San Francisco, Calif. -- While the number and magnitude of projects in the pipeline make for a bright outlook for the American solar industry, the future is anything but clear for domestic manufacturing.
In the United States, solar is expected to become a growing player in the decade to come. But does that mean that manufacturers will set up shop to be closer to the market, or will a global oversupply of modules force companies to reconsider their expansion strategies? And how does the current uncertain future of our policy impact the path forward?
A look at the projections suggests that the U.S. will be ripe for an influx of manufacturers looking to get closer to their markets. According to the EPIA global market outlook through 2015, the American solar industry is expected to rise among the world leaders in installed capacity. And a peek at the scale of projects either under construction or under development shows that demand is there, and it’s mostly coming from photovoltaics. Those numbers would seemingly lead global companies to consider launching American operations as technological and manufacturing gains push down the price of modules while the volatility of fossil fuels means transportation costs will only rise. These factors, say industry experts, bode well for American manufacturing if indeed the market meets projections.
“You manufacture where your market is,” said Rhone Resch, CEO and President of SEIA. “The more we grow the market in the U.S., the more manufacturing will be attracted to the U.S.”
Recently there have been some gains in the American sector. According to Resch, 2010 saw substantial increases in domestic manufacturing as wafer production increased by 80 percent, cells by 30 percent and modules by 20 percent.
Many companies, some global, are setting up operations across the U.S., and not just where the development is — which for the most part tilts heavily toward the southwestern part of the U.S.
“We’re seeing manufacturing come to Mississippi and South Carolina and Tennessee and Michigan — places that are absolutely crucial for the economic recovery of our country,” said Resch.
That, says Graham Stevens, Associate Director at Navigant Consulting, is part of the maturing process of any industry. First, you tend to see plants driven by research and development centered around innovation centers like Silicon Valley, Boston, Austin and near NREL in Colorado.
“Once you get past the first plant stage, you get into larger, second plant facilities,” said Stevens. “Then, the location of the plants will generally follow the incentives. There are some pretty attractive packages offered by some states.”
But there are other factors as well. According to Stevens, the question isn’t whether the U.S. will be a player in solar manufacturing, but rather what will its role be. Right now, about 80 percent of the PV modules produced are made with crystalline silicon and about 15 to 20 percent are glass-based thin-film. Manufacturers like First Solar, the world leader in thin-film technology, may be especially poised to tap into the expected spike in domestic demand.
“The glass costs are a much larger proportion of their total costs and shipping glass around is an expensive proposition, so generally you want to locate the plan as close to the end use as possible,” said Stevens. “That will depend on how well thin film competes with crystalline silicon as time goes on. Aside from First Solar, there are a number of thin film companies that are finishing their first plants and just ramping up into full-blown production.”
Where it’s Happening
One of those emerging thin-film manufacturers is U.S.-based Abound Solar, which received a $400 million Department of Energy loan guarantee that will help it triple capacity at its current 65 MW plant in Loveland, Colo. The federal backing will also help the company open up a new 640 MW facility in Tipton, Ind. The company is doing early infrastructure work on a never-been-used auto industry factory that was essentially abandoned during the financial collapse of 2008. With DOE support, company officials are planning to hire staff next year and remain hopeful that the Indiana plant will be at full capacity by the end of 2014.
“When we went down the DOE process, we knew manufacturing in the U.S. was a criteria,” said Russ Kanjorski, Vice President of Marketing for Abound Solar. “We did an exhaustive search across the U.S. We knew we needed a facility that was already built. We looked at buildings, infrastructure and labor force and we came out with a couple of options. Far and away, the Tipton site met our needs.”
Kanjorski credits to DOE backing with keeping the project on track for a facility that will allow it to compete with the bigger players in a growing domestic market.
“Our scale-up would certainly have been much longer [without the DOE],” said Kanjorski. “This is a tough time for financing anything whether you are a public company or a private company. In the solar industry, scale is critical. The Chinese manufacturers have gotten to scale, driving cost down. First Solar is very competitive and has scale. So for any of the newer companies with promising technologies that can be cost leaders, you have to get to scale.”
China-based Suntech has gotten to scale with its massive manufacturing operation in its home country. But company officials say part of the global strategy is to produce where it does business. So Suntech recently opened a small manufacturing facility in Goodyear, Ariz. At 40 MW, it pales in comparison to the 1 GW of production capacity in China. Suntech built it with expansion in mind — but only if the conditions are right.
