Qcells Plans Largest Clean Energy Manufacturing Investment In US History

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A few days ago, the Atlanta Journal Constitution reported that Qcells, the solar panel manufacturing division of South Korea’s Hanwha, was planning to make a major investment in new factories in Georgia, a move the AJC called “the largest clean energy manufacturing investment in U.S. history.” Now the news is official. Qcells says it will build two new US factories, one in Cartersville and the other near an existing facility in Dalton, Georgia. The Cartersville factory will be used primarily to convert raw silicon into polysilicon which will then be turned into ingots. Those ingots are then sliced into wafers that are converting converted into the solar cells that make solar panels or modules. When complete, the two new Qcells factories are expected to employ more than 2,600 workers.

The big story here is that the vast majority of the steps needed to make a solar panel — from producing raw silicon to solar cells — take place in China today. Qcells has been talking about expanding its operations in Georgia for over a year, but what got it to move forward was the Inflation Reduction Act passed by Congress last August. Under the 45X production tax credit structure created by the IRA, each domestically produced part of the solar manufacturing process will receive its own tax benefits, Scott Moskowitz, head of market strategy and public affairs for Qcells, tells Canary Media.

Solar modules and cells will receive 7 cents and 4 cents per watt of generation capacity, respectively. Crystalline silicon wafers and ingots, solar grade polysilicon, and silicon metal will receive credits based on the volume of production. The goal of this tax credit structure, first put forward by Georgia senators Jon Ossoff and Raphael Warnock and known as  the Solar Energy Manufacturing for America Act, is to make each stage of the solar production process cost competitive with materials and products coming from overseas.

“All these credits stack,” Moskowitz says, with each stage in the process adding tax credit value to the final product. Taken together, they could cover about half the cost of producing a solar panel. “What SEMA was designed to do is make U.S. solar manufacturing and products competitive with anyplace in the world,” Moskowitz adds.

Securing The Solar Panel Supply Chain

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Credit: National Renewable Energy Lab

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With China controlling most of the world’s supply of solar panel raw materials and components, creating a US-based supply chain is no easy feat. Over the past two decades, China has invested tens of billions of dollars to cement its dominance in crystalline silicon solar production. It now hosts about 80% of global polysilicon production, almost all production of silicon ingots and wafers, 85% of solar cell manufacturing and 75% of solar panel manufacturing, according to International Energy Agency data.

The Cartersville plant, located about 55 miles outside Atlanta, will source polysilicon to be converted into wafers from the REC Silicon plant in Washington state. Qcells’ parent company, Hanwha Group, invested $160 million into that facility in 2022 and plans to restart the factory in the second half of 2023REC Silicon, in turn, plans to source the needed raw ingredient, high-purity silicon metal, from operations in Alabama, Ohio, and West Virginia owned by London-based Ferroglobe and from Mississippi Silicon in Mississippi. In the US, only Fist Solar has such a vertically integrated solar panel production capability. “We’re the only company at the moment manufacturing products from raw materials to finished solar systems” in the US, Moskowitz says.

Qcells began expanding its Dalton factory last year, but this new $2.5 billion investment will see a further expansion of its solar cell and module production line there, adding 2 gigawatts to its current 3.1 gigawatt production capacity. The combined production capacity of both Georgia plants will be 8.4 gigawatts when they’re completed in 2024. That’s a massive expansion, considering that the US had a total of 11 gigawatts of solar panel and module capacity as of last year. Globally about 500 gigawatts of solar panels and modules were produced last year, mostly in China.

Georgia & South Korea

Georgia opened a trade office in Seoul, South Korea, in 1985. Several governors of Georgia have visited South Korea. In 2019, Brian Kemp made South Korea his first overseas visit as governor, emphasizing the importance of the partnership. In 2006, Kia Motors announced it would build its first US factory in West Point near the Alabama border. That project mushroomed into thousands of jobs across not only the Kia plant, but the campuses of dozens of suppliers, according to the Atlanta Journal Constitution.

SK Innovation announced its first battery factory in Georgia in 2018. Then last May, Hyundai announced it would build a  $5.54 billion factory to manufacture electric cars. Just before the end of 2022, Hyundai and SK Innovation announce a joint venture that will build a battery factory in Georgia. Today, South Korea is the 10th largest export market for Georgia, and Georgia’s imports from Korea totaled $8.83 billion in 2021.

The IRA provides $10 billion in tax credits for building new solar manufacturing facilities, plus $30 billion for US manufacturers to make components for solar panels, batteries, wind turbines, and to process the minerals needed for renewable energy technologies and electric vehicles. The law also extended a 30% income tax credit for rooftop solar for 10 years and offers a credit for battery systems that store excess energy when the sun isn’t shining.

While many electric utilities are still heavily reliant on natural gas for generation, many — particularly in the southern half of the country — are turning to solar as they shutter uneconomical coal-fired power plants and attempt to reduce greenhouse gas emissions that are causing climate change.

After two years of supply chain disruptions that caused significant delays and cost increases for US solar developers, and with the US engaged in multiple trade disputes with China that could disrupt future supplies of solar materials from that country, there are good reasons beyond tax credits for solar companies to invest in US manufacturing capacity, Moskowitz said. “I personally don’t think there’s anything that disadvantages the U.S. from being the leading manufacturer in this sector,” Moskowitz says. ​“Yes, the U.S. has higher labor rates and environmental standards than other countries. But that’s what this type of legislation and these types of trade policies are meant to address.”

The Takeaway

The Inflation Reduction Act isn’t perfect. It is the quintessential amalgam of enlightened self interest and raw political power, but it is turbocharging investments in clean energy technologies in America. Despite its flaws, it is creating ten of thousands of new jobs in industries America desperately needs to transition away from traditional sources of electricity generation that rely on fossil fuels.

Trade wars are easy to win, one former president boasted, and then went about proving it wasn’t so easy after all. The Inflation Reduction Act is creating investments that will make America more competitive and less reliant on other countries for its most essential needs.

 

 

 

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