Solar

Inflation Reduction Act sparks solar supply chain moves

Inflation Reduction Act sparks solar supply chain moves
REC Silicon's Moses Lake, Washington facility (Courtesy: REC Silicon)

The Inflation Reduction Act is already leading to improvements to the solar energy supply chain in the U.S.

Days after the bill was signed into law, REC Silicon and Mississippi Silicon said they have committed to negotiating a raw material supply agreement and helping establish a low-carbon U.S. solar supply chain— a partnership the companies said is possible because of the legislation.

The companies said in a statement they will expand their relationship to support the development of an "end-to-end U.S. solar supply chain" from raw silicon, to polysilicon, and fully assembled modules.

"We are hopeful that with the passage of the Inflation Reduction Act… the entire solar supply chain in the US will be fully established and placed in a position to flourish," REC Silicon CEO James A. May II said.

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The Inflation Reduction Act includes a $369 billion investment in clean energy and climate change mitigation.

Baked into the Inflation Reduction Act are provisions of the Solar Energy Manufacturing for America Act (SEMA Act), which incentivizes U.S. production throughout the solar value chain. The incentives would provide new certainty for domestic solar manufacturers and developers, who seek a 'Made in America' product that is difficult to source.

Elements include:

  • 11 cents/watt for integrated modules
  • 7 c/w for non-integrated solar modules
  • 4 c/w for cells
  • $12/sq. m. of wafer
  • $3/kg of polysilicon
  • 40 c/sq. m. of polymeric backsheet

REC Silicon operates two polysilicon manufacturing facilities in the U.S.: Moses Lake, Washington, and Butte, Montana. Their combined annual production capacity totals 18,000 metric tons (MT), including 16,000 MT of granular, solar grade polysilicon at Moses Lake, and 2,000 MT of electronic grade polysilicon at Butte. The Moses Lake facility was shut down in mid-2019 when China imposed tariffs on U.S.-made polysilicon, in retaliation for tariffs slapped on Chinese-made solar panels in 2013. 

Hanwha made an initial $160 million investment in January for a 16.67% stake in REC Silicon. It became REC Silicon's largest shareholder in mid-March by acquiring an additional 4.67% stake from Aker Horizons in a deal valued at around $44 million.

GO DEEPER: Former SEIA CEO Rhone Resch, Heliene president Martin Pochtaruk, and Ultra Low-Carbon Solar Alliance executive director Michael Parr discussed how to scale domestic solar manufacturing in a recent episode of the Factor This! podcast.

Mississippi Silicon is the first new silicon metal facility in North America in 40 years. Located in the northeast corner of the state the plant is located to take advantage of an expanding domestic customer base, low-cost electricity and a regional supply chain. 

"We are pleased by the growing recognition of the importance of a strong end-to-end US supply chain for these materials," Mississippi Silicon CEO Eddie Boardwine said. "Passage of the SEMA Act makes bringing that supply chain to reality. We look forward to working with REC Silicon to strengthen our existing relationship and build out that vital supply chain.”

Following the passage of the Inflation Reduction Act, the solar industry's leading trade group released a roadmap to reach 50 GW of domestic solar manufacturing capacity by 2030.

While the U.S. currently has the capacity to produce metallurgical grade silicon, polysilicon, steel, aluminum, resins, racking, and mountings, there is no domestic solar ingot, wafer or cell manufacturing capacity and only modest capacity to produce solar modules, inverters, and trackers, according to the Solar Energy Industries Association (SEIA) report.

The SEIA roadmap suggests a "downstream-to-upstream" approach to scaling domestic solar manufacturing. Domestic manufacturers should first focus on scaling module capacity over the next 2-3 years before taking on manufacturing capacity for ingots, wafers, and cells.

One exception to the plan, however, is the restarting of existing polysilicon factories, like REC Silicon's facility in Moses Lake, SEIA said.