Federal Policies and Incentives Drive Demand for American-Made Solar Power Modules

The U.S. was one of the world leaders in solar equipment manufacturing a few decades ago, but then the Chinese stole the show. Now, however, American companies are finding a lot of new opportunities as a result of supportive measures enacted by U.S. lawmakers.

The first practical silicon solar cell was created in the U.S. by a team of scientists working together at Bell Laboratories in 1954. The technology remained a major focus for many American scientists and engineers for decades after, and the U.S. became a world leader in solar cell manufacturing at least partly as a result. According to some reports, the U.S. was a net exporter of photovoltaic (PV) modules until as recently as 2011. However, since that time, global solar PV manufacturing capacity has largely moved from the U.S.—as well as Europe and Japan—to China.

According to an International Energy Agency (IEA) special report issued in August 2022, China has invested more than $50 billion in new PV supply capacity since 2011. Today, the IEA says China’s share in all the manufacturing stages of solar panels (such as polysilicon, ingots, wafers, cells, and modules) exceeds 80%, which is more than twice China’s share of global PV demand. In addition, the country is home to the world’s 10 top suppliers of solar PV manufacturing equipment.

Based on manufacturing capacity under construction when the IEA report was being compiled, China’s share of global polysilicon, ingot, and wafer production was expected to reach almost 95% by 2025. That means the world would almost completely rely on China for the supply of key building blocks for solar panel production, the report says. Furthermore, China’s Xinjiang province was said to account for 40% of global polysilicon manufacturing, and one out of every seven panels produced worldwide was manufactured by a single facility. That level of concentration in any global supply chain represents a considerable vulnerability.

While China has been instrumental in bringing down costs for solar PV worldwide, providing multiple benefits for clean energy transitions, it has left manufacturing companies in other nations unable to compete. The IEA said China is “the most cost-competitive location to manufacture all components of the solar PV supply chain.” The report says costs in China are 10% lower than in India, 20% lower than in the U.S., and 35% lower than in Europe. Large variations in energy, labor, investment, and overhead costs explain these differences.

Tariffs on Imports and Incentives for Domestic Manufacturers

Yet, countries are not simply standing by and watching China corner the market. The number of antidumping, countervailing, and import duties levied against parts of the solar PV supply chain has increased from just one import tax in 2011 to 16 duties and import taxes, with eight additional policies under consideration in 2022, according to the IEA. Altogether, these measures cover 15% of global demand outside of China.

In the U.S., the Obama administration was the first to hit Chinese solar companies with punitive import tariffs. It did so in May 2012, setting import duties of at least 30% after finding that the Chinese had dumped cut-price solar panels into the U.S. market. Additional tariffs were ordered on certain crystalline silicon PV products from China and Taiwan in 2015. In January 2018, President Trump imposed safeguard tariffs on imported solar cells and modules, based on the investigations, findings, and recommendations of the independent, bipartisan U.S. International Trade Commission. The tariffs were set to expire after four years, but after they came due in 2022, President Biden extended the order for an additional four years.

Later, in June 2022, President Biden took additional executive action to spur domestic clean energy manufacturing in the U.S. The specific measures he implemented were:

■ Authorizing use of the Defense Production Act to accelerate domestic production of clean energy technologies, including solar panel parts.

■ Directing the development of master supply agreements, including “super preference” status, to spur additional domestic solar manufacturing capacity.

■ Creating a 24-month bridge, while reinforcing the integrity of U.S. trade laws and processes, to ensure a reliable supply of components that U.S. solar deployers required to construct clean energy projects as domestic manufacturing capability scaled up.

Meanwhile, the Inflation Reduction Act (IRA), which Biden signed into law on Aug. 16, 2022, provided for a 10% domestic content bonus credit amount, which applies to solar power farms whose owners are able to satisfy the domestic content requirements. The new demand spurred by this bonus credit has proven to be a significant driver in bringing solar component manufacturing back to the U.S. The White House reported that companies had announced more than $10 billion in solar energy manufacturing investments in the U.S. in just the first year following passage of the IRA.

Building U.S. Solar Manufacturing Capacity

One company that effectively got its start as a result of the IRA was Panasol USA LLC. It came into being when UK-based Renergia, joined forces with SolCatalyst LLC and SDC Capital Ventures LLC, and incorporated Panasol USA in Texas in December 2022.

“There are a few key reasons why Panasol chose College Station, Texas, as its headquarters,” Ricardo Jimenez, CEO of Panasol USA, told POWER. “In addition to being in a business-friendly state, our factory is located in what’s called an opportunity zone, and that allows for additional tax incentives that some of our main investors were looking for. The area is also filled with smart and hard-working individuals, who will help for recruiting purposes. Additionally, due to our proximity to a big school like Texas A&M, we are hopeful for collaborations with the university and its research departments.”

