Welcome solar enthusiasts, to another informative post on the developments within the solar industry. Today, I’d like to demystify the latest research produced by Wood Mackenzie, focusing on the capacity that solar companies are planning to establish in the U.S. You might find this particularly relevant if you’re investigating solar panels for your home and are curious about the challenges the industry faces.
First of all, the Inflation Reduction Act (IRA) of 2022 has done wonders for the solar industry, especially in incentivizing domestic solar manufacturing. Indeed, hefty investment has followed – with planned domestic expansion of 144GW in module manufacturing capacity, and 71 GW and 61 GW in cell and wafer manufacturing respectively by 2027. To put that into perspective, currently, we have 26 GW of module capacity available, with no significant domestic wafer or cell manufacturing.
But, admittedly, there’s a long road from announcement to actual realization, and we must brace ourselves for obstacles along the way. Wood Mackenzie anticipates that only 45% of the announced module capacity, 25% of cell capacity, and a meager 5% of wafer capacity will manifest. This is mainly because some investments might not succeed, and some solar companies lack the experience to fulfil their ambitions.
One challenge lies in the disproportionate capacity of modules produced in the U.S. versus cells and wafer. Given that cell and wafer facilities are significantly more expensive to build and technologically complex, the solar industry will probably continue to lean on imports for these components for the foreseeable future. A domestically-driven solar array for home use seems somewhat elusive in the current landscape.
Another hurdle pertains to the scarcity of many “other” solar components produced in the U.S., such as glass, backsheet, junction boxes, and frames. As you can imagine, you need all these components for an effective solar array for home installation. Yes, the demand is there, the capacity is growing but it will not happen overnight.
For instance, the U.S. solar sector heavily depends on module frames imported from East and Southeast Asia, almost always constructed from carbon-intensive aluminum. However, if the solar industry shifted from aluminum to recycled steel frames, it would liberate itself from this dependency on foreign imports.
Lastly, there is an elephant in the room that we cannot ignore: price. The fierce price competition due to oversupply is currently plaguing U.S. manufacturers, often leading to selling modules at a loss to stay competitive. In response to this, the Department of Commerce is investigating alleged antidumping infractions in Vietnam, Malaysia, Thailand, and Cambodia.
In summary, the solar industry, despite promising investments and incentives, continues to encounter challenges which might deter the journey from planned to realized capacity. However, I am confident that with continued advancements and evolution, we will see a future where the successful establishment of a solar array for home is commonplace.
Stay tuned for updates on these issues in the upcoming Wood Mackenzie’s Solar and Energy Storage Summit and as always, I will be keeping you in the disruptive yet fascinating world of solar power thereafter. Your solar company scout, signing off.
Original Articlehttps://pv-magazine-usa.com/2024/06/04/has-the-inflation-reduction-act-bolstered-the-u-s-solar-supply-chain/
