Minnesota is losing one solar energy company — and gaining yet another.
Solar Skies Mfg. of Alexandria, Minn., a maker of solar panels to heat hot water, said Wednesday that it will move manufacturing operations early next year to Massachusetts, where its parent company has a plant.
At the same time, Heliene Inc., a maker of solar-electric panels in Sault Ste. Marie, Ontario, said it is setting up a manufacturing plant in St. Paul that will open in early 2015.
Solar Skies' planned departure surprised solar industry officials. The company, founded in 2006 by Randy Hagen, had developed highly efficient panels for thermal heating, and had been mentioned by state economic development officials as an example of the state's growing clean energy sector.
In an interview, Hagen said he sold his half interest in the company earlier this year to partner HTP, a heating and hot water technology manufacturer in East Freetown, Mass. Hagen said HTP decided to consolidate the solar panel manufacturing at its factory there.
The plant in Alexandria, where employees had dropped from a high of 17 to six, will operate through January, he said. Just two of the remaining Alexandria employees, including Hagen, are expected to remain with the company.
"If we were doing well, there would be no reason to leave Minnesota," said Hagen, who declined to talk about company finances, but said much of its recent business has been on the East Coast.
As homegrown Solar Skies leaves Minnesota, Canadian solar panel maker Heliene plans to start production in St. Paul — drawn largely by the state's Made in Minnesota program offering $15 million annually in utility-funded solar incentives.
Heliene President Martin Pochtaruk said the St. Paul factory will finish the assembly and test solar-electric panels that are partly manufactured in its Sault Ste. Marie plant. The St. Paul operation will employ about 10 people initially and be housed at solar distributor Simpleray's facility at 705 Raymond Av., he said. Simpleray also will market the panels, he added.
"We want to see the market uptake," said Pochtaruk in an interview. He projects a late February launch of production.
Heliene is the second out-of-state solar power manufacturer lured recently by Minnesota incentives. Itek Energy, based in Bellingham, Wash., announced in November that it would open a solar panel plant in south Minneapolis. On Wednesday, local executive Paul Krumrich said the company is up and running, and assembled its first panels there last week.
These comings and goings highlight the disparity in state aid for solar thermal vs. solar photovoltaic panels. Hagen of Solar Skies said the state's annual incentive for solar thermal — $250,000 — helped his niche of the industry, but the assistance pales in comparison to the millions going to solar electric. The incentive money is paid to homes and businesses installing the systems.
"There isn't sufficient business volume here in Minnesota or the Midwest," he said. "That is the only reason we are leaving."
Lynn Hinkle, policy director for the Minnesota Solar Energy Industries Association, said he was disappointed that a pioneering manufacturer is leaving the state.
"It is tough to lose somebody that we thought was going to grow here," Hinkle said. "We wish them well. It may not be a good news story for Minnesota, but they are going to stay alive."
Minnesota has three other solar manufacturers besides the two newcomers. The others are TenKsolar in Bloomington and Silicon Energy in Mountain Iron, both makers of solar-electric panels, and the Rural Renewable Energy Alliance, a nonprofit manufacturer of solar air-heating equipment based in Pine River, Minn.