Qcells to invest $2.5B in building out US solar supply chain

Inflation Reduction Act tax credits spur Qcells to make a major investment in Georgia solar factories and to expand its U.S. polysilicon supply.

Artist rendering of the solar factory Qcells plans to build in Bartow County, Georgia.
An artist’s rendering of a factory Qcells plans to build in Georgia, the first in the U.S. that will combine production of silicon ingots and wafers with manufacturing of solar cells and panels. (Qcells)
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Qcells and Georgia’s two U.S. senators played a key role in crafting a tax credit in the Inflation Reduction Act aimed at revitalizing U.S. solar manufacturing. On Wednesday, the solar manufacturer announced it will invest $2.5 billion in two Georgia facilities that will test that policy’s potential to make the U.S. competitive against China across the solar supply chain. 

Most notably, the bulk of this record-setting investment in U.S. solar manufacturing capacity will go to building the country’s first facility for turning the raw polysilicon that makes up most of the world’s solar cells into a finished solar product. 

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That plant in Cartersville, Georgia, set to begin construction in the first quarter of 2023 and begin production in late 2024, will be capable of manufacturing 3.3 gigawatts of solar ingots, wafers, cells and panels per year. This will cover most of the process of converting raw silicon to power-generating solar equipment — forming polysilicon into ingots, slicing them into wafers and converting those wafers to cells that make up solar panels or modules. 

a graphic depicting the solar supply chain: polysilicon, ingots, wafers, cells, modules
The silicon value chain (NREL)

The Cartersville plant, about 55 miles outside Atlanta, will source the polysilicon to be converted into wafers from the REC Silicon plant in Washington state. Qcells’ parent company, South Korea–based Hanwha Group, owns a majority share of that facility after investing $160 million in 2022 and plans to restart the now-idled plant in the second half of 2023

REC Silicon, in turn, plans to source the needed raw ingredient, high-purity silicon metal, from operations in Alabama, Ohio and West Virginia owned by London-based Ferroglobe and from Mississippi Silicon’s production facility in its namesake state. 

Under the 45X production tax credit structure created by the Inflation Reduction Act, each domestically produced part of this solar manufacturing process will receive its own tax benefits, said Scott Moskowitz, Qcell’s head of market strategy and public affairs. Solar modules and cells will receive 7 cents and 4 cents per watt of generation capacity, respectively. Crystalline silicon wafers and ingots, solar-grade polysilicon and silicon metal will receive credits based on the volume of production. 

The goal of this tax-credit structure, first put forward by U.S. Senators Jon Ossoff (D) and Raphael Warnock (D) of Georgia and other Democrats as the Solar Energy Manufacturing for America (SEMA) Act, is to make each stage of the solar production process cost-competitive with materials and products coming from overseas. 

All these credits stack,” Moskowitz said, with each stage in the process adding tax-credit value to the final product. Taken together, these credits could cover about half the cost of producing a solar panel. 

What SEMA was designed to do is make U.S. solar manufacturing and products competitive with anyplace in the world,” Moskowitz said. 

Ossoff praised Qcells’ announcement in a statement, noting that it will bring thousands of solar jobs and billions of dollars” to Georgia. My goal remains to make Georgia the world leader in advanced energy production,” he said. 

Can the U.S. compete with China’s solar dominance? 

In the case of solar, China is the main competitor. Over the past two decades, China has invested tens of billions of dollars to cement its dominance in crystalline silicon solar production. It now hosts about 80 percent of global polysilicon production, almost all production of silicon ingots and wafers, 85 percent of solar cell manufacturing and 75 percent of solar panel manufacturing, according to International Energy Agency data.

Qcells’ $2.5 billion investment, which the company has been hinting at for the past year, also includes a further expansion of its solar-cell and module production line in Dalton, Georgia, adding 2 gigawatts to its current 3.1-gigawatt production capacity. Qcells opened that facility in 2019 with 1.4 gigawatts of production capacity and has already more than doubled it with a $170 million investment announced in early 2021

The combined production capacity of both Georgia plants will be 8.4 gigawatts when they’re completed in 2024. That’s a massive expansion, considering that the U.S. had roughly 11 gigawatts of solar-module capacity as of last year, out of about 500 gigawatts being produced globally.

But it’s the vertically integrated nature of Qcells’ new Cartersville facility and its upstream supply relationship with REC Silicon that really stand out. With the exception of U.S.-based thin-film solar manufacturer First Solar, which has vertically integrated the production of its cadmium-telluride solar panels, we’re the only company at the moment manufacturing products from raw materials to finished solar systems” in the U.S., Moskowitz said. 

Qcells’ investment is among the first major commitments to U.S. solar manufacturing to come since the Inflation Reduction Act was passed in August. There’s been far more investment to date in manufacturing lithium-ion batteries and their components and mining and processing their raw materials, which are eligible for similar production tax credits. Some analysts question whether the Inflation Reduction Act’s domestic manufacturing incentives will be sufficient to overcome China’s established dominance in global solar supply chains. 

Qcells won’t source the entirety of its material for building solar panels in the U.S. from domestic sources. Nor will U.S. manufacturing make up the majority of its production, which stood at an estimated 12.4 gigawatts as of 2021, most of it in South Korea with facilities in China and Malaysia.

But after two years of supply-chain disruptions that have caused significant delays and cost increases for U.S. solar developers, and with the country engaged in multiple trade disputes with China that could disrupt future supplies of solar materials from that country, there are good reasons beyond tax credits for solar companies to invest in U.S. manufacturing capacity, Moskowitz said. 

I personally don’t think there’s anything that disadvantages the U.S. from being the leading manufacturer in this sector,” Moskowitz said. Yes, the U.S. has higher labor rates and environmental standards than other countries. But that’s what this type of legislation and these types of trade policies are meant to address.”

Jeff St. John is director of news and special projects at Canary Media.