Since the introduction of the Inflation Reduction Act (IRA) in 2022, US solar manufacturing has exploded with new utility-scale projects and facility creation. The table below shows the trickle-down effects of the IRA implementation and forecasts on the policy’s continued influence.
SEIA/Wood Mackenzie
According to SEIA, as of 1Q24, the US increased solar capacity by 71 percent with new solar module manufacturing capacity, and added 11 GW — the largest quarterly manufacturing growth in the US — bringing total capacity to 200 GW.
While initiatives such as the IRA have sparked this flurry of announcements about new PV solar manufacturing ventures, one statistic from Wood Mackenzie in early 2024 estimated that only 45% of announced manufacturers would reach fruition.
Challenges to PV Manufacturing
The closure of Toledo Solar, an Ohio based thin-film solar module producer, highlights the struggles that the US solar market currently faces on delivering domestic modules.
Additionally, domestic content requirements, which mandates a 40% domestic threshold for projects built before 2025 with a 5% step up each subsequent year, present further hurdles to new entrants in the industry.
Lack of skilled labor is also impacting manufacturer success, with Bloomberg reporting a deficit of up to 500,000 professionals needed to power the industry. Approximately 52% of solar industry employers reported difficulty in finding qualified workers.
Laos Facility (Imperial Star Solar, 2024)
Other challenges include lack of insufficient investment capital and uncertainty around policy and regulation, particularly with a new administration looming.
Despite the challenges and many more, Imperial Star successfully opened doors on a 2 GW Texas facility last month. EVP Keer Zhuo addressed the crowd in her opening speech, citing “Imperial Star Solar stands here today, marking a successful milestone in delivering our commitment as a US-based manufacturer.”
Southeast Asia Manufacturing: Choosing a Facility Location
Three months ago, Imperial Star Solar announced a pivotal equipment procurement partnership with Qingdao Gaoce Technology. Now, after just 2 months of operation, the production line at the Laos silicon wafer factory has reached a capacity of 2.5 GW!
Phase 2 of this partnership includes expanding to a capacity of 4 GW. This facility completes a global supply chain network, underscoring a commitment to innovation, quality in solar manufacturing, and scalable growth.
Why Laos? Why Indonesia?
Factors that Imperial Star and others consider when selecting Southeast Asia manufacturing locations include:
Policy & Economic Environment — Countries exempt from 201 solar tariffs, countries unimpacted by AD/CVD circumvention, level of national stability (presence of any ongoing conflicts or instability in the country should be assessed)
Infrastructure Conditions — Electricity requirements (30000kVA/1GW wafer, 27000kVA/1GW crystal growth, 3000kVA/1GW wafer slicing, 8000kVA/1GW Cell, 4500kVA/1GW), land availability, water availability and usage, industrial development opportunities, shipping/transportation (well-maintained ports with modern facilities, efficient cargo handling and inland transportation convenience)
Business Practices — Business conditions (particularly logistics and transportation costs + labor costs), government support toward local business
Investment Scale — What opportunities for scale are available in these countries? Approx. $35 million/ 1GW for cell production, $10 million/1GW for module production, and $45 million/1GW for crystal growth & wafer cutting
(Imperial Star Solar, 2024)
Based on the above analysis on Southeast Asian countries performed by Imperial Star Solar, Indonesia and Laos are currently the most favorable countries for facility locations.
Currently, the overall PV cell capacity in Indonesia sits at 5 GW with announcements to reach 10 GW by the end of 2025. Indonesia's module capacity is primarily located in Jakarta and Surabaya and reaches 3 GW.
In Laos, total operating cell capacity is currently concentrated to 1-2 leading players, producing a total of about 2 GW. Imperial Star's newest cell facility will boost the total capacity in Laos to ~4 GW. Module capacity is relatively small but quickly expanding to keep up with US market demand.
As more facilities open across Laos and Indonesia, there are potential risks associated with establishing manufacturing in these countries.
Imperial Star continues to monitor the situation to best help our clients maneuver policy risks within the global supply chain. By analyzing the business conditions and changing policy in each of these countries, strategic decisions can be made about the location of global cell, wafer, and module facilities to allow for reliable and sustainable growth.
UPCOMING EVENTS
RE+ 2024
September 9-10: Anaheim, CA
Find us at booth #D24101 — Book time to meet with us during the event
PV Cell Tech Conference
October 8-9, 2024: San Francisco, CA
Reserve your tickets to hear Sales & BD Manager Marvin Yang's session Technology Selection for New U.S. Fabs on October 9th @ 11:40AM
News & Media
Numbers That Define Biden’s Energy Legacy — See more
Energy Permitting Act Introduced — See more
MA Passes Solar & Storage Energy Reforms — See more
Imperial Star Partners with GivePower to Impact Global Change — See more