Why First Solar Is Building a New Factory in the Southeastern US
Boosting Domestic Production
First Solar is the nation’s largest solar-panel maker. It just announced plans to invest $1.2 billion in an effort to boost its US manufacturing capacity by 75%. Included in that plan is a $1 billion new factory that will be built in the southeastern US, on top of a $185 million expansion at factories based in Ohio.
First Solar expects to have 6 gigawatts of panel-making capacity in the US next year. As a result of these new investments, that’s anticipated to reach 10.6 gigawatts by 2025. All this on top of the company’s 10 gigawatts of manufacturing capacity outside the US, which will be achieved next year when First Solar’s factory in India comes online.
Change of Direction
The legislation focused on climate, taxation, and healthcare that was recently signed into law by President Biden impacted First Solar’s decision to build a US factory. CEO Mark Widmar recently argued the legislation makes solar an asset class worth investing in.
As part of the spending plan’s focus on boosting green energy, hundreds of billions of dollars of incentives are available for companies who make clean-energy equipment in the US. That could translate to between $140 million and $630 million in tax credits each year for First Solar, once its new plant is constructed. The company says its location will be announced sometime before the start of the fourth quarter.
Start of a Trend
The new laws that incentivize US production and soaring demand for clean energy suggest this is the start of a major domestic expansion. Lawmakers are also concerned about being overly reliant on China for things like solar equipment, given ongoing tensions between Washington, DC and Beijing.
At present, China controls over 80% of the global solar manufacturing supply chain. But international firms are beginning to invest further in the US. South Korea’s Hanwha Solutions announced plans to build an alternate supply chain in the US back in March. It stands to reason that other companies will look to follow suit as the entire sector expands domestically.
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