Martin Pochtaruk was not surprised by the announcement.
Pochtaruk, the CEO of Heliene (one of the few North American solar module manufacturers), had been hearing rumblings for months about LG’s exit from the competitive solar industry.
Pochtaruk said, “This is the result of a larger decision.” Renewable Energy World During an interview.
It is unlikely that there is one.Single LG decided to close its solar business. This will lead to the closing of its Huntsville, Alabama module manufacturing plant, which has a 550 MW capacity.
Pochtaruk states that it’s not as simple as blaming U.S. solar manufacturing’s economics and circumstances. LG’s move is a direct indictment of the global solar industry, and foreshadows more difficult times ahead.
“They have 200 lines. Pochtaruk stated, “And this one, as you all know, it is one that must be fought for every single day.” He said, “Who else will fall?”
Pochtaruk blames federal policy inaction and an economic imbalance for solar energy that began a year earlier.
The Build Back Better Act, which includes $550 billion for domestic manufacturing and clean energy, has not been passed by Congress. A bill from Senator Jon Ossoff, D-Ga., called the Solar Energy Manufacturing for America Act would provide tax credits for each stage of the solar supply chains — from the production and tracking of solar cells to the manufacturing of modules. After passing the House, it is still not up for a vote in Congress.
A trend of decreasing solar module prices for nearly a decade seems to be ending. The price of polysilicon has risen to $39.3/kg from its lowest point in 2011 (when it was $39.3/kg). The cost of solar trackers has risen dramatically with steel prices having tripled in the last year. Transport costs are rising with gas prices reaching 2008 levels in certain areas. China is expected to increase its solar capacity by nearly 100 GW each year through 2025, which will squeeze the global supply of components.
For U.S. solar module producers, an additional layer of protection can be added by importing non-Chinese Polysilicon to avoid trade enforcement action and anti-dumping.
Pochtaruk stated, “We’re certainly not going back anytime soon to lower prices, lower price.” Increasingly, what is emerging is a reversal in the market dynamics that make many projects–particularly larger ones–“unbuildable.”
The U.S. Department of Energy completed what it called the first comprehensive analysis of American clean energy supply chains at the request of President Joe Biden. One of the findings is that the supply chains are still heavily dependent on China.
The Ultra Low Carbon Solar Association recently reported that Chinese producers have 83% of the global capacity for polysilicon production. They also have 96% for wafers and 79% for cells.
According to the DOE report incentives could be used to offset the higher cost of solar PV manufacturing here in the U.S. which can be between 30-40% more expensive.
DOE recommended that the U.S. increase thin-film module manufacturing, which isn’t as dependent on China for input material. The agency suggested cell production and international standards of inverters as potential ways to improve the domestic supply chains.
According to the report, significant financial support will be required by the federal government for the U.S. PV supply chain, in order to succeed. The U.S. can take strategic actions to improve workforce development, manufacturing and human rights, as well as trade, if it has the right support.
Pochtaruk stated that he won’t give up on the U.S. Despite difficult market conditions, Heliene announced that it would expand its manufacturing in Minnesota and open a new facility at Riviera Beach, Florida. The company’s executives will also be evaluating whether to purchase some LG equipment.
However, margins are still razor thin and the business is difficult. It’s difficult to blame LG for jumping ship.
Pochtaruk posed the question, referring to Washington’s policy gridlock. To his own question, he replied “probably”. This is, after all, what we do for a living.
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