Solar

First Solar: IRA domestic content details will drive expansion decisions

First Solar: IRA domestic content details will drive expansion decisions
First Solar's module manufacturing facility in Ohio (Courtesy: First Solar)

The U.S. solar industry is awaiting details on federal incentives for domestically produced solar modules, part of the Inflation Reduction Act.

Among those waiting is the CEO of First Solar, who said during an April 27 earnings call that the company will rely on rules from the Treasury Department to help guide its future domestic expansion plans.

The Inflation Reduction Act provided a 10% adder to the Investment Tax Credit for projects that utilize domestic content. Treasury is expected to issue guidance soon as to which components need to be manufactured in the U.S. in order to qualify.

Mark Widmar, the First Solar executive, said he believes the Section 45X tax credit should, at least, require domestic production of the cell. He said that stipulation will be a "key determining factor" as to whether First Solar continues to expand its U.S. manufacturing footprint.

If Treasury does not require domestic cell production to qualify for the adder, and instead rewards module assembly, Widmar speculated that First Solar could potentially invest in new module finishing lines instead of factories.

"If that's (Treasury's) decision, then we'll have to assess that from our own perspective and determine what investments we make," Widmar said. "I would be very disappointed if that's the direction that they went."

GO DEEPER: Aaron Bates, CEO of the U.S.-based cadmium telluride solar manufacturer Toledo Solar, joined Episode 31 of the Factor This! podcast to discuss "untruths" in domestic manufacturing, CdTe technology, and the impact of the Inflation Reduction Act. Subscribe today wherever you get your podcasts.

First Solar announced in November plans to build a $1.1 billion, 3.5 GWdc factory in Alabama, its fourth U.S. solar module manufacturing facility. 

The new factory is part of a previously announced investment in scaling First Solar’s American manufacturing footprint to more than 10 GWdc by 2025.

The planned factory in Lawrence County, west of Huntsville in the northern part of the state, is expected to be commissioned by 2025. It would join three factories in Ohio, including one that is scheduled to come online in the first half.

“The passage of the Inflation Reduction Act of 2022 has firmly placed America on the path to a sustainable energy future,” Widmar said at the time.

First Solar booked 4.8 GWdc of orders in the first quarter of 2023, bringing the company's expected volume sold backlog to 71.6 GWdc, the company said in its earnings call. Widmar said First Solar's capacity is sold out through 2026, and 2027 capacity is around 40% sold so far.

Project developers are quick to celebrate securing supply agreements with First Solar as the focus on sustainably-sourced and domestically-produce modules rises in importance.

Since October 2022, First Solar landed multi-gigawatt supply orders from Swift Current Energy, Silicon Ranch, and Lightsource bp, each of which issued press releases cheering the deals. Leeward Renewable Energy announced a 2-year, 2 GW order with First Solar on April 27.

Few manufacturers receive such fanfare from supply agreements, and project developers often don't disclose which modules they use.