First Solar, a solar manufacturer headquartered in Arizona, said this week it would spend nearly $700 million to expand its solar manufacturing footprint in Ohio, giving the Biden administration a concrete win in its bid to have more clean energy equipment produced in the U.S.
The investment will add more than 3 gigawatts of capacity to First Solar’s existing plants in the state. The company last announced an expansion of its U.S. operations in 2018, shortly after the Trump administration imposed tariffs on imported solar cells and modules. First Solar is the largest solar manufacturer in the United States, which has seen a proliferation of new and expanded solar factories in recent years as companies sought to evade tariffs.
First Solar's thin-film cadmium-telluride solar modules were never subject to those tariffs, however. While its peers have paid millions of dollars in tariffs to deliver products to the U.S. market, First Solar has continued to import panels made abroad without paying Section 201 duties, offering the company a distinct market advantage.
Now that President Biden has picked up the Trump administration’s impetus to encourage U.S. manufacturing, First Solar is positioned to continue to benefit. The tariffs don’t step down until early 2022, and the administration has not indicated whether it plans to seek an extension of them.
“We brand ourselves as America’s solar company,” CEO Mark Widmar said. “We hope this [factory] demonstrates First Solar’s commitment to the Biden administration’s goals.”
Though Widmar said First Solar believes in “the intent and the spirit” of the Section 201 tariffs to create a “level playing field” for domestic industry, the company is currently advocating for industrial policy that offers incentives for both domestic supply and demand. Widmar pointed to examples such as a solar investment tax credit with a longer timeline and a tax credit for new manufacturing.
The new Ohio plant will bring the U.S. share of First Solar’s global manufacturing to just under 50 percent. Once the plant is operational, First Solar could supply about 60 percent of its U.S. demand with American-made modules, according to Widmar. The company is completely sold out of modules through the rest of 2021, with 60 to 70 percent of its 2022 product already sold as well.
The factory expansion will also allow the company to singlehandedly supply nearly half of the U.S.' total demand for large-scale solar equipment, “further reducing the country’s dependence on foreign suppliers,” said Kelsey Goss, a solar analyst at Wood Mackenzie, in an email.
U.S. utility-scale solar is First Solar’s largest market. On the company’s most recent earnings call, held in late April, Widmar said the company is “uniquely positioned to support domestic energy independence in the United States and play a leading role in [Biden’s infrastructure] plan” because of its distinctive technology.
U.S. Energy Secretary Jennifer Granholm called the factory announcement “the perfect embodiment of President Biden’s strategy to build out domestic manufacturing and supply chains for critical industries,” in a statement on the news.
The White House’s infrastructure package, unveiled in March, includes many provisions to boost clean energy. In addition to supporting incentives that would increase renewables and electrify industry, President Biden has emphasized a goal to have much of that equipment manufactured in the U.S. Currently, the majority of the solar supply chain is located in Asia.
President Trump was an opponent of renewables but a supporter of boosting U.S. manufacturing. His administration established Section 201 tariffs with that latter goal in mind. Biden has continued to support some Trump-era solar trade policies. It’s unclear whether supporters of the tariffs will advocate for their extension.
First Solar, which has publicly supported the tariffs, said it now prefers a less volatile policy with better “industry alignment.” The Section 201 tariffs splintered the solar industry, dividing domestic manufacturers and developers. A tariff extension is not the company’s “preferred path,” said Widmar.
“Our advocacy is going to be about industrial policy. However, if for whatever reason we’re unsuccessful accomplishing a more constructive industrial policy, then we may have a voice as it relates to 201,” he said.
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