“The U.S. was a logical choice because it had a couple of the necessary environmental conditions that set up well,” said Andrew Beebe, Chief Commercial Officer at Suntech. “We saw a long-term market here that’s going to continue to grow and expand and present more and more opportunity for the company. In the future, where we see opportunity around the world that’s very stable and very-large scale, we’ll continue to repeat this process of building production closer and closer to our customers.”
Where the Policy Is
When President Obama called for a “renaissance of American manufacturing” last month, he may as well have been speaking directly to the country’s emerging solar industry.
“When you look historically, the U.S. was the largest manufacturer of PV in the world, going back 12 years ago,” said Resch. “We lost that leadership to countries like Germany and Japan, and most recently China. … When we look down the road with First Solar and GE and some of the other announcements and factories that are under construction, we think the U.S. is going to make a strong play for reclaiming a major leadership role in manufacturing photovoltaics.”
To get there though, many believe that America will need a comprehensive federal policy to spur investment. So far, the policy coming from Washington has been sporadic, and in many ways, has caused some hesitation in the industry.
Resch points to the recent recovery act as an example. A 30 percent tax credit helped support more than 50 new manufacturing facilities for the solar industry alone. But the expiration of that credit means a central support structure has vanished.
“We’re working with the administration and Congress to reinstate incentives just so the manufacturers looking to scale up will choose the U.S. over China or other countries,” said Resch.
Many of those global companies are keeping a close eye on the federal policy situation while considering their next steps. At Suntech, the goal is to be global. That means its customers — 95 percent, in fact — come from outside China. Today, about half its revenue comes from European markets, down from a high of 80 percent. This means its customer base is shifting, and the company must work to understand and interpret the policy situation in each of the countries it serves.
“We’re quite familiar with markets that go up and down in terms of predictability and in terms of policy support and subsidy challenges,” said Beebe. “We’ve learned to live with that as part of the necessary part of the process before we’ve reached grid parity in major markets.
“The great news is that over the next five years, we’re going to see grid parity become a true reality in the United States, in places like Italy, and of course, in places like Germany and others very soon after. As those markets become more economically driven and less policy driven, really the sky’s the limit.”
http://www.renewableenergyworld.com/rea/news/article/2011/07/video-u-s-solar-growth-coming-but-will-manufacturing-follow
In the United States, solar is expected to become a growing player in the decade to come. But does that mean that manufacturers will set up shop to be closer to the market, or will a global oversupply of modules force companies to reconsider their expansion strategies? And how does the current uncertain future of our policy impact the path forward?
A look at the projections suggests that the U.S. will be ripe for an influx of manufacturers looking to get closer to their markets. According to the EPIA global market outlook through 2015, the American solar industry is expected to rise among the world leaders in installed capacity. And a peek at the scale of projects either under construction or under development shows that demand is there, and it’s mostly coming from photovoltaics. Those numbers would seemingly lead global companies to consider launching American operations as technological and manufacturing gains push down the price of modules while the volatility of fossil fuels means transportation costs will only rise. These factors, say industry experts, bode well for American manufacturing if indeed the market meets projections.
“You manufacture where your market is,” said Rhone Resch, CEO and President of SEIA. “The more we grow the market in the U.S., the more manufacturing will be attracted to the U.S.”
Recently there have been some gains in the American sector. According to Resch, 2010 saw substantial increases in domestic manufacturing as wafer production increased by 80 percent, cells by 30 percent and modules by 20 percent.
Many companies, some global, are setting up operations across the U.S., and not just where the development is — which for the most part tilts heavily toward the southwestern part of the U.S.
“We’re seeing manufacturing come to Mississippi and South Carolina and Tennessee and Michigan — places that are absolutely crucial for the economic recovery of our country,” said Resch.
That, says Graham Stevens, Associate Director at Navigant Consulting, is part of the maturing process of any industry. First, you tend to see plants driven by research and development centered around innovation centers like Silicon Valley, Boston, Austin and near NREL in Colorado.
“Once you get past the first plant stage, you get into larger, second plant facilities,” said Stevens. “Then, the location of the plants will generally follow the incentives. There are some pretty attractive packages offered by some states.”
But there are other factors as well. According to Stevens, the question isn’t whether the U.S. will be a player in solar manufacturing, but rather what will its role be. Right now, about 80 percent of the PV modules produced are made with crystalline silicon and about 15 to 20 percent are glass-based thin-film. Manufacturers like First Solar, the world leader in thin-film technology, may be especially poised to tap into the expected spike in domestic demand.
