Although Germany has traditionally dominated the photovoltaics end-use market, PV industry players see tremendous growth potential in the United States, where the utility market is considered particularly attractive. “The U.S. market is poised for substantial growth that’s expected to be the largest in the world,” commented Gordon Brinser, vice president of operations at SolarWorld Industries Americas Inc.
Gordon Brinser, vice president of operations, SolarWorld Industries AmericasSolarWorld, whose global headquarters are in Bonn, Germany, is one PV device manufacturer that has brought at least some of its production to the United States over the past several years. In late 2008, SolarWorld opened North America’s largest solar cell manufacturing facility, a 500 MW facility in Hillsboro, Ore.
Brinser spoke during yesterday’s North American PV Fab Managers Forum at Intersolar about the impetus behind expanding into the North American market. SolarWorld’s decision to locate in the United States was dependant on several factors, he said, including proximity to key markets, state and local incentives, a fast ramp to 500 MW, and a skilled workforce.
Manufacturing in close proximity to key markets is a significant factor, Brinser said, noting the ability to work directly with end customers to enable quick and correct solutions, faster improvement cycle times to market and feedback from customers, and lower inventory costs.
The lower shipping costs that come about from closer proximity to end markets is not inconsequential because of the considerable weight of the solar panels, noted Julie Blunden, executive vice president, public policy and corporate communications for SunPower.
Julie Blunden, executive vice president, public policy and corporate communications, SunPowerBlunden also spoke at the PV Fab Managers Forum, but from a different perspective, given that SunPower is a California-based company that has traditionally done its manufacturing in Asia. SunPower has encountered substantial shipping costs from Asia, she said, and also a substantial hit in time as panels spend weeks being shipped across the ocean. So it was a meaningful decision to start building solar panels in the United States.
SunPower has committed to doing exactly that, with plans to begin production by this fall in Milpitas, Calif., just down the road from its San Jose-based headquarters. SunPower is partnering with Flextronics Inc. to produce 75 MW of solar panels annually at Flextronics’ facility.
It was not a decision made lightly. Although the United States is indeed an attractive market, and California in particular shows the most promise within the country, the cost of manufacturing in the United States is significantly more expensive that it is in most Asian countries. Cost challenges come in the form of capital, labor, utilities and taxes, Blunden noted.
But besides costs, market certainty is another important component of the location decision, with factors including volume and growth rate, disruption, and substitute prices, Blunden said. “We select first for cost, and second for market certainty,” she added, noting that when SunPower began manufacturing in the Philippines, the company knew it wouldn’t be a meaningful end market, but the location gave access to low costs.
What tilted SunPower toward California was long-term market demand, Blunden said, noting that they could’ve had lower costs in another state, but not with the confidence of market demand right out of the gate.
Cost challenges in the United States have been addressed through a variety of measures, including lower working capital, lower transportation costs, shipping benefits, new tax incentives, utilities, and considerations in capital and labor costs. Blunden pointed to the U.S. Department of Energy’s SAI award for equipment design for lower manufacturing costs, local and state grants, and the fact that SunPower was able to make use of an existing empty facility at Flextronics’ headquarters.
Brinser also noted the significance of being able to use an existing shell. In SolarWorld’s case, the PV manufacturer bought an existing shell from the semiconductor industry, and was able to convert it to process more than 10 million solar cells every month.
Looking out to only 2014, the predictions from the industry about where market growth will end up are wide-ranging — from 14 GW installed to as high as >45 GW. “We’re talking four years out. I’d say there’s a little uncertainly about how the market is going to develop,” Blunden said. But regardless of exactly how it turns out, the question remains, “Where do you place your bets?” Confidence in the U.S. market is key to driving more production this direction.
— Aaron Hand, SEMICON West Daily News