In early 2023, having secured the site and the funding needed, Panasol—under the leadership of Renergia and with the support of a highly qualified group of strategic partners, mainly Ecoprogetti SRL and 149MKM—embarked on development of a factory. Jimenez said it’s a state-of-the-art solar panel manufacturing facility that is fully robotized (Figure 1) and can run 24 hours a day with an annual capacity of 500 MWp. Panasol expects to deliver the first production from the facility this summer.

1. The robotic arm shown here is part of the cells-tabbing process of solar panels—a key process that Panasol will incorporate at its automated manufacturing plant in Texas. Courtesy: Panasol

Jimenez said Panasol is in a unique position today because of the IRA. “The act’s clean energy provisions opened up opportunities for anyone interested in investing in the renewable sector in the U.S.,” he said. “At this point, the main players in this industry have been from China with Chinese investors, but Panasol is an American company, owned by American investors. We are not controlled by any foreign government, and I think that sets us apart.”

Another company that moved quickly to ramp up U.S. manufacturing capabilities following passage of the IRA was Heliene. The company has a long history manufacturing solar PV modules in North America; it’s headquarters are in Sault Ste. Marie, Ontario, Canada, and it has a factory there and in Mountain Iron, Minnesota. However, as U.S.-based solar module component manufacturers closed in the 2010s, it was forced to import items such as solar cells for its modules from other regions of the world.

Yet, when the IRA opened the door for U.S. companies to get back in the solar equipment manufacturing game, Martin Pochtaruk, president and CEO of Heliene, told POWER that his company immediately began looking for and developing partnerships with potential U.S.-based manufacturers. It has taken Heliene a year and a half to solidify all the agreements, but after announcing a deal with Suniva Inc., the largest and oldest U.S. manufacturer of high-efficiency monocrystalline silicon solar cells, on March 27, 2024, Pochtaruk says Heliene will be the first company able to provide crystalline solar modules with a U.S.-made solar cell, which is expected to be available by the middle of this year.

Under the three-year strategic sourcing contract signed between the two companies, Suniva will manufacture the solar cells at its newly upgraded 1-GW facility in Norcross, Georgia, and ship them to Heliene’s assembly plant in Mountain Iron. Going forward, Suniva has said it intends to expand manufacturing capabilities to as much as 2.5 GW in the future.

Heliene, for its part, is also focused on expanding capacity. Pochtaruk explained that Heliene’s first production line in Mountain Iron was completed in 2018. A second line was added to the site in 2022 (Figure 2). Last year, the line built in 2018 was replaced with a new one. Today, the company is working on adding a third line in Minnesota, which will be located in the Minneapolis metropolitan area. Pochtaruk expects that line to be in production by late-October or early-November this year.

2. Heliene operates two solar module manufacturing lines in Mountain Iron, Minnesota, and has a third under construction in the Minneapolis metropolitan area, which is expected to begin production in the fourth quarter of 2024. Courtesy: Heliene

A Growing Market for U.S.-Made Products

Jimenez expects the largest demand in the U.S. will continue to come mainly from utility-scale developers. He said developments keep growing in number and size, putting huge pressure on suppliers to deliver products on schedule. Panasol intends to focus on utility-scale projects, particularly in Texas, where demand is growing the fastest.

“At this point, we’re seeing such strong demand in the U.S. that we’re already planning on a second line of panels. The demand has grown so much that the expectations that we have for the sales of the production from our first and second line are pretty much committed for the next three years,” said Jimenez.

Pochtaruk agreed that the U.S. offers great opportunity. “The solar market has been over burdened by imports. That is the effect of over capacity in Asia. That over capacity has flooded the market—and I mean, the entire global market—with products from China and the Chinese proxies manufacturing in Southeast Asia,” he said. “But what I would say is that there are two sections of the market: the larger portion of the market that is flooded with imports and then a portion of the market that is looking at the 10% investment tax credit adder for domestic content. And that market, actually, is looking for a product that is made in the U.S. and that will help them build the 40% cost of the project toward achieving that target, and that is what we’re focused on.”

“The IRA will definitely provide a boost to the industry at large, both in terms of employment, investment, and business opportunities,” Jimenez said. “I believe the general public, entrepreneurs, and the investment community at large have now a different industry that unlocks multiple opportunities for everyone to benefit.”

—Aaron Larson is POWER’s executive editor.