“The glass costs are a much larger proportion of their total costs and shipping glass around is an expensive proposition, so generally you want to locate the plan as close to the end use as possible,” said Stevens. “That will depend on how well thin film competes with crystalline silicon as time goes on. Aside from First Solar, there are a number of thin film companies that are finishing their first plants and just ramping up into full-blown production.”
Where it’s Happening
One of those emerging thin-film manufacturers is U.S.-based Abound Solar, which received a $400 million Department of Energy loan guarantee that will help it triple capacity at its current 65 MW plant in Loveland, Colo. The federal backing will also help the company open up a new 640 MW facility in Tipton, Ind. The company is doing early infrastructure work on a never-been-used auto industry factory that was essentially abandoned during the financial collapse of 2008. With DOE support, company officials are planning to hire staff next year and remain hopeful that the Indiana plant will be at full capacity by the end of 2014.
“When we went down the DOE process, we knew manufacturing in the U.S. was a criteria,” said Russ Kanjorski, Vice President of Marketing for Abound Solar. “We did an exhaustive search across the U.S. We knew we needed a facility that was already built. We looked at buildings, infrastructure and labor force and we came out with a couple of options. Far and away, the Tipton site met our needs.”
Kanjorski credits to DOE backing with keeping the project on track for a facility that will allow it to compete with the bigger players in a growing domestic market.
“Our scale-up would certainly have been much longer [without the DOE],” said Kanjorski. “This is a tough time for financing anything whether you are a public company or a private company. In the solar industry, scale is critical. The Chinese manufacturers have gotten to scale, driving cost down. First Solar is very competitive and has scale. So for any of the newer companies with promising technologies that can be cost leaders, you have to get to scale.”
China-based Suntech has gotten to scale with its massive manufacturing operation in its home country. But company officials say part of the global strategy is to produce where it does business. So Suntech recently opened a small manufacturing facility in Goodyear, Ariz. At 40 MW, it pales in comparison to the 1 GW of production capacity in China. Suntech built it with expansion in mind — but only if the conditions are right.
“The U.S. was a logical choice because it had a couple of the necessary environmental conditions that set up well,” said Andrew Beebe, Chief Commercial Officer at Suntech. “We saw a long-term market here that’s going to continue to grow and expand and present more and more opportunity for the company. In the future, where we see opportunity around the world that’s very stable and very-large scale, we’ll continue to repeat this process of building production closer and closer to our customers.”
Where the Policy Is
When President Obama called for a “renaissance of American manufacturing” last month, he may as well have been speaking directly to the country’s emerging solar industry.
“When you look historically, the U.S. was the largest manufacturer of PV in the world, going back 12 years ago,” said Resch. “We lost that leadership to countries like Germany and Japan, and most recently China. … When we look down the road with First Solar and GE and some of the other announcements and factories that are under construction, we think the U.S. is going to make a strong play for reclaiming a major leadership role in manufacturing photovoltaics.”
To get there though, many believe that America will need a comprehensive federal policy to spur investment. So far, the policy coming from Washington has been sporadic, and in many ways, has caused some hesitation in the industry.
Resch points to the recent recovery act as an example. A 30 percent tax credit helped support more than 50 new manufacturing facilities for the solar industry alone. But the expiration of that credit means a central support structure has vanished.
“We’re working with the administration and Congress to reinstate incentives just so the manufacturers looking to scale up will choose the U.S. over China or other countries,” said Resch.
Many of those global companies are keeping a close eye on the federal policy situation while considering their next steps. At Suntech, the goal is to be global. That means its customers — 95 percent, in fact — come from outside China. Today, about half its revenue comes from European markets, down from a high of 80 percent. This means its customer base is shifting, and the company must work to understand and interpret the policy situation in each of the countries it serves.
“We’re quite familiar with markets that go up and down in terms of predictability and in terms of policy support and subsidy challenges,” said Beebe. “We’ve learned to live with that as part of the necessary part of the process before we’ve reached grid parity in major markets.
“The great news is that over the next five years, we’re going to see grid parity become a true reality in the United States, in places like Italy, and of course, in places like Germany and others very soon after. As those markets become more economically driven and less policy driven, really the sky’s the limit.”
http://www.renewableenergyworld.com/rea/news/article/2011/07/video-u-s-solar-growth-coming-but-will-manufacturing-follow
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