US solar deployment is on a hot streak, while manufacturing is stalled out

Canary Media’s Solar High Rollers column covers utility-scale solar development. 

The U.S. solar installation industry is deploying billions of dollars worth of utility-scale and rooftop photovoltaics and is still growing strong despite the headwinds of a pandemic, worker shortages, supply-chain woes and import tariff complexity.

The U.S. solar manufacturing industry is another story. America builds a tiny fraction of the planet’s solar gear and continues to lose market share in the face of China’s scaled-up solar supply giga-complex.

U.S. solar manufacturers have largely lost the battle with China. The U.S. currently has a meager 7.5 gigawatts of PV module production capacity, according to consultancy Wood Mackenzie, out of a global capacity of nearly 400 gigawatts, according to Solarzoom.

Determined U.S. policymakers are working to advance legislation with subsidies and support that might revive domestic solar manufacturing and tap its power as a potential jobs engine.

This month, our Solar High Rollers column takes a look at the ongoing U.S. installation boom and assesses proposed U.S. manufacturing policy and the current difficult landscape.

Breathtaking growth

U.S. solar deployment growth is breathtaking and persistent. Deployments reached 5.7 gigawatts of installed capacity across all market segments in Q2 2021, the largest Q2 figures on record, bringing the total for the first half of 2021 to nearly 11 gigawatts, according to the U.S. Solar Market Insight report from the Solar Energy Industries Association (SEIA) and Wood Mackenzie.

With solar now economical in much of the country, installed solar capacity in the U.S. has topped 100 gigawatts, according to the report. The number of solar projects with capacities greater than 100 megawatts is booming across all regions of the U.S.

Lone Star State ascendant

Texas added 2.5 gigawatts of solar in 2020, surpassing California as the leader in utility-scale solar growth, according to research from Lawrence Berkeley National Laboratory. Before Texas takes that as a green light to secede, note that California, which added 1.6 gigawatts in 2020, still accounts for the most installed capacity on a cumulative basis with 32 percent of the U.S. total.

Texas is perfect for big solar. Although the state has no renewable portfolio standard, it has Texas sun, lots of land and a competitive energy-only marketplace driven by corporate clean energy buyers and utility offtakers, who are happy to take advantage of the competitive pricing of solar (or solar-plus-storage) compared to other generation sources.

Can the U.S. regain a solar manufacturing foothold? 

The U.S. played a vital role in the early commercialization of photovoltaics. The country was once a significant producer of PV modules, as well as solar-grade polysilicon and silicon PV wafers and cells.

But global manufacturing leadership shifted to Japan and Germany, and then, overwhelmingly, to China. As of last year, Chinese companies owned more than 60 percent of global capacity across every layer of the supply chain, according to Bloomberg.

The United States has lost approximately 80 percent of its global market share in these industries over the past decade. Its share of module shipments dropped to about 0.5 percent in 2017, according to the National Renewable Energy Laboratory.

This seismic shift to Chinese manufacturing is not unique to solar PV modules. China has an industrial policy that provides low-cost power and debt to strategic industries, which then scale rapidly courtesy of an enormous, subsidized and walled-off domestic Chinese market. The occasional use of forced labor is also helpful in keeping manufacturing costs down.

Can the U.S. be a solar-powered nation without a domestic solar supply chain? Can the U.S. solar industry regain its production mojo?

Supply chain of fools

The U.S. solar market has a long history of record growth despite oscillating global economics and politically motivated national energy policy.

Today’s solar market faces a variety of headwinds and turbulence:

• Global logistics woes are forcing delivery delays and price hikes for materials and components.
• High prices for polysilicon, the main ingredient in crystalline-silicon PV cells, are putting some solar projects in jeopardy, as Canary recently reported.
• The Biden administration imposed import restrictions on silicon from a producer in China’s Xinjiang province because facilities there were linked to forced labor of Uyghur Muslims, as reported in Canary.
• In August, a group of anonymous firms petitioned the U.S. Commerce Department to impose antidumping and countervailing duty orders on makers of silicon solar cells and modules imported from Malaysia, Thailand and Vietnam. The new petition would greatly expand the application of these tariffs, according to pv magazine.

These logistics woes are being compounded by, of all things, a ban on coal imports. China recently prohibited shipments of coal from Australia — not for climate reasons, but because of a political dispute. But China’s domestic power demand is growing, so the result has been electricity rationing in industries such as manufacturing of solar cells and modules in Yunnan province as well as aluminum in Guangxi province.

Chinese solar plants have been producing just 10 percent of last year’s output and ​“some plants have been forced to operate just two days per week, alongside peers in the concrete, steel, lime, and ceramics segments,” according to reporting in pv magazine.

This has led to solar-module supply shortages in Texas. Fossil fuels connect us around the globe in ways we don’t even realize.

