PV Manufacturing in the United States: Market Outlook, Incentives and Supply Chain Opportunities
The U.S. PV Manufacturing Industry: Outlook, Strategy and Opportunities
Framed by the onset of cyclical overcapacity, roiling capital markets, plummeting prices and rapidly evolving business models, the global PV industry is entering a period of dramatic and hitherto unseen transformation. And with a supportive administration, growing utility interest in deployment, and gigawatts of pent-up solar demand, the U.S. looks to be poised at the cusp of this brave new solar reality. Thus far, however, most of the discussion between policy makers, market participants and industry observers has focused on the growth of domestic end-markets, while little space has been devoted to the other side of the coin – i.e., domestic production. Historically, only a small handful of crystalline silicon-based facilities have been producing at levels resembling commercial production in the early half of the decade, and though the ramp of thin-film in the U.S. has lent the domestic manufacturing scene higher visibility in recent years, it has been a pale shadow of the expansive build-out of capacity witnessed in Germany, China, and Taiwan.
Recent evidence, however, has indicated that this may be about to change. The prospects of the U.S. market and the threat of "Buy American" provisions in the ARRA have prompted a stream of announcements from manufacturers – both established foreign players as well as new domestic entrants – about setting up production facilities in the U.S. Adding further momentum to this have been the numerous manufacturing incentives passed into law within the past year and the generous packages afforded by solar companies that have chosen to base manufacturing domestically. At the same time, venture-funded thin-film companies with large cash cushions have been largely undeterred by existing market conditions and have made steady progress in bringing their products to market. All this comes together to indicate that an inflection point for U.S. PV manufacturing is in the offing.
In This Report
- Capacity and production projections for U.S.-based polysilicon, wafers, cells, modules, by technology, location, and manufacturer
- Detailed information and intelligence on all current future U.S. PV manufacturing facilities
- In-depth profiles of 33 U.S.-based PV wafer, cell, and module producers
- Comprehensive listing of all federal, state, and company-specific subsidies available to PV manufacturers in the U.S., as well as an assessment of the impact of the provisions of the American Recovery and Reinvestment Act of 2009 (ARRA) on U.S. PV manufacturing activity
- Projections of U.S. PV materials consumption (feedstocks, glass, encapsulants) and manufacturing equipment requirements
- Quantitative analysis of U.S. states' viability for US PV manufacturing, taking into account state incentives, tax burdens, utility rates, proximity to end-demand, and labor resources
- U.S. cell and module capacity are estimated to grow at an annualized rate of 50 percent and 45 percent respectively from 2008 to 2012. Thin-film will continue to occupy a majority of production share in the U.S., constituting 2.69 GW, or 67 percent, of cell and module capacity by 2012. Production share in thin-film technologies will be shared relatively evenly between CdTe (18 percent), amorphous silicon (24 percent), and CIGS (22 percent). At the same time, the build-out of crystalline silicon PV will also proceed at a strong pace over the next few years: crystalline silicon will still comprise the majority share for any one technology, at 35 percent of cell and module capacity by 2012.
- More plants were announced in the first half of 2009 than in the previous three years combined, which serves as evidence of the gathering momentum for increasing PV plant construction in the U.S. and points to recent political and policy-related developments as a catalyst. A number of these will be owned by companies based in Europe and Asia, indicating growing interest from foreign manufacturers in entering the U.S. manufacturing market.
- The West Coast states of Oregon and California will emerge as major manufacturing centers over the next few years, together comprising 28 percent of producible supply by 2012; 59 percent of the U.S.'s producible wafers in 2012 will come from Oregon. By contrast, California's presence hinges critically on a ramp-up of CIGS, with most CIGS-based firms having based their facilities there.
- The passage of the ARRA has introduced significant incentives for PV manufacturers at the federal-level by way of the Advanced Energy Tax Credit, which is a 30 percent tax credit on the capital cost of equipment and that is set to be converted to a direct cash payment. At present, 18 U.S. states offer some form of incentive for PV manufacturing. There is a high degree of overlap between those states that offer PV manufacturing incentives and those that currently house or will be housing production facilities.
- The growth in domestic PV production should provide meaningful opportunities for their many suppliers by fueling sizeable growth in material requirements, including feedstocks, glass and encapsulants, as well as in manufacturing equipment. By 2012, the domestic PV industry could consume as much as 40 million m2 by 2012, while the annual U.S. PV equipment market will stand at $952 million at this time.
- A number of factors will influence the location of future manufacturing facilities. These include state incentives, power prices, the cost and availability of skilled labor, proximity to end-demand, and tax burdens. Oregon, Ohio, Michigan and Pennsylvania emerge as having the best overall collection of characteristics, and there is a high correlation between a state's overall performance on the above metrics and its existing manufacturing presence.
- At the same time that the U.S. is attracting new PV manufacturing, a strong recent trend observed in the case of a number of established American and European firms has been to shift production to Asia, through in-house manufacturing, tolling arrangements, or contract manufacturing firms. For Asia-based producers with highly competitive cost structures but limited access to the U.S. market, module assembly facilities in the U.S. make the most sense, while European and U.S. players with highly sub-optimal cost structures are likely to shift wafer and cell production to low-cost locations. For firms between these two extremes, incentive packages will play a critical role in evening the equation, and only states offering deals that can meaningfully close the cost gap between U.S. and Asian production will come into contention.
*U.S. PV Bundle: Includes both The United States PV Market: Project Economics, Policy, Demand, and Strategy Through 2013 and PV Manufacturing in the United States: Market Outlook, Incentives and Supply Chain Opportunities at 20% discount