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Efforts to establish solar manufacturing in the United States, thanks to generous subsidies from the Inflation Reduction Act, have had mixed results. While module assembly facilities appeared quickly, cell production capacity lags far behind, and the current political uncertainty is leaving more questions than answers for solar manufacturers of all sizes. A bright winter sun warmed a crisp morning into a pleasant day in Greenwood, South Carolina, despite the threat of rain. On the last day of January 2025, about 80 attendees, including state and local representatives and community leaders, attended a modest event in the small town to celebrate a major achievement in American solar energy. It was the opening ceremony of ES Foundrys solar cell production facility, probably the largest in the country so far. Representatives of the solar industry, trade press, and ES Foundry customers toured the manufacturing facilities and saw crystalline silicon (c-Si) solar cells in various stages of development. “The offshoring of component manufacturing is more important than ever,” said Elissa Pierce, a solar supply chain analyst at Wood Mackenzie. She said “more than a dozen” solar module factories have been created since the IRA went into effect in 2022. ES Foundry is only the second c-Si cell factory, and WoodMac expects to reach 11.3 GW of annual cell manufacturing capacity in the United States this year. Thin layer domain Solar cell manufacturing in the United States is dominated by First Solar, a Tempe, Arizona-based manufacturer of cadmium telluride (CdTe) cells. In its monolithic production process, glass enters one end of the production line and the finished module exits the other. At the companys third-quarter 2024 earnings call, First Solar CEO Mark Widmar confirmed the start of production at the companys $1.1 billion, 3.5 GW manufacturing facility in Alabama. According to Widmar, First Solar plans to produce 14 GW of modules in the U.S. by 2026 and 25 GW globally. Thin-film production is concentrated under one roof, but c-Si supply chains can be disparate. The crystalline silicon supply chain involves the production of polysilicon raw material, as well as individual solar ingots, wafers, cells, and modules. Cell production in the United States remains far behind the 50 GW of module capacity that analyst Exawatt expects by 2025. There is still no US wafer production. “The companies we know have brought wafers to the US are Suniva and ES Foundry, Hanwha brought wafers, and Silfab brought some wafers in January of this year,” said Alex Barrows, head of solar at CRU-owned Exawatt. Barrows estimates that of the 42 GW announced for cell manufacturing, 10 GW could come online this year and 19 GW by 2026. Cell production The recapitalized Suniva began commissioning 1 GW of cell production capacity in Georgia in mid-2024. Canadas Silfab is also commissioning a 1 GW line in South Carolina and has signed purchase agreements starting in Q2 2025. ES Foundry unveiled its 1 GW line in January and began shipping cells the following month. Suniva raised $110 million in October 2023 to restart cell production, and Silfab raised $100 million for cell operations in November 2024. “We have 1 GW of capacity in August and plan to reach 3 GW of nameplate capacity,” said ES Foundry CEO Alex Zhu, who has led U.S. operations for companies including Suntech, Shunfeng International Clean Energy, and GCL System Integration. ES Foundry’s cell fab in South Carolina is equipped for large-format “G12” (210 mm) wafers, but it currently uses smaller “M10” (182 mm) materials. “For actual production, since we are using M10 right now, we probably need to discount 15% to 20% of nameplate [capacity],” the CEO said. ES Foundry plans to shift to G12 wafer production in its second phase of expansion. Cell boosters The expansion of solar cell manufacturing capacity in the United States has been driven by trade barriers and domestic incentives. For developers, these policies have made domestically produced photovoltaic modules attractive, both in terms of security of supply and through attractive subsidies. However, the current political turmoil caused by the Trump administration has led to a surge in uncertainty. The industry has been forced to reflect on the future form of these measures. Currently, cell producers are incentivized by the Inflation Reduction Act (IRA) through a $0.04/watt tax credit. There is an additional domestic content credit tied to a 30% investment tax credit (ITC), plus another 10% if certain quotas of U.S.