Oregon U: ‘Not Engaged’ in SolarCity’s Use of Prison-Made Solar Panels for Green Campus Project

By Barbara Hollingsworth | March 12, 2015 | 12:10pm EDT


Panels assembled by federal prisoners were used in the solar farm installed at Oregon State University by SolarCity as part of the Oregon University System's "Solar by Degrees' green energy project. (OUS)

(CNSNews.com) – The Oregon University System (OUS) was “not engaged” in SolarCity’s management of its multi-campus solar energy project that reportedly used up to 3,000 solar panels assembled by federal prisoners paid 93 cents an hour, a university official told CNSNews.com.

A subcontractor for billionaire Elon Musk’s highly-subsidized solar energy company used the prison labor to keep costs down on the green campus project, according to an investigation by The Oregonian/Oregon Live.

The massive $27 million “Solar by Degrees” project, which started in 2012 and was completed last year, received $11.8 million from the now defunct Business Oregon Tax Credits program, which was designed to help businesses create jobs for state residents.

Accoding to a Dec. 2, 2012 OUS press release, Brandon Trelstad, OUS’s sustainability coordinator, said that the Oregon Department of Energy “made certain that Oregon industry and local jobs were supported”.

But instead of hiring local residents, SolarCity’s supplier paid federal inmates 93 cents an hour to assemble the solar panels used in the OUS project.

“Those solar arrays rest on a foundation of falsehoods and false hopes,” The Oregonian’s Ted Sickinger and Jeff Manning reported.

“Interviews and an examination of thousands of pages of documents show that state officials wrongly awarded millions in state tax credits, turning a blind eye to phony documents. The project was also dogged by an international trade war, a bitter corporate rivalry and a stunning twist that traded high-paid Oregon jobs for prison labor at 93 cents an hour.”

Gov. Kate Brown has asked the Oregon Department of Justice to investigate the matter.

CNSNews.com asked OUS to respond to the newspaper’s allegations that prison labor was used in its highly touted solar energy project.

“We read with interest coverage in The Oregonian regarding the construction of solar power installations on state of Oregon university property. These installations were the result of a contract initiated by the Oregon University System on behalf of all Oregon universities,” Steve Clark, vice president of university relations and marketing at Oregon State University, replied in an email.

“As part of this Oregon University System initiative, Oregon State University agreed to provide land for several solar system installations and in return purchase lower-cost power generated by the solar unit. OSU officials were not engaged in managing this contract or the state energy credits requested or issued," he said.

“We are very aware of the public’s appropriate interest in state programs that are designed to generate new employment. Oregon State is one of the largest employers in the state of Oregon and its operations and expenditures are responsible for more than $2.3 billion worth of economic activity in Oregon and the creation of more than 31,600 jobs statewide.

“In the case of this solar power matter, we were not engaged in managing Solar City or who the firm’s vendors or suppliers employed,” Clark said.

SolarCity Chairman Elon Musk (center) with co-founders Lyndon Rive (left) and Peter Rive celebrate the solar company's IPO at NASDAQ on Dec. 13, 2012. (AP photo)

In 201l, former Democratic Gov. John Kitzhaber announced the state's largest solar energy project to great fanfare, promising Oregon residents green energy jobs in addition to clean, cheap solar electricity.

Kitzhaber also claimed that the “100 percent Oregon” project would use solar panels manufactured in the state and boost the local economy by more than $10 million.

Kitzhaber resigned February 13 in a green energy scandal involving his fiancée, Cylvia Hayes, and billionaire hedge fund manager Tom Steyer.

The Utah-based Renewable Energy Development Corp. (REDCO), founded by a nephew of former presidential candidate Mitt Romney, was initially hired to build OUS’ massive solar project, but the company went bankrupt in December 2011 due to intense competition from Chinese solar panel manufacturers.

The state then contracted with SolarCity, the recipient of nearly $1 billion in tax subsidies and grants, to complete the project. SolarCity negotiated with its German-based competitor, SolarWorld, which has a factory in Hillsboro, Oregon, to provide the solar panels for the OUS project.  

However, in a Feb. 26, 2013 email obtained by The Oregonian, SolarCity consultant Martin Shain informed Oregon Energy Dept. officials that SolarWorld’s panels were too expensive:

“We continue to have significant challenges with SolarWorld… pricing per watt has been increased, all while deep concerns in the financial community about their liquidity are creating very difficult project finance issues…We now have alternative modules of U.S. manufacture, and very possibly Oregon manufacture, that are both financeable and within cost.” 

SolarCity then hired Georgia-based Suniva to provide the panels, The Oregonian investigation found. The cost of the panels went way down because Suniva paid prisoners incarcerated at the Federal Correctional Institution (FCI) in Sheridan, Ore. just 93 cents an hour to assemble them, far below Oregon’s minimum wage of $8.95.

The prisoners worked for Federal Prison Industries (FPI), a “wholly owned government corporation within the Department of Justice.”

SolarCity spokesman Will Craven, who admitted that what Suniva did “may not have been in the spirit” of the state tax credit program, nevertheless defended the use of prison labor. “It’s certainly in the interest of Oregon to give inmates skills they can use when they reenter society,” he told The Oregonian.

Oregon’s Department of Energy also reportedly violated its own rules by accepting “phony and misleading documents…that purportedly demonstrated that construction was underway by April 15, 2011” – the deadline to qualify for Business Oregon Tax Credits, The Oregonian reported.

SolarCity owns the solar installation at OUS and charges the university for the electricity it produces.

However, even with massive federal and state subsidies and, in the OUS project the use of incarcerated labor, SolarCity’s total operating losses more than doubled to $120 million during the fourth quarter of 2014.

Despite multiple requests by CNSNews.com for a comment, SolarCity did not return our calls and emails.

Related: Despite $39B in Annual Gov’t. Subsidies, Solar Produced 0.5% of Electricity in US

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