Maxeon looks to bring solar manufacturing back home with $1B US factory

Maxeon Solar Technologies has chosen Albuquerque, New Mexico as the site for a record-sized silicon solar cell and module factory, a testament to the epochal industrial-policy measures contained in the Inflation Reduction Act.

The immense manufacturing facility would make Maxeon the latest global entrant in the race to bring energy production back to the U.S.

Maxeon carries the technological legacy of SunPower, the pioneering U.S. solar company it was spun out of in 2020. Founded in Silicon Valley in 1985, SunPower initially distinguished itself with world-record solar cell performance — a technical edge that Maxeon maintains. SunPower also once built solar panels and cells in the U.S., but cost pressures from its competitors’ Chinese-made products pushed the company to move production abroad.

Now Maxeon is aiming to return to its U.S. manufacturing roots.

The total investment for the proposed 3-gigawatt facility would exceed $1 billion, but Maxeon says it still has to make it through the due diligence and approval process of the U.S. Department of Energy’s Loan Programs Office in order to complete the financing of the project.

If the loan is finalized, Maxeon’s facility will emerge as one of the largest domestic solar manufacturing expansions since the landmark Inflation Reduction Act was passed last August. The company, which currently makes its products in Mexico, Malaysia and the Philippines, is considering plans to expand its U.S. manufacturing operation to an annual capacity of 4.5 gigawatts. For context, the entire U.S. solar industry produced a total of 5 gigawatts’ worth of solar panels in 2022.

“Thanks to the support of the Biden administration, the U.S. is now poised to re-shore and scale up a domestic solar supply chain,” said Bill Mulligan, Maxeon’s CEO, in a release.

Solar now ranks as the fastest-growing type of electricity generation in the U.S., but its rapid ascension has depended on tens of millions of solar panels imported from overseas. The lucrative solar subsidies in the Inflation Reduction Act have put the U.S. solar industry on a path to reclaiming its past manufacturing leadership.

In the 12 months since the law passed, a number of established solar players including Qcells, First Solar and Enel have already selected sites and in some cases broken ground for new factories or expansions of existing manufacturing facilities. Qcells forecasts that its total solar-panel production capacity in Georgia will hit 8.4 gigawatts in 2024. Vertically integrated U.S. solar manufacturer First Solar says it will be churning out 10 gigawatts’ worth of panels a year by 2025 — and just weeks ago, it announced a new $1.1 billion facility to help it get there.

In total, more than 30 new U.S. solar manufacturing facilities or expansions have been announced since the IRA was passed, with a potential combined annual capacity of more than 70 gigawatts. Contrast that with the 11 gigawatts of manufacturing capacity in the U.S. today, a distressingly small 2 percent of the world’s 500 gigawatts’ worth of photovoltaic module production capacity in 2023, according to energy consultancy Wood Mackenzie.

There’s a good reason for this new migration of manufacturing to the U.S.: The IRA’s generous tax credits reward manufacturers for making solar modules in a U.S.-based, vertically integrated plant, meaning that all components are sourced in the U.S. Subsidies apply across the solar value chain, including polysilicon, thin-film or crystalline PV cells, wafers and modules. Altogether, they will cover about half the cost of manufacturing a solar module.

That’s a good deal for manufacturers. And it’s an even better deal for them if the government is backing the loan, as Maxeon hopes will be the case with its pending DOE application. Should that loan close, Maxeon expects construction to begin in the first quarter of 2024, with the production of panels to start in 2025. Up to 1,800 employees will staff the completed facility.

Financing and building new factories like this will mean real progress in bringing manufacturing to the U.S. — and in Maxeon’s case, it will be a technology coming back to its country of origin.