“Going to the mat” for solar 

Introduced in June, the Solar Energy Manufacturing for America Act (SEMA), sponsored by U.S. Senator Jon Ossoff of Georgia (D), would create a tax credit for domestic solar production at all steps of the solar module supply chain in order to bring some of that offshore manufacturing back onshore. American manufacturers would be eligible for a generous tax credit of 11 to 18 cents per watt for a solar module manufactured in a U.S.-based vertically integrated plant.

Last month, Ossoff was still pushing hard to have SEMA included in the now-dangling budget reconciliation package, calling it a ​“generational obligation.” The Georgia senator was joined by an important ally, Senator Ron Wyden of Oregon (D), chair of the Senate Finance Committee, who said, ​“We are going to go to the mat for this as part of the reconciliation effort.”

A new poll from left-leaning pollster Data for Progress found bipartisan support for SEMA with 67 percent of likely voters in the U.S. strongly or somewhat supporting the act, according to reporting in The Hill.

While Ossoff was pushing for the inclusion of his legislation in the reconciliation bill, Representative Val Demings (D-Florida) introduced the Reclaiming the Solar Supply Chain Act, with the aim of creating domestic manufacturing jobs while confronting issues related to supply, emissions and human rights concerns in the solar supply chain. This legislation would provide $3.5 billion ($700 million invested annually from 2022 through 2026) for new U.S. solar manufacturing, retooling, retrofitting and expansion.

U.S. manufacturing roll call

Here are the top four U.S. solar module manufacturers, according to Solar Power World’s rankings:

• First Solar, with a total U.S. capacity of 2.4 gigawatts, is the largest PV panel builder in the U.S. and greatest potential beneficiary of proposed subsidies. First Solar intends to increase its global manufacturing capacity up to 17 gigawatts a year by 2024, with new factories planned for the U.S. and India. The company’s cadmium telluride thin-film solar technology doesn’t rely on the global polysilicon supply chain.
• South Korea-based Hanwha Q Cells has a 1.7-gigawatt solar panel plant in Dalton, Georgia that is the largest solar manufacturing facility in the Western Hemisphere and stands to gain a tax credit of at least 7 cents per watt if home-state Senator Ossoff’s bill passes.
• Silfab has 800 megawatts of capacity across two sites in Washington state. 
• LG Solar has 550 megawatts of solar module capacity in Huntsville, Alabama.

Notable solar companies with U.S. manufacturing news:

• GAF Energy, a provider of roof-integrated solar, is moving into a new 112,000-square-foot facility in San Jose, California. GAF Energy works in partnership with GAF, North America’s largest roofing and waterproofing manufacturer. (Both are part of Standard Industries.)
• Heliene’s new facility in Riviera Beach, Florida increases the company’s North American manufacturing capacity by 100 megawatts. The plant will build high-efficiency heterojunction solar modules. 
• Meyer Burger will develop a 400-megawatt, high-performance heterojunction cell solar module manufacturing facility in the U.S., with final site selection expected by year’s end.
• Reliance New Energy Solar announced its plans to acquire PV module manufacturer REC Group, as well as a 40 percent stake in engineering, procurement and construction firm Sterling and Wilson, with the goal of adding a 1-gigawatt module facility in the U.S.

The awesome scale of China’s PV ecosystem

While the U.S. is equipped with 7.5 gigawatts of total solar panel production on its shores, China’s total solar module capacity is expected to grow to an eye-popping 392 gigawatts by the end of 2021, with total wafer capacity at almost 375 gigawatts, according to Solarzoom.

China’s solar business is going to be operating at a never-before-seen scale to satisfy the needs of its domestic PV market of more than 70 gigawatts per year, as well as the rest of the globe.

A single Chinese manufacturer, Longi, is set to expand to over 100 gigawatts of wafer capacity by the end of 2021.

This is against a backdrop of a Chinese solar complex that has seen boom, bust, bankruptcy and restructuring, along with the fall of premier global brands.

As Vincent Shaw wrote in pv magazine in March, ​“This time around, production capacity expansion is at a much larger scale and wider scope than ever before. According to one statistical analysis, based on official announcements by Chinese PV companies in 2020, the total invested capital in PV manufacturing exceeded $47 billion.”

Solar gear such as trackers, inverters, glass and backsheets are also expected to see significant capacity expansion, as well as supply-chain stresses.

Dueling forecasts

Research firm IHS Markit warned that it could cut its global solar installation forecasts for 2021 as a result of volatile market conditions and supply-chain struggles.

On the other hand, there’s the possibility of U.S. solar installation and manufacturing accelerating if Congress passes the budget reconciliation bill. That legislation could include market drivers such as extensions of the Investment Tax Credit and Production Tax Credit for solar and wind, direct-pay provisions for the two tax credits, and the creation of a stand-alone storage investment tax credit.

Wood Mackenzie is leaning toward optimism. It’s forecasting greater than 12 percent year-over-year growth for the global solar industry.

Correction: This article originally misstated the year-over-year growth for the global solar industry as 30 percent, which references the growth for the U.S. only. It has now been updated to reflect the correct information.