First Solar (FSLR) is making a $1.2 billion investment into expanding its factory footprint in the U.S., providing a tailwind to President Biden’s push to accelerate domestic manufacturing and reduce America’s reliance on Chinese supply chains.
The largest solar manufacturer headquartered in the U.S., First Solar plans to invest $1 billion in a new fully vertically integrated factory based in the Southeast and an additional $185 million for upgrading and expanding its existing footprint in northwest Ohio.
The move allows the company to expand its solar capacity in the U.S. to 10 gigawatts over the next three years — enough to produce a solar panel every 1.6 seconds, according to First Solar CEO Mark Widmar.
“This expansion is an important step towards achieving self-sufficiency and solar technology which in turn supports America’s clean energy security ambitions, its deployment of solar at scale, and its ability to lead with innovation,” Widmar told Yahoo Finance.
The announcement comes after the Inflation Reduction Act (IRA) became law, securing billions of dollars in tax incentives to accelerate the U.S. transition to green energy. The bill sets aside roughly $30 billion in production tax credits for solar panels, wind turbines, batteries, and critical minerals procession, in addition to a $10 billion investment tax credit to build clean technology manufacturing facilities such as those for solar panels.
“Because of the decision that was made for the passage of the IRA, we are prioritizing the U.S. market,” Widmar said. “You know, we believe that with the IRA, we have a durable industrial policy foundation, one that we’ve long been advocating for. It’s comprehensive and this foundation will enable the solar industry as a whole.”
First Solar stock soared roughly 25% in the last month, largely on the passage of the IRA. The momentum prompted BofA Securities to upgrade the stock for a second time this month, estimating that the company will receive up to 17 cents per watt in tax credits for its production of solar panels. In a recent note, analyst Julien Dumoulin-Smith said the credits would add more than $3 billion in cash to the company’s balance sheet by 2026.
In its latest earnings results, First Solar announced a record bookings backlog of 44.3 GW.
Widmar did not specify the amount of incentives company would be eligible for but said he believed the company would be “entitled to the entire production process” in part because it specializes in thin film PV modules — unlike its competitors that largely source crystalline silicon PV cells, a critical component of solar panels imported from China and southeast Asia.
Globally, China maintains a tight grip on solar panel production, with more than 70% of the world’s polycrystalline silicon manufactured there. More than half of that production has come from the troubled Xinjiang region, where the U.S. has accused China of carrying out a genocide.
First Solar already has two operating facilities in Perrysburg and Lake Township, Ohio. Its third Ohio factory is set to be commissioned in the first half of 2023, Widmar said, and a Arizona-based firm had narrowed down the site of its fourth facility to a “small number of states” and hoped to finalize a location by the end of the third quarter.
First Solar estimates that the new investment will create 850 new manufacturing jobs, bringing its total workforce to more than 3,000 people in the U.S. by 2025.
“We always look across many different dimensions for a site selection, including the workforce, the quality of the labor force, the proximity to our supply chain partners, ability to get access to power generation and competitive power prices,” Widmar said. “It’s a comprehensive balanced scorecard that really has to ensure not just near term but long term strategic objectives that we would envision for our manufacturing facility.”
Akiko Fujita is an anchor and reporter for Yahoo Finance. Follow her on Twitter @AkikoFujita