L R AS Published on Sunday 29 January 2023 - n° 432 - Categories:the American PV
What will the US IRA change in two years?
Trends and challenges in the booming US solar market, according to Wood Mackenzie
The panels
The US Inflation Reduction Act provides $370 billion in spending on renewable energy. It allocates $60 billion to domestic manufacturing in the supply chain. Yet panel manufacturing is changing, evolving from mono-PERC to N TOPCon panels.
It is easy to switch from the former to the latter technology: TOPCon panels have achieved 25% efficiency in mass production and could rise to 28.7%. Analysts believe that 27% efficiency in the laboratory could be achieved with improvements in metallisation and thinner wafers. Some manufacturers expect the average wafer thickness for large-format TOPCon panels to fall by 20 μm this year to 120 μm, which will drive most of the price reductions in 2023.
The Inflation Reduction Act stimulates US panel manufacturing with $30 billion in production tax credits as well as a $10 billion investment tax credit to build clean technology manufacturing facilities. Wood Mackenzie expects US panel capacity to exceed 15 GW by the end of this year (2023).
The big question, however, is the definition of 'US-made equipment'. Does it mean that the panels are assembled in the US? Or do all components have to be made in the US. The challenge for panel manufacturers is that there are virtually no wafer or cell manufacturers in the US, although this is changing with recent announcements from companies like Qcells and CubicPV. The difference in interpretation of domestic content could have a significant impact on panel manufacturing capacity over the next five years. Analysts estimate that nearly 45 GWdc of new capacity will come online by 2026.
Inverters, trackers
The residential inverter market will grow worldwide in 2023. With the rise of rooftop solar, especially in countries such as India and Germany, the market for microinverters, string inverters and DC optimisers, the most popular inverter choices for rooftop installations, will grow accordingly. In particular, string inverters with multiple maximum power point trackers (MPPTs) will increase in market prevalence in 2023.
Residential inverters will see increased use of artificial intelligence in their algorithms. Panel-level power electronics (MLPE) and single-phase string inverters, the most popular in rooftop solar installations, will account for 11% of global inverter shipments in 2023. Inverter manufacturing will increase as major players add production lines and new entrants join the market, and the resulting competition will trigger a price decline of 2% to 4% in 2023.
An ongoing challenge for inverter manufacturers is the global shortage of electronic chips, which is expected to continue into 2023 and spill over into 2024. This shortage has led to inverter manufacturers sourcing chips from lower tier manufacturers and conducting rigorous in-house testing to ensure the quality, efficiency and life of their inverters.
Domestic production of trackers is accelerating in several parts of the world due to government incentives as well as logistical problems encountered during the COVID-19 pandemic. Tracker prices will fall in India and the US. More stable steel supply is expected in the US and India, partly due to the expansion of existing steel production. Europe, however, will still face an imbalance in the steel market. Given that over 60% of the follower mix is steel, this rebound in steel demand will lead to increased competition in the follower market for suppliers. Wood Mackenzie forecasts that by 2023, follower prices will fall by 5% in the US, Brazil and China.
Solar costs
Capital expenditure will continue to fall, partly due to the increased use of TOPcon technology. Wood Mackenzie analysts also expect the price of silicon to fall this year. They estimate that the current global capacity of 300 GW will reach 900 GW by the end of 2023.
More than one million additional tonnes of silicon will come on stream in 2023. Most of this new capacity will be in China. However, the 10% or so planned outside China could be subject to a price premium, as it could be free of tariffs and other political risks.
The uncertainty surrounding the amount of anti-dumping/countervailing duties (AD/CVD) is an ongoing challenge. The US Department of Commerce will announce its final determination in May 2023.
In the US, developers will continue to focus on IRA requirements, including prevailing wage and domestic content surcharges for utility projects that begin construction in 2023. In order for projects to receive the full 30% investment tax credit or production tax credit, all projects over 1 MWac must pay their workers their wages and have an apprenticeship programme in place.
PV Magazine of 26 January 2023
