For more than two decades, workers at a factory in Perrysburg, Ohio, near Toledo, have been making something that other businesses in the United States long ago stopped producing: solar panels.
How First Solar, the company that owns the factory, survived when most solar panel makers left the United States and moved to China is key to understanding the feasibility of President Biden’s efforts to establish a large domestic green energy industry .
Last year, Mr. Biden and Democrats in Congress authorized hundreds of billions of dollars in federal incentives for the manufacturing of solar panels, wind turbines, batteries, electric cars and semiconductors. This effort is one of the most extensive uses of industrial policy ever undertaken in the United States.
As a result, many companies, including First Solar, have announced plans to build dozens of factories across the country. But no one is entirely sure these investments will be sustainable, especially in businesses like battery or solar panel manufacturing, where China’s dominance is deep and strong. Chinese manufacturers enjoy low labor costs, economies of scale and incentives from a government eager to regulate industries critical to fighting climate change.
First Solar escaped the move of most manufacturing to China in part because its panels do not use polysilicon, a material found in most panels and now made almost entirely in China. But it has not been an easy journey and the company has struggled at times, especially after the 2008 financial crisis.
“They’re kind of a unicorn,” said Michael Haben, director of the Wright Center for Photovoltaics and Innovation at the University of Toledo, who has worked with First Solar. “It has been a rocky history. “Revenues have been quite volatile.”
Some analysts warn that efforts to manufacture solar panels in the United States are misguided. Even in the best of times, the business returns modest profits and does not employ many people. Jenny Chase, solar analyst at Bloomberg New Energy Finance, said importing panels from low-cost producers would be better for a faster transition from fossil fuels to renewable energy.
“Solar panels would have been cheaper,” Ms. Chase said, “if policymakers hadn’t pushed for domestic manufacturing.” “In the United States, despite the boom in manufacturing, it will still be expensive.”
But many lawmakers and corporate executives insist that the United States should make solar panels. He argues that it would be unwise for the country and allies like the EU and Japan to depend on China for such vital technology. Supply chain disruption during the pandemic and growing economic hostility between Beijing and Washington highlight major risks.
One thing is certain: The world will need many more solar panels to eliminate greenhouse gas emissions. Energy experts said installed solar power capacity around the world would need to be at least 20 times and possibly 70 times greater than today.
“We will need a very large amount of photovoltaics around the world,” said Nancy Hagel, director of the National Center for Photovoltaics at the National Renewable Energy Laboratory. “Although this is a very ambitious goal, it is achievable given the growth of photovoltaics in recent years.”
Mark Widmer, chief executive of First Solar, said he is confident his company and other companies can rapidly expand U.S. production. The company, based in Tempe, Ariz., is building its fifth U.S. factory in Louisiana. It is already expanding in Ohio, where it has three plants, and one under construction in Alabama. It also has factories in Vietnam and Malaysia and is working on one in India.
“It’s challenging,” Mr. Widmer said, describing the company’s plans at the Perrysburg factory. “It’s really David versus Goliath.”
Mr. Widmer, 58, who grew up in a working-class family in South Bend, Indiana, about two and a half hours from Perrysburg, said he was motivated by a desire to create American jobs and increase America’s lead in technology. Were.
He was the first in his family to go to college – his father worked in a mailroom, and his mother was a secretary – earning a degree in accounting and finance from Indiana University.
Soon after becoming chief executive five years ago, Mr. Widmer said, he pushed his engineers to create a new generation of solar panels that would generate more energy at a lower cost per watt. The move was risky as it required the removal of old equipment and large investment in new machinery, a switch that sharply reduced production in 2018.
“I said, ‘Let’s take the jump,'” Mr. Widmer said. “Not many CEOs would have taken this decision. I knew we had to move forward.”
First Solar began in 1990 as Solar Cell, founded by Harold McMaster, an inventor and businessman who was a pioneer in the production of tempered glass, which is used in skyscrapers and solar panels.
In the 1990s and 2000s, the solar panel business was growing rapidly in the United States, Europe, and Japan. But like many emerging industries, it soon fell on hard times, and several companies, including Solyndra, which had been given support by the Energy Department during the Obama administration, closed.
At the same time, the Chinese government and Chinese companies doubled down on technology. He greatly expanded panel manufacturing, which helped reduce costs rapidly.
First Solar, which benefited from an investment from the Walton family of Walmart founders, survived in part by quickly scrapping plans to expand production. This saved the company from selling panels at huge losses. According to a case study By the Center for Strategic and International Studies in Washington.
It also helped that First Solar’s panels were different from most Chinese panels. Instead of silicon, the company used a proprietary thin film of cadmium telluride.
One thing that helped First Solar sustain was strong growth in Europe, where many countries, notably Germany, offered generous subsidies to encourage solar energy use.
Yet First Solar has not been immune to the industry’s ups and downs. The company lost more than $100 million in 2019 before earning nearly $400 million in 2020 and 2021. Last year, it lost $44 million, which the company attributed to volatile freight and shipping costs.
Mr. Widmer said the Inflation Reduction Act, Mr. Biden’s signature climate law, has set the stage for a growing domestic solar manufacturing industry. But he worries that the law could become “a political football” — a real danger given that some Republican lawmakers have sought to repeal all or parts of the law.
He also said that the United States should protect domestic producers from unfair Chinese competition. “If we are to build a diverse, competitive and sustainable solar manufacturing industry, China’s anti-competitive behavior must be addressed,” he said.
One of the advantages of First Solar, Mr. Widmer said, is that it does not equate to the use of forced labor, which human rights groups and U.S. government officials say is common in China’s western Xinjiang region.
In August, First Solar revealed that it had exposed the use of forced labor by subcontractors at its plant in Malaysia. Subcontractors forced immigrant workers to pay fees to get jobs and withheld wages and passports. Mr Widmer said he was committed to publicizing the findings, compensating the workers and demanding the subcontractors return their passports.
“I’m an auditor by nature,” Mr. Widmer said. “I’ve always felt that you always have to do what’s right in order to sleep at night.”
Human rights activists worry that as manufacturers increase solar panel production, forced labor, sometimes called “modern slavery”, will become more common. Walk Free, an Australia-based human rights group, It is estimated that 50 million people The number of people living in forced labor situations worldwide in 2021 is approximately 10 million more than in 2016.
Michael Carr, executive director of Solar Energy Manufacturers for America, a trade group, said more domestic manufacturers like First Solar are needed to ensure the United States has a secure supply of panels untainted by forced labor.
“Manufacturing of the modules is starting in the United States,” Mr. Carr said. But, he added, “our international competitors have really made big gains.”