US solar factory plans soar to 47 GW; EU officials agree higher renewable energy target

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Suppliers pledge 47 GW of new US module factories

Solar companies have announced plans for 47 GW of new U.S. module manufacturing capacity over the last year on the back of new tax credits in President Biden's Inflation Reduction Act and other government policies, the Solar Energy Industry Association (SEIA) said in a statement on March 30.

The U.S. had around 8 GW of module manufacturing capacity in 2022 and is on track to triple capacity to 22.5 GW by 2024, the White House said last year.

The surge in new factory announcements means the SEIA's goal of 50 GW of domestic capacity by 2030 is now "within reach," the industry group said, noting that not all of the planned factories will be built.

"Regionally, Georgia, South Carolina, and Ohio are quickly becoming hubs for solar manufacturing, and Americans in these states will see a lot more job opportunities and local investments in their communities," SEIA said.

Solar developers are now typically coupling new projects with battery storage and suppliers have announced over 100 GWh of battery manufacturing capacity, it said.

Most U.S. solar developers source their solar panels from Asia, but import tariffs, customs delays, and soaring global demand has pushed up prices and delayed projects. U.S. solar installations must triple to 60 GW/year by the middle of the decade to meet the President's climate goals, the Department of Energy (DOE) said in a report in 2021.

The inflation act extends tax credits for solar developers by 10 years and includes investment tax credits (ITCs) and production tax credits (PTCs) for clean technology manufacturing.

Recent factory announcements include Hanwha Q Cells' plan to invest $2.5 billion to build a solar power manufacturing value chain in the U.S. state of Georgia that will increase the South Korean firm's production capacity in the U.S. from 1.7 GW to 8.4 GW by 2024.

U.S. upstream solar manufacturing capacity lags far behind its module output, requiring huge investments in the production of solar cells, wafers and ingots to create a domestic supply chain. Companies are starting to invest more in these areas, SEIA said.

"Enel, Qcells and Silfab have announced efforts to manufacture solar cells in the United States, and ingot wafer manufacturers are also readying efforts to launch domestic capacity," the industry group said.

Investments in new U.S. polysilicon factories will also be required, along with the repurposing of existing facilities, so a truly domestic supply chain remains many years away.

US renewable energy output surpasses coal, nuclear combined

U.S. renewable energy generation surpassed coal and nuclear combined for the first time in 2022 on new solar and wind installations, the Energy Information Administration (EIA) said on March 27.

Renewable energy accounted for 21% of total generation, including solar, wind, hydropower, biomass and geothermal. Solar and wind combined represented 14% of total output, up from 12% in 2021, and is expected to hit 17% this year, EIA said.

Natural gas remained by far the largest source of generation, rising to 39% of total output, compared with 37% in 2021. The share of coal-fired generation fell by three percentage points to 20% in 2022, due to plant retirements and lower usage at existing plants. The share of nuclear generation slipped by one percentage point to 19% following the closure of the 800 MW Palisades nuclear power plant in Michigan in May 2022.

                             Share of US power generation - top three states

                                                                       (Click image to enlarge)

U.S. utility-scale solar capacity was 71 GW at the end of 2022, while wind capacity was 141 GW, EIA said.

EU officials agree to hike 2030 renewable energy target

European Union officials agreed on March 30 to set a target of 42.5% of gross energy consumption from renewable energy by 2030 with a potential top-up to 45%.

The provisional deal, clinched by European Parliament and Council negotiators, commits the 27 EU countries to accelerated renewable energy targets set out by the European Commission in order to end Europe's reliance on Russian oil and gas. The EU sourced 22% of its energy from renewable energy in 2020 and had previously set a target of 32% by 2030.

                 Share of gross energy from renewables in EU in 2020

                                                             (Click image to enlarge)

Source: Eurostat (European Commission)

The agreement, which must be approved by the EU Parliament and EU countries to become law, follows a flurry of EU interventions designed to accelerate renewable energy deployment and manufacturing.

EU renewable energy companies will be able to receive as much funding as U.S. green energy subsidies under a temporary loosening of state aid rules set out by the European Commission (EC) on March 9. The move aims to counter competition from the U.S. and China. President Biden's 2022 Inflation Reduction Act provides $369 billion of green subsidies, including tax credits that increase the profitability of U.S. solar and wind projects as well as new manufacturing facilities.

Until the end of 2025, EU member states will be able to provide funding to companies that matches the level offered in other locations, or sufficient funding to persuade the company to invest in Europe, the EC said. National governments will also be allowed to provide more types of support to renewable energy projects.

The EC has also proposed a new Net Zero Industry Act that sets a target of 40% of renewable energy components from EU factories by 2030 and domestic content rules in renewable energy tenders that favour EU products.

The rules form part of the EC's Green Deal Industrial Plan to mobilise state aid and EU funding for clean technology companies and accelerate the construction of new manufacturing facilities.

The EU has also agreed emergency regulations that speed up solar and wind permitting and laid out draft market reforms that aim to protect consumers against volatile wholesale prices and make it easier for all business customers to sign long-term power purchase agreements (PPAs) with generators.

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