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U.S. Solar Manufacturing Poised for Boom if Energy Tax Incentives Move Ahead

Smart clean energy policies can be transformational for domestic manufacturing

Wednesday, Mar 30 2022

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By
John Smirnow

It’s well documented that clean energy tax incentives can launch massive private investment. It has also become clear that these incentives will transform U.S. solar manufacturing — putting us well on our way to achieving the Solar Energy Industries Association’s (SEIA’s) goal of 50 GW of domestic solar manufacturing capacity. This will only happen, however, if we seize the energy tax investment opportunity before us. 

Businesses have been planning since last spring when the clean energy tax incentives were first proposed. Consistent with the need for a holistic approach, the proposed tax legislation necessarily focuses on demand certainty, capex support, and production-related incentives, including the Solar Energy Manufacturing for America Act. Now a wave of public statements and announcements is starting to show how strong U.S. solar manufacturing could become.  

Companies such as Enphase, REC Americas, Maxeon, Hanwha Q CELLS, and Meyer Burger are looking to either create new manufacturing capacity in the United States or expand existing facilities. And SEIA is aware of many more leading companies actively contemplating U.S. manufacturing investments.  

SEIA’s research team concludes that U.S. solar panel manufacturing alone would vastly expand, and relatively quickly, if the energy tax incentives pass into law, and we have a pretty good record on industry forecasts. 

We also expect to see immediate growth in solar inverter, racking, and tracker manufacturing. This will include a lot more American steel in the ground. And the production and manufacturing employees who make all this happen will be in states like Illinois, Wisconsin, Arizona, Ohio, Pennsylvania, Michigan, North Carolina, South Carolina, Washington State, Tennessee, and West Virginia. 

Further up the supply chain, we expect new investments in domestic ingot and wafer and cell manufacturing capacity. Ingot plants will present new opportunities to U.S. polysilicon manufacturers who are unfairly blocked from selling into the large market in China. This in turn will lead to business for U.S. silicon metal producers in places like West Virginia, Alabama, and Mississippi. 

Clean energy tax incentives will also stimulate investments in new machine tool capacity such as ingot pullers, pick and place machines, and laminators, and from companies that produce solar glass, junction boxes, encapsulants, back sheets, etc. With the right investments we could truly build a broad domestic solar manufacturing base. 

But as we saw recently with the announcement that LG was exiting the global solar business, a bright domestic solar manufacturing future is not assured. We must make a commitment as a nation. 

In 2020, SEIA published a strategic manufacturing whitepaper calling for 100 GW of manufacturing investments across the renewable energy supply chain, including solar, wind and storage. The whitepaper identified tax incentives as a critical driver for new manufacturing. Last year, we set a solar-specific target of 50 GW, including polysilicon, ingots and wafers, cells, modules, racking, trackers and inverters. What we know today is that if the long-term energy tax investments SEIA has been advocating for over the past three years pass into law, the United States will soon have a flourishing domestic solar manufacturing industry.  

There are many reasons why strengthening U.S. solar manufacturing is important, including climate goals, supply chain resiliency and national security. If we hope to seize the promise of American solar manufacturing we must invest in the future, and clean energy tax incentives are that investment. 

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