An Italian company announced plans to build a $1 billion solar factory in Oklahoma on Monday, shaking up the industry as its growth path is uncertain and some of its key incentives face pushback in Congress.
Enel North America said that its affiliate 3Sun USA would make solar panels and cells at the new facility in Inola, Okla., beginning in 2024. Up to 3 gigawatts of panel capacity could be manufactured at the plant the following year, with that number rising to 6 GW in subsequent years, it said.
The factory could become one of the country’s first to produce crystalline silicon solar cells — a key component in most panels that has not been made at commercial scale in the United States for several years. Most components for solar panels currently are imported.
The $1 billion is one of the largest solar manufacturing deals since passage of the Inflation Reduction Act, suggesting the way U.S. panels are produced is starting to shift. It also comes as the industry faces key trade and financial decisions from the Biden administration that could influence its future.
According to the Solar Energy Industries Association, newly announced factories representing more than 56 GW of solar panel capacity have been touted by manufacturers since the law was passed. That’s roughly 10 times the current U.S. panel production capacity, according to estimates from the National Renewable Energy Laboratory.
Giovanni Bertolino, head of 3Sun USA, said in a press release that the announcement marked “a major step forward in developing a state-of-the-art PV factory” that would move Oklahoma “to the forefront of renewables manufacturing.”
The announcement was welcomed by President Joe Biden, who released a statement calling Enel’s plans “the latest proof that my Investing in America agenda is working, and American manufacturing is back.”
“Because of my Inflation Reduction Act, private capital is being invested in Oklahoma and all across the country, as communities step up to help build our clean energy economy,” said Biden.
Yet the solar industry is facing numerous headwinds.
The Commerce Department is expected to decide in August whether it will extend tariffs on Chinese solar imports to those made in four Southeast Asian countries, a possibility that solar developers say says would thwart growth.
In late April, House Republicans also voted to raise the debt ceiling as part of a measure that would have eliminated billions in clean energy tax breaks, although the bill stands little chance of passing the Senate.
Abby Ross Hopper, CEO of the Solar Energy Industries Association, cited the House bill during a webinar last week, saying keeping the Inflation Reduction Act intact “will require a sustained effort by the whole SEIA team.”
“While the [Biden] administration has made it extremely clear they won’t entertain any rollback of this historic legislation, keeping the IRA the law of the land is SEIA’s highest priority,” said Hopper.
With potential tariffs, Commerce ruled in favor of enacting them in a preliminary finding in December 2022. It found that four major Chinese cell and panel companies were skirting existing tariffs by exporting from Southeast Asia. Roughly three-quarters of the United States’ solar panel and cell imports originate there.
Biden has moved to shield solar developers from any resulting tariffs via a two-year reprieve that was praised by trade groups like SEIA. But the reprieve is unpopular among members of both parties in Congress. This month, a Republican-sponsored resolution calling for the reprieve’s reversal passed with support from several Democrats in both chambers, before Biden vetoed it.
Overall, the solar sector is still struggling to take off in the way that many analysts say will be necessary to address climate change. In a report Monday, the American Clean Power Association said clean energy installations, including for utility solar, declined for the first time in five years.
In March, SEIA and market research firm Wood Mackenzie released a report finding that utility-scale solar installations fell 31 percent in 2022, due to the Commerce probe as well as detainments of solar imports by customs officials seeking verification that the equipment was not made with forced labor.
A ‘pivotal factor’
DOE has said solar may need to become the United States’ central power resource in order to reach the Biden administration’s climate goals.
By 2035, for instance, roughly 760 to 1,000 GW of solar will need to be deployed in the United States in order to decarbonize the grid by then, DOE said in a 2021 study.
That is at least five times more than the 142 GW of solar capacity online in the United States at the end of 2022, according to SEIA data.
On the manufacturing side, Enel alone could more than double the volume of domestic-made solar panels.
Approximately 5 GW of photovoltaic panels were produced in the United States last year, according to an April industry update from the National Renewable Energy Laboratory.
That’s less than the annual 6-GW production capacity targeted by Enel for its planned facility in Oklahoma. Bertolino of 3Sun USA said the Inflation Reduction Act had encouraged his company to think bigger.
The company had begun planning a U.S. solar equipment factory before the Inflation Reduction Act, he said in an emailed statement. But the law’s passage was “a pivotal factor in the company’s decision” to aim for a 6-GW annual capacity rather than 3 GW, he added.
Bertolino said Enel expected to pursue the 45X advanced manufacturing production tax credit for panels and cells made at the Oklahoma factory. That credit, established in the Inflation Reduction Act, is available for production of a range of solar equipment, including precursor components like polysilicon and wafers.
Bertolino did not say directly whether developers that buy panels from the Oklahoma factory would be able to claim a 10 percent bonus laid out in the Inflation Reduction Act to reward projects that use U.S.-made equipment.
The Treasury Department released guidance earlier this month laying out a complex series of calculations for determining eligibility. Bertolino said his company was still evaluating the guidance.
This story also appears in Climatewire.