Vol. 2 | Issue 17 | August 7, 2014

Solar Industry E-Feature

Conditions And Capital Seem Ready For U.S. PV Manufacturing

Recently, some photovoltaic manufacturers announced plans to produce cells, panels and silicon wafers in the U.S. The solar companies point to various reasons for adding domestic manufacturing to their overseas production or for manufacturing in the U.S. only.

In 2013, silicon wafer manufacturer 1366 Technologies announced it had raised a total of $62 million in funding, in part to build a 250 MW capacity facility in the U.S. Founded in 2007, the Bedford, Mass.-based company currently operates a demonstration facility.

Craig Lund, vice president of business development for 1366, says labor costs in China are increasing, and workers are still doing certain tasks by hand.

"In a lot of factories, people are picking up wafers with suction cups," Lund says. "We are handling molten silicon, and a machine does all the work."
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Lund notes that while China still dominates certain types of manufacturing, the U.S. shines in automated advanced manufacturing. Skilled U.S. laborers also know how to keep the machines running, he says, which decreases downtime.

"Making t-shirts is hard to do in the United States," Lund says. "But if you are running a sophisticated piece of machinery and you need high-quality laborers, this is the place to do it."

Other companies have also announced they will open production facilities in the U.S. In July, Andalay Solar Inc. announced it will soon begin manufacturing solar modules in San Jose, Calif. The company says that the majority of its customers are in the U.S. and prefer products made domestically. Andalay says the U.S.-made panels will be available in September.

Norcross, Ga.-based Suniva, which makes crystalline silicon solar cells and modules, is opening a second U.S. manufacturing facility this year. The new facility will be located in Saginaw Township, Mich. The company has an existing manufacturing facility near Atlanta.

Matt Card, vice president of global sales and marketing for Suniva, says Michigan is very attractive due to its rich history in manufacturing, which yields a highly skilled workforce to draw from. Also, key supply chain partners such as Hemlock/Dow Corning have invested in the area, and Michigan's central location and logistics infrastructure make it easier for Suniva to move products nationwide.

"We see no downside," Card says. "The U.S. market has spoken and has clearly stated that it values a company that was born in the USA, is owned in the USA and builds high-quality products here in the USA."

Suniva plans to begin construction of the 200 MW capacity factory this month, with production to begin in the fourth quarter of the year.

"The U.S. market is growing and can consume the output of a large factory, which lowers overall logistics and rising overseas transport costs," says Aaron Thurlow, vice president of global sales and marketing for Silevo, a California-based developer of solar cells. "We also expect to benefit from lower cost and more reliable utilities in the U.S. that are critical in larger high-tech manufacturing."

In June, SolarCity signed an agreement to buy Silevo and announced plans to build a 1 GW capacity factory in Buffalo, N.Y., once the deal is complete. Silevo currently has high-volume manufacturing operations in Hangzhou, China.

"Uncertainty regarding policy environments and rising labor costs in China make U.S. manufacturing attractive," Thurlow says, adding that the company plans to continue operating its China factory to serve international markets.

Industry experts say there are several reasons why solar companies plan to manufacture in the U.S.

"The U.S. market is the third largest in the world in 2014 with installations exceeding 7 GW," says Stefan de Haan, principal analyst for IHS Solar Research in Munich, Germany. "Unlike other big markets, like Japan, it will grow sustainably in the coming years."

There might be a slowdown in 2017, he says, because of the reduction in the investment tax credit, but still, the future looks bright for U.S. solar manufacturing. "It makes sense to have a local footprint in such a high-volume market, in particular against the background of stagnating markets in Europe and a Chinese market that is very hard to enter by foreign suppliers," he says.

De Haan notes that the trade issues with China and Taiwan will help U.S. manufacturing, and, in the next five to 10 years, the PV supply chain will be less concentrated in China than it is today.

"But in the short term, there are no significant changes to be expected," he says. "China currently disposes of almost 70 percent of global PV manufacturing capacity, and the leading Chinese manufacturers are expanding massively in their domestic market these days, which will keep China's share stable."

Matt Feinstein, an analyst with Lux Research in Boston, says it's a small trend, but still, the "Made in USA" phenomenon is happening for a few reasons.

"There is capital available to do it," Feinstein says. "There is a lot more money folks can use. SolarCity came in with a lot of money, and 1366 has new investors."

Policy is also a factor, Feinstein says, pointing to the trade disputes and tariffs. Most solar products will still come from China, he says, but the solar sector can expect more "Made in USA" announcements.

"There is going to be a cost advantage now that could be obtained by not going through China," Feinstein says. "There is probably appetite for a few more companies to build in the U.S."


Nora Caley is a freelance writer based in Denver.
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