U.S. solar equipment manufacturing is about to grow, but there are miles to go before reaching the White House goal of becoming a global heavyweight.
Driving the news: First Solar said Tuesday it is planning to invest up to $1 billion in a new panel factory in the southeast.
- The company is also spending nearly $200 million to expand production in Ohio.
Why it matters: It's among several early signs the new climate law will sway investment.
- It created new tax breaks for clean energy manufacturing projects, and extended incentives for generation projects.
- CEO Mark Widmar wrote the law has "delivered precisely the durable solar industrial policy that we’ve long advocated for."
- SPI Energy last week cited the law in announcing new solar wafer manufacturing plans.
The big picture: Analysts expect billions of dollars in incentives will spur other new announcements and help bring tentative plans to fruition.
- "We expect that solar companies will prioritize bringing new ingot, wafer and module factories to the U.S.," Pol Lezcano, BloombergNEF's lead North American solar analyst, said via email.
- "There is definitely going to be a boom in domestic manufacturing," Sylvia Leyva Martinez, a senior Wood Mackenzie analyst, tells Axios.
- She said the combination of the manufacturing tax credits and extended credits for building new generation projects will work in concert.
- The Solar Energy Industries Association, in a report, said the law could help lift U.S. manufacturing to 50 gigawatts of capacity by 2030 (but also cautions on several pitfalls).
Yes, but: The U.S. remains far behind China and other regions in the supply chain for panels and other equipment.
- Chinese manufacturers made 180 gigawatts worth of panels last year, per BloombergNEF.
- In 2021 the U.S. manufactured enough panels to provide 8 gigawatts of generating capacity, Lezcano said.
- BloombergNEF is tracking another 7 gigawatts already announced or under construction by companies including Hanwha Q Cells and First Solar.
What we're watching: How many more projects materialize — and when.
- Martinez notes companies need specifics from the IRS on the tax programs. Developers also need to find adequate sites, among other steps, she said.