Solar power is finally scaling up. In a wave of new investment in United States solar technology and power production, Italian energy company Enel will build a three gigawatt (GW) solar cell and module plant in the country in 2023, with plans to scale up to six GW.
Why bring solar manufacturing to the United States?
Since the signing of the Inflation Reduction Act (IRA), companies have been planning for more manufacturing plants in the U.S. to take advantage of solar tax credits. Some companies are also attempting to follow a new IRA requirement. It asks all components of electric vehicles (EVs) sold in the U.S. to also be built there in order to qualify for tax credits, which can involve some solar cells in solar-roof-charging EVs.
The goal is to encourage more investment in American manufacturing. In turn, it will boost the economy and lessen dependence on overseas manufacturing. During the pandemic, many industries struggled with supply chain issues brought on by complex manufacturing arrangements hamstrung by materials shortages and shipping delays. Spurring investment in clean energy domestically will make the clean energy revolution less dependent on global supply chains.
These new rules throw multinational manufacturing into a tailspin. On the other hand, they encourage investment in homegrown clean energy and clean technologies. They also remove dependency on China and other countries for components such as solar cells and microchips.
The IRA includes a tax incentive for end consumers installing solar as well. The new tax incentives are expected to shift both corporate and consumer behavior in the direction of investing in solar energy technologies.
The state of solar investment in the U.S.
Enel’s announcement came just a day after the U.S. solar module manufacturer First Solar announced it will build a $1.1 billion 2.5 GW direct current factory in Alabama. The First Solar factory is expected to be commissioned by 2025. It will join three factories in Ohio, including a new one in the state that expects to begin production by the first half of 2023.
In direct response to the IRA, Hanwha Q Cells has searched for a new location for a solar module manufacturing plant and has promised multiple billions of dollars in investment in the U.S. solar supply chain. Toledo Solar has also planned an expansion of its domestic solar panel manufacturing to reach 2.8 GW by 2027.
By 2032, solar energy is expected to produce more electricity each year than all U.S. coal-fired power plants in 2021. The IRA will drive an additional 222 GW of solar over the next 10 years when compared to a no-IRA scenario, according to the SEIA.
United States production matters
Nearly all of the current solar cell and module manufacturing currently takes place in China. A recent report from the Ultra Low-Carbon Solar Alliance found that Chinese producers account for 83% of global capacity for polysilicon production, 96% for wafers, 79% for solar cell production and 70% for solar modules.
Enrico Viale, head of Enel North America, said incentives for domestic solar manufacturing in the IRA served as a catalyst for the company’s decision to invest in a new U.S. solar cell and module plant. Additionally, Enel’s sister company, 3Sun, operates a 200 megawatts (MW) solar manufacturing facility in Italy. There, 3Sun has plans to expand production to 3 GW.
With the new U.S. plant, Enel says they plan to replicate the Italy facility to produce bifacial heterojunction photovoltaic cells. Foundation-level investments like these pave the way for long-term growth in U.S. solar.
“It is our intention to bolster a robust domestic solar supply chain that accelerates and strengthens the US’s transition to clean energy,” Viale said.
It is possible the U.S. will see growth in the solar manufacturing sector as well as a boost to manufacturing jobs in the country. This is just in time for the power grid to shift to clean energy, making those jobs sustainable energy focused.
The future of solar power in the U.S.
With the passing of California‘s re-worked NEM 3.0 tariff, the solar industry is watching as state governments try to work out how to encourage consumers to contribute home solar-generated power to the grid. Some of how solar grows in the U.S. will depend on how governments and utilities price out compensation for home solar energy that is pumped back into the grid as excess.
Success in this department is about balancing the needs of all parties and upping storage capacity. During peak generation hours of daytime sunlight, there is more power available than the grid can use. But during night-time hours, even sustainability-friendly states like California still use backup gas and coal to power the grid.
The future of solar depends on storage battery technology, municipalities balancing out power demand and supply, and solar panels being affordable enough that they are worth their upfront cost. While that is being worked out, motivating investment in large solar plants is a lasting way to ensure that clean energy is replacing dirty coal and gas for a sustainable future.
Images via Enel