More than 150GW! U.S. domestic component manufacturing ambitions and procurement difficulties

Since the mid-2020s, U.S. photovoltaic system developers have encountered increasing challenges in module procurement.

Chief among these are the impact of UFLPA, the U.S. Department of Commerce’s investigation into circumvention of previous anti-dumping and countervailing duty rulings on Chinese photovoltaic cells and modules, COVID-19-related supply chain disruptions, and the two-year The global polysilicon supply situation is tight and prices are high.

In fact, more and more companies are announcing the establishment of photovoltaic manufacturing plants in the United States. Cumulative investment related to the announcements totaled $15.9 billion as of October 31, according to industry body SEIA, which includes plans to increase domestic module production capacity to more than 150GW by 2027, well above the expected annual scale of 44GW that year.

However, module buyers cannot take these announced capacity plans and schedules at face value. Projects must go through complex processes such as site selection, design, permitting, financing and EPC before being put into production. Optimistic execution timelines are often met with the reality of delays and, in some cases, dead ends.

According to CEA’s assessment, less than 50% of the more than 150GW of new module capacity announced at the time of writing may be operational by 2027.

In addition, the component factories that are completed and put into production will require the supply of batteries (as well as other key materials, such as glass, encapsulants, frames, etc.). Publicly announced new battery capacity additions in the United States total 84GW.

CEA predicts that 33GW will be put into production by 2027. Both figures are far lower than the above-mentioned announced/expected U.S. module production capacity. As a result, many U.S. component plants will rely on imported batteries.

Since the vast majority of global cell processing is in Asia, the same constraints that limit the import supply of modules (UFLPA restrictions and anti-dumping/countervailing duties) will also affect the import supply of cells unless the cells are made with non-Chinese wafers.

Similarly, the new domestic battery production capacity in the United States will greatly exceed the new silicon ingot/silicon wafer production capacity. Therefore, U.S. battery processing plants will rely on silicon wafer imports, and silicon ingot/wafer production capacity is even more concentrated in Asia than cell/module production capacity. Restrictive factors affecting module and cell imports will also affect silicon wafer imports.

The final major consideration for U.S. PV module procurement is the price environment and how it will develop. Due to the above-mentioned barriers to imports of U.S. components, U.S. buyers currently face a premium of nearly 2 times global prices.

The timing and pace of global trends in U.S. market prices remain uncertain and will be affected by actual domestic and international PV capacity growth rates, locations and technologies that are not subject to import restrictions. Other relevant factors include enforcement of current U.S. laws and possible future changes to those laws.