Elon Musk’s 'other' Gigafactory breaks ground in Buffalo

Call it the “other” Gigafactory.

SolarCity, Elon Musk’s fast-growing solar leasing business, broke ground Tuesday on a huge factory in Buffalo, N.Y., to build high-efficiency solar panels. When fully operational, the plant will produce enough panels per year to generate a gigawatt of electricity, roughly the output of a nuclear reactor. The facility is expected to employ 1,450 people.

The news comes two weeks after Tesla Motors, Musk’s electric-car company, firmed up plans for a $5 billion Gigafactory near Reno that will build advanced batteries. Musk serves as CEO of Tesla and chairs the corporate board of SolarCity, which is led by his cousin, Lyndon Rive.

MBA BY THE BAY: See how an MBA could change your life with SFGATE's interactive directory of Bay Area programs.

The two projects bear similarities. In each case, Musk’s companies are trying to ensure a future supply of low-cost, high-quality equipment to fuel their expansion. And each project has attracted significant taxpayer dollars.

Construction of the SolarCity Gigafactory will be funded by the Research Foundation for the State University of New York, which is developing a technology park in Buffalo called RiverBend on the site of a former steel plant.

The foundation will build the 1.2 million-square-foot factory, install infrastructure to supply it with energy, and buy much of the equipment to fill it. In all, the state expects to invest $750 million in the project, according to a release from Gov. Andrew Cuomo.

SolarCity, of San Mateo, will lease the factory from the foundation for 10 years, paying $1 per year plus utilities, according to a document the company filed Tuesday with the Securities and Exchange Commission. But as part of an agreement with the state, the company will spend approximately $5 billion on capital costs, operational expenses and other costs associated with the facility during the initial 10-year lease period,the filing said.

By comparison, Nevada officials offered Tesla tax breaks worth more than $1.2 billion to entice the automaker, based in Palo Alto, to build its battery factory in their state. Five states, including California, spent much of the year courting Tesla, hoping to land badly needed manufacturing jobs.

The Buffalo solar factory project originally involved another Bay Area company — Silevo, a solar equipment startup. Based in Fremont, the company agreed in November to rent space at RiverBend. SolarCity announced plans to acquire Silevo in June and expanded the factory’s planned size by roughly five times.

“Less than a year after announcing our original plan, one of the leading solar companies in the world is coming on board and making this the largest advancement for Buffalo’s economy in a generation,” Cuomo said Tuesday. “This is bigger than anything we could have imagined.”