financial condition. Its financial troubles continued through the second half of last year, with the manufacturer losing $71 million in that period, up from the $60 million it lost in the first six months of 2012.
The company has not yet reported to South Korean regulators how much cash it had or how much debt it carried at year’s end, according to information provided by Bloomberg News. On June 30, the company had less than $20 million in cash and carried a substantial debt load.
Company officials attending the groundbreaking again disputed the notion that their financial difficulties could prevent them from completing and operating the plant.
“We are putting more equity in Korea and, also, we’re going to put more here,” Nexolon Chairman Woo Jeong Lee said. He also said the ongoing losses had not made it harder for the company to raise cash.
Nexolon America is part of the OCI Solar Power-led consortium that won the contract to build CPS’s 400 megawatt project, which requires the bid winners to invest $100 million in the San Antonio area and create 800 new jobs locally. Nexolon’s plant is expected to account for half of the required job creation.
Nexolon executives have said their company has already set aside much of the money they would need to complete the plant, though they declined to say how much. They also said their contract with OCI Solar contains significant penalties, which they would incur if they fail to complete the project.