The U.S. module manufacturing market’s ride the last few years is the perfect example of the infamous solarcoaster. Just as quickly as companies like Schott, Solyndra, Solon, Suntech, Suniva and Stion (is it an S thing?) went bankrupt or exited the U.S. market, many significant manufacturers made announcements in 2018 that they’re setting up shop in the United States. To say this is a direct result of the 30% tariffs enforced on imported crystalline silicon (c-Si) solar panels is premature, according to many of those entering the United States. U.S. demand is enough that companies are building new facilities exceeding what Suniva and SolarWorld (previously the country’s largest c-Si manufacturers) were producing at their peak. Tariffed or not, the United States needs more panels, and major global brands are ready to step in.
Once a company decides manufacturing in the United States is a good move, the question is then whether to build a new facility or work with an established original equipment manufacturer (OEM). Smaller Made-in-USA brands like Lumos Solar and CertainTeed Solar manufacture panels through an OEM in California. Others are choosing to go it alone in new plants.
SunPower picked up an easy win with its soon-to-be-completed acquisition of SolarWorld’s Hillsboro, Oregon, relatively up-to-date assembly facility that was previously rated at 530 MW. The capacity may change once SunPower switches production over to its P-series modules and new Next Generation Technology process, but the major bones of the plant are all there.
Canada’s Heliene is also retrofitting two former panel production facilities in Minnesota and Oregon. Heliene was at first going the OEM route and producing panels in the Minnesota plant under Silicon Energy ownership. When Silicon Energy tanked, the Minnesota government asked Heliene if it would step in and maintain employment. Heliene president Martin Pochtaruk said 60% of the Canadian company’s 2017 sales came from the United States, so the idea to take over an entire 140-MW plant wasn’t a big stretch.
“We have had a presence in the U.S. market since 2010. We aren’t coming in not knowing who we’re going to sell to,” he said. “Right now we’re in an aggressive position. There is clearly a demand that can be supplied with a U.S.-made product.”
The U.S. solar market installed 10.6 GW of new solar in 2017 and should finish 2018 with another 10 GW. If every c-Si and thin-film manufacturer in production today in the United States was producing at full capacity, the country might be lucky to have 4 GW of domestic product—not even meeting half the demand.
The U.S. module manufacturing market is ripe with opportunity. Companies just have to choose the best plan of attack.
When an OEM is best
Solar installers may not be familiar with Auxin Solar panels, manufactured in a 100,000-sq ft facility in San Jose, California. That’s because only a small amount of Auxin-branded panels are made there; 90% of the 150-MW capacity plant is used by other names. Company president Mamun Rashid said Auxin Solar originally wanted to produce its own unique modules for cheap in Asia, but a lower price often means lower quality, so Auxin decided to work in the United States and open its doors as an OEM.
“We quickly realized the quality issues in Asia,” Rashid said. “Looking at the solar panel as a 25-year product, we found it unacceptable. So in 2008, we examined the business plan to find out what it would take to set up in the United States.”
Rashid and his partners thought there’d be future demand for Made-in-USA, high-quality solar panels. And after reading a report that expected a need for international companies to set up regional manufacturing because of high shipping costs, they banked on that happening in the solar industry. Foreign companies would soon need a place to make U.S. modules, and Auxin Solar wanted it to happen in its California plant.
“Being a commodity product, we didn’t want to spend resources on branding recognition and inside sales,” Rashid said. “We were happy to divert our resources to better manufacturing processes and lowering the cost of production. That’s why we quickly changed to OEM for other people in the United States.”
Some of Auxin Solar’s early OEM work came from Asian Tier 1 companies that were large enough to win U.S. government or military projects that required Made-in-USA product. The brands would be assembled in the Auxin Solar facility to reach compliance. Today’s OEM jobs are wide-ranging, from a panel company that needs extra help making a big order for a U.S. utility-scale project, to manufacturers just getting started that only want a few megawatts each year. Rashid said the company works with between 12 and 18 brands and has the ability to manufacture many different panel technologies. Lines can switch from 60-cell to 72-cell or bifacial to traditional within two hours.
“That’s why we exist and why we can handle all these different types,” he said. “That’s what we’ve perfected. All of our lines are custom-designed by us. We’ve bought equipment from Germany, Italy, Asia, but we build to our design.”
Rashid said he’s pleased with the decision to mostly source Auxin Solar’s facility out to other brands. He has consistently steady work for 60 employees on two shifts. Just as solar installation is seasonal, panel manufacturing flows the same. More panels might be needed to reach Q4 deadlines while production slows in Q2. A manufacturer using its own facility will have busy times and down times, but it is paying for that building the whole year. Auxin Solar as an OEM house works its contracts to stay occupied 12 months of the year.