-made components are incorporated into a utility-scale solar project. Both measures are important, according to Zhu, but the ITC remains the most important measure for the U.S. solar industry as a whole. According to Zhu, if the ITC is scrapped or reduced prematurely, the impact on developers and manufacturers would be profound. That would significantly alter all investment in the industry. There are so many options on the table that its hard to predict. Of course, well want to maintain the 45X or maintain domestic content. National content Its plausible that under Trump, very large domestic content requirements will be introduced so that US-made products can qualify for the ITC. This could be positive for cell manufacturers, but the policy changes carry risks. “A big problem these cell factories have is raising capital,” said Pol Lezcano, a US solar analyst and senior associate at BloombergNEF. He said that even before Trump’s 2024 election victory, the prospect of a second Trump term had affected capital market attitudes toward solar investment. “Not only does it freeze capital, but it also adds a layer of upstream supply risk, because you don’t know how hard Trump will go after upstream components with ties to China.” While the expansion of cell capacity is encouraging, Lezcano said that producers remain heavily dependent on imports of upstream components, such as wafers, ingots, and polysilicon. A trade war, which could include Southeast Asian producers, could have a devastating effect. Marginal solar cell manufacturing projects appear increasingly unlikely. Serious investment Considerable financing is required to establish cell production in the United States. Photovoltaic technologist Peter Fath, CEO of manufacturing consultancy RCT Solutions, estimates that a fully equipped solar cell factory requires three times the capital expenditure (capex) of a module facility with the same level of automation. When factors such as cleanroom construction and utility costs are included, investments can be four or even five times higher than those for an equivalent module line. In the United States, setting up a cell factory is a real pain. The construction companies take whatever they can, and the same goes for the utilities, Fath explains. He added that obtaining Underwriters Laboratories (UL) certification for the equipment and production line can increase initial costs by up to 20%. This could penalize Chinese equipment suppliers in particular, who may not have yet overcome this hurdle. Amid political uncertainty, the possibility of export controls on Chinese photovoltaic cell equipment destined for the United States has also raised concerns. In early 2024, there were reports that the Chinese government would introduce restrictions in retaliation for US trade barriers on module imports from China. However, industry analysts report that import data show no controls have been imposed on the equipment, at least in the current first wave of investment in cell capacity. Supply of raw materials Supplying other materials could be problematic. Lezcano says there may be no end in sight for U.S. manufacturers, with the potential for new bottlenecks along the supply chain. “Everyone wants to get non-Chinese polysilicon, and Wacker, Hemlock, and OCI can charge a premium. If you try to produce U.S. wafers, you’re competing against a long list of companies.” The decision to halt production at REC Silicons Moses Lake facility is not only a blow to non-Chinese polysilicon stocks, but may also have given Hanwha Qcells pause. The manufacturer had ambitious cell production plans, but Lezcano said a proposed 3.3 GW, fully integrated production facility in Georgia could be delayed as a result. Hanwha, the parent company, made a big investment, a big bet. Internally, the fact that the deal didnt work out may be causing delays in management, Lezcano said. Qcells appears to have delayed the launch of its cell lines in the United States. The Canadian solar manufacturer and project developer may also be leaving customers waiting for new cells from its $800 million, 5 GW facility in Indiana, announced for October 2023. Despite subsidies and trade support measures, the path to success in crystalline silicon manufacturing in the United States remains difficult. Silfab hopes to use the negatively doped n type cells it produces in its rooftop and commercial-scale module products, and Suniva also supplies other module manufacturers. ES Foundry is attempting to master cell production before considering entering the saturated module market. Unlike Europe, which remains overwhelmingly dependent on Chinese imports to supply its solar projects and installers, the United States is heading toward a milestone in offshoring. Exawatts Barrows says import data for February or March is likely to reveal that US manufacturers supply more than 50% of the countrys end-market demand, albeit only modules for now. Import data will soon show that the United States has gone from being a market that imported almost entirely modules, about a year ago, to a market that imports predominantly cells, although it still imports some modules. |
