In June 2021, newly elected Senator Jon Ossof proposed his SEMA (Solar Energy Manufacturing for America) Act, and the Solar Energy Industries Association (SEIA) seized the moment to predict that the United States could reach 50 GW of power generation capacity. manufacturing by 2030. Now that the Inflation Reduction Act (IRA) has finally been passed, including the Solar Investment and Production Tax Credits, the SEIA has released a new white paper , Catalyzing U.S. Solar Manufacturing, which reformulates this figure of 50 GW.
In fact, SEIA says the US can now achieve at least 50 GW of manufacturing across the entire supply chain, down to polysilicon, with the first major facilities beginning construction in 2023 with modules, then gradually ascending through cells, wafers, ingots and polysilicon. In SEIA’s vision, each party supports the other – even modules, one of the simplest and least capital intensive segments, will become much more competitive once they have a domestic supply of quality glass. solar.
Basically, SEIA expects polysilicon production to still be only around 15.5 GW – around 45,000 tonnes – by the end of 2025, rising to almost 40 GW by the end of 2026 and 46 GW in 2027. In fact, the SEIA prediction stops in its tracks in 2027, which isn’t what’s going to happen – but that’s how far the IRA can guarantee financial returns on its own on investments in new factories, given that its lifespan is limited. Another oddity is the low growth accorded to TF (Thin-film) modules, given the historical bias in US utility scale and the prominence of First Solar.
Since the passage of the Cut Inflation Act, there has been a constant trickle of solar manufacturing announcements, but so far they are small. For example, this week Ascent Solar, a maker of CIGS thin-film solar modules, listed on the Nasdaq stock exchange, after being delisted six and a half years ago. Very big announcements, such as brand new polysilicon and wafer facilities, or the new plant that First Solar said it would consider if the grants pass, have yet to kick off. Perhaps those decisions will be made after the midterm elections, or once some other issues such as global economic turbulence and fuel prices become clearer.
This week, REC Silicon and Mississippi Silicon signed a memorandum of understanding for the supply of the latter’s industrial silicon – the raw material that is purified into polysilicon. Earlier, in June, REC also announced its intention to negotiate a similar supply deal with Ferroglobe.
REC Silicon CEO James May has said since the IRA was passed that he “hopes” the “entire US solar supply chain will be fully established.” REC Silicon had previously announced that it would restart production at its 18,000-ton polysilicon plant in Moses Lake, but one wonders how long it would have remained open from then without the production tax credit. of the IRA, and it’s interesting that May only said he was hopeful. .
The big question for solar manufacturing and the IRA is whether the entire supply chain will be relocated – not just cells and modules, but also wafers and polysilicon. As we discussed earlier, even a subsidy covering the marginal cost of production for Chinese manufacturers may not be enough to close the gap for US-based facilities – it’s one thing to jump-start existing capacity, it’s it’s quite another to build a new one with an initial investment. cost at least $1.5 billion per 100,000 tons (enough for 40 GW), in a country where wages and electricity prices are Western.
This loophole needs to be filled with sanctions against China based on allegations of forced labor in Xinjiang, and it comes down to arbitrary decisions made by politicians, as well as the specifics of enforcement and rules. So you can understand why the SEIA first predicts that module, tracker and inverter capacity will be relocated, followed by wafer and cell ingot – although it frames this more as ensuring that domestic demand downstream exists first before the upstream supply is built.