US solar manufacturing capacity has quadrupled thanks to climate law

The U.S. solar manufacturing industry is going through an unprecedented growth spurt.

In the two years since the Inflation Reduction Act (IRA) was passed, domestic capacity for producing solar modules has nearly quadrupled, according to the U.S. Solar Market Insight report released today by the Solar Energy Industries Association and Wood Mackenzie. ​“Module” is the industry term for what’s more commonly known as a solar panel.

Generous incentives in the Biden administration’s landmark climate law have driven solar-module manufacturing capacity to more than 31 gigawatts. That’s a stark change from August 2021, one year before the IRA became law, when the country could produce just 8.3 gigawatts. The U.S. installed 32.4 gigawatts of solar in 2023, a figure expected to climb even higher this year, meaning the country’s solar manufacturing capacity is now close to matching its pace of solar deployment.

The massive expansion of home-grown solar manufacturing ensures that the U.S. is no longer dependent on the market’s hyperdominant supplier, China, for its solar modules. 

As for the rest of the solar supply chain, however, the U.S. is still reliant on companies abroad.

Most solar modules are constructed with photovoltaic cells based on polysilicon wafers. While the U.S. has roughly enough polysilicon capacity to meet its needs, it still has no operational facilities that can turn that raw material into the solar wafers and cells that do the physics magic act of transforming light into power.

That could change early next year, when Hanwha Qcells starts manufacturing wafers and cells at its end-to-end factory in Cartersville, Georgia. In the meantime, China still makes most of the U.S.’s solar wafers.

Nevertheless, U.S. module capacity continues to expand faster than the rest of the domestic supply chain. Last quarter, production started up at a new Qcells factory in Georgia, a Sirius PV facility in Georgia, and a Meyer Burger plant in Arizona. Since the IRA was signed, the big names in Chinese module manufacturing, along with more than 30 other companies, have announced plans to launch U.S. factories or grow their current capacity.

The recent rush to produce solar panels in the U.S., spurred by the IRA’s cleantech manufacturing incentives, stands as proof that the carrots approach of the climate law is far more effective than the dead-end sticks approach of imposing tariffs on Chinese goods taken by the Obama, Trump, and Biden administrations.

In fact, the U.S. solar manufacturing boom could be big enough to allow the country to soon become a net exporter of solar panels for the first time in decades. In the infinitesimally small chance that all announced growth plans are realized, the U.S. could expand its module capacity to 53.9 gigawatts by the end of 2024 and 139.5 gigawatts by 2027, according to the report, more than the country is likely to need itself.

Even if the U.S. could achieve those aspirational domestic manufacturing numbers, China has left American solar in the dust.

China’s annual module production capacity was more than a terawatt at the end of 2023, an unfathomable scale well over 25 times America’s current total. Jenny Chase, the longtime solar analyst at BloombergNEF, points out that solar-module factory capacity is often 1.5 to 3 times greater than annual installed capacity in this overheated, underutilized market. BloombergNEF recorded 428 gigawatts of global solar installations in 2023 and forecasts that nearly 600 gigawatts of solar will be installed by the end of this year.

Yet for all the gains made in U.S. solar manufacturing over the last two years, its future — and the thousands of well-paying jobs it creates — remains vulnerable not only to industry dynamics like interconnection delays, equipment shortages, and labor shortfalls, but to a potentially radical shift in energy policy in the event of a second Trump administration.