Tuesday, May 01, 2012
[IWS] CRS: U.S. SOLAR PHOTOVOLTAIC MANUFACTURING: INDUSTRY TRENDS, GLOBAL COMPETITION, FEDERAL SUPPORT [27 April 2012]
IWS Documented News Service
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Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
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Congressional Research Service (CRS)
U.S. Solar Photovoltaic Manufacturing: Industry Trends, Global Competition, Federal Support
Michaela D. Platzer, Specialist in Industrial Organization and Business
April 27, 2012
http://www.fas.org/sgp/crs/misc/R42509.pdf
[full-text, 33 pages]
Summary
Every president since Richard Nixon has sought to increase U.S. energy supply diversity. In
recent years, job creation and the development of a domestic renewable energy manufacturing
base have joined national security and environmental concerns as rationales for promoting the
manufacturing of solar power equipment in the United States. The federal government maintains
a variety of tax credits, loan guarantees, and targeted research and development programs to
encourage the solar manufacturing sector, and state-level mandates that utilities obtain specified
percentages of their electricity from renewable sources have bolstered demand for large solar
projects.
The most widely used solar technology involves photovoltaic (PV) solar modules, which draw on
semiconducting materials to convert sunlight into electricity. By year-end 2011, the total number
of grid-connected PV systems nationwide reached almost 215,000. Domestic demand is met both
by imports and by about 100 U.S. manufacturing facilities employing an estimated 25,000 U.S.
workers in 2011. Production is clustered in a few states, including California, Oregon, Texas, and
Ohio.
Domestic PV manufacturers operate in a dynamic and highly competitive global market now
dominated by Chinese and Taiwanese companies. All major PV solar manufacturers maintain
global sourcing strategies; the only U.S.-based manufacturer ranked among the top ten global cell
producers in 2010 sourced the majority of its panels from its factory in Malaysia. Some PV
manufacturers have expanded their operations beyond China to places like the Philippines and
Mexico. Overcapacity has led to a significant drop in module prices, with solar panel prices
falling more than 50% over the course of 2011. Several PV manufacturers have entered
bankruptcy and others are reassessing their business models. Although hundreds of small
companies are engaged in PV manufacturing around the world, profitability concerns appear to be
driving consolidation, with ten firms now controlling half of global cell and module production.
The Department of Commerce and the U.S. International Trade Commission are investigating
allegations that U.S. producers have been injured by dumped and subsidized imports from China.
If significant duties are ultimately imposed, U.S. production could become more competitive with
imports, but the cost of installing solar systems might rise. On the other hand, a number of federal
policies that have helped to spur domestic demand for solar PV products have expired or reached
their funding limits. These include the 1603 cash grant program and the advanced energy
manufacturing tax credit; S. 591, which would extend the credit, has been introduced in the 112th
Congress. Under current law, the Investment Tax Credit for PV systems will sunset at the end of
2016.
The competitiveness of solar PV as a source of electric generation in the United States will likely
be adversely affected both by the expiration of these tax provisions and by the rapid development
of shale gas, which has the potential to lower the cost of gas-fired power generation and reduce
the cost-competitiveness of solar power, particularly as an energy source for utilities. In light of
these developments, the ability to build a significant U.S. production base for PV equipment is in
question.
Contents
Introduction...................................................................................................................................... 1
Solar Photovoltaic (PV) Manufacturing .......................................................................................... 3
Historical Overview................................................................................................................... 4
The Manufacturing Process....................................................................................................... 5
Production Locations................................................................................................................. 9
Domestic Production ............................................................................................................... 10
U.S. Solar Manufacturing Employment .................................................................................. 14
Global Production Shifts................................................................................................................ 15
U.S. Trade in Solar Products.......................................................................................................... 19
Allegations of Dumped and Subsidized Solar PV Products from China .......................... 20
Domestic Content.............................................................................................................. 21
U.S. Exports ...................................................................................................................... 21
U.S. Government Support for Solar Power ................................................................................... 22
Advanced Energy Manufacturing Tax Credit (MTC) ....................................................... 23
DOE Loan Guarantee Programs........................................................................................ 23
Investment Tax Credit (ITC) ............................................................................................. 25
SunShot and Other Department of Energy Initiatives ............................................................. 26
Conclusions.................................................................................................................................... 26
Figures
Figure 1. PV Value Chain ................................................................................................................ 8
Figure 2. U.S. PV Installations and Global Market Share ............................................................. 10
Figure 3. U.S. Cell/Module and Polysilicon Production Facilities................................................ 12
Figure 4. Domestic Solar Industry Employment Trends ............................................................... 14
Figure 5. Average Price of PV Cells and Modules ........................................................................ 16
Figure 6. Annual Solar Cell Production by Country...................................................................... 17
Tables
Table 1. Cell and Module Production in the United States............................................................ 10
Table 2. Selected Recent PV Facility Closures.............................................................................. 12
Table 3. Selected New or Planned PV Plants................................................................................. 13
Table 4. Top PV Cell Manufacturers by Production ...................................................................... 18
Table 5. U.S. Imports of Solar Cells and Modules, Select Countries ............................................ 20
Table 6. 1705 Loan Guarantees for Solar Generation and Manufacturing Projects ...................... 24
Table A-1. Solar PV Manufacturers Receiving a 48C Manufacturing Tax Credit......................... 28
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