“Because I’m doing many different products at different times of year, I don’t have that run rate risk,” Rashid said. “It’s easy enough to buy equipment [and start a manufacturing facility]. But it’s a whole different story keeping operation costs low.”
Auxin Solar is a solar manufacturing success story that Charles Bush hopes to repeat in Richmond, Virginia. Bush bought a 16,000-sq-ft former die plant in Richmond and spent $1.2 million to set it up as a panel assembly facility, and he’s actively looking for manufacturers to partner with.
Bush knows the solar industry well. He owns the installation company Off Grid By Design and works on both grid-tied and off-grid projects in Virginia. Because of the “Off Grid” name, Bush said he receives a lot of calls from people looking for 12-volt solar panels. With no good U.S. products to suggest, Bush decided to make them himself. That’s why he set up the Richmond plant (called Solar Electric America), and he’s also reached out to Tier 1 manufacturers to assemble in his facility.
“Just by putting frames and junction boxes on, it becomes assembled in America,” Bush said. “I can put panels out at $0.50/W, and they’re assembled in America.”
Although Solar Electric America has been up and running for almost a year and a half, not much activity is currently happening at the 60-MW capacity facility. Bush is hoping to score some partnerships at Solar Power International later this month.
For larger companies looking to play with more than 150 MW of capacity, starting a new production facility is a smart move. Jeff Juger, director of business development with JinkoSolar, said the company’s decision to build its own facility in Jacksonville, Florida, rather than partner with an OEM was because JinkoSolar’s volume goals for the United States would have exceeded the abilities of existing OEMs and limited the company’s future ambitions. As the world’s No. 1 module supplier, JinkoSolar has no worries about keeping its new 400-MW U.S. plant busy; the company signed a 2.75-GW supply deal with NextEra Energy and a 1.43-GW supply contract with sPower earlier this year.
“JinkoSolar has been one of the market leaders in U.S. module sales, and the Florida factory will support part of that volume. Demand in the U.S. will greatly exceed the factory capacity,” Juger said. “Although the impact from tariffs should not be understated, proximity to demand and ability to offer local products with local service are strong motivators [for moving into the United States].”
The Florida facility will support 200 jobs and panels should begin shipping before the end of the year. JinkoSolar did evaluate existing U.S. solar facilities during site selection, but the company ultimately decided to build from scratch.
“JinkoSolar is setting up a state-of-the-art facility in the United States,” Juger said. “JinkoSolar has very high standards for manufacturing processes and product efficiency, which make it difficult for older facilities to meet the company’s requirements. Occupying another facility might have meant tearing out outdated or irrelevant infrastructure first. The added cost of such a step became unnecessary when the company found a good building to customize in Jacksonville.”
John Taylor, senior VP of public affairs and communications for LG Electronics USA, said something similar when explaining why LG decided to build its own 500-MW manufacturing plant in Alabama.
“We have our own secret sauce, with the Cello technology and high-performance panels,” Taylor said. “We believe that we are in a good place in terms of our product and technology leaderships, and it didn’t make sense to partner with others.”
The primary goal of the LG Alabama plant is to serve the U.S. market. Even with a 500-MW capacity and over 1 million panels expected to be made each year, LG’s demand is so high in the United States that additional modules will need to be imported. The company is a top panel provider in both the residential and commercial markets.
“It’s a prudent business decision to begin manufacturing solar modules in the United States, especially in the current environment that we’re spending 30% duties on imported panels,” Taylor said. “There’s a lot to be said of being in the same time zone as your customers.”
LG didn’t have to search too long for a U.S. location to manufacture solar panels. The company had an empty building on its Huntsville, Alabama, campus that once built color television sets. LG decided a facility once used for an old technology was a perfect fit for new solar production.
“It’s coming full circle in Huntsville, by launching our latest manufacturing operation, this time for a 21st century technology,” Taylor said. Huntsville is home to NASA’s Marshall Space Flight Center and has a deep high-tech employment pool. LG isn’t worried about finding 160 highly trained and technical workers in the area. LG’s NeON 2 line of monocrystalline modules will begin shipping from the Alabama plant by Q1 2019.
Both JinkoSolar and LG have ideal business plans to succeed in the U.S. market. South Korea’s Hanwha Q CELLS, which primarily supplies modules for utility-scale projects, is thinking even bigger with its planned 1,600-MW module plant in Georgia. Even with these three major announcements from foreign companies, there’s still plenty of room for more manufacturers to join in on the fun.
“The market is big. There is space for everybody,” said Heliene’s Pochtaruk. “Let’s see who actually does it. We don’t make big announcements; we just build solar.”
Check out our list of current and announced U.S. panel assembly facilities on our special page, and click around on our map of locations.