Supply chain woes seem to infiltrate all industries these days. Still, the domestic solar business might experience some relief with Italy’s Enel’s plan to implement solar manufacturing in the United States. While a critical component of the supply chain, solar cells will be one of the components constructed in the new factory.
The Wall Street Journal estimates the Enel factory to be one of the most significant ventures forecasted to exceed a billion dollars in construction costs with the ability to produce as much as 6-gigawatt solar panels and solar cells, a necessity in building solar panels.
“Economies of scale and learning curves are super important in this business,” says Giovanni Bertolino, the U.S. head of Enel’s cell and panel-making division.
The United States passed the Inflation Reduction Act, where companies can take advantage of tax credits for manufacturing items such as wind turbines and electric vehicle batteries. Under this legislation, power-plant development firms find eligibility to receive bonus tax credits if they utilize domestically built components.
According to Bertonlino, Enel must significantly increase production volumes to surpass Chinese manufacturers that command the market regarding quality and pricing. With the Inflation Reduction Act offering attractive incentives to shore up the domestic renewable supply chain, Enel identified an opportunity and initiated a wave of deals to corner the market. Other businesses like First Solar Inc. and LG Energy Solution Ltd. have followed the same course of attack, with billions in spending allocated to manufacturing strategies.
Domestic manufacturing growth has also boomed within the solar arena because of shortages in equipment originating during the pandemic. While China commands 80 percent of the current supply chain, potential reliance on the country has sparked an increase in fear across the globe. U.S. actions have further aggravated supply shortages in its attempts to steer legislation in preventing the abuse of human rights, as well as its attempt to prevent Chinese companies from bypassing tariff payments.
Because of a focus on decreasing greenhouse gas emissions, countries search for clean energy power sources. The United States has zeroed in on solar as the potential savior to fossil fuel, which has initiated a rise in demand resulting in the need for domestic manufacturing.
In keeping with the trend, the United States has been adding 20 gigawatts of solar capacity per year. With this being enough to provide power to over 3 million homes, some predict a double in total in the next ten years. Enel produces solar cells and panels from a factory in Italy and is expanding its capacity to three gigawatts.
“We thought there was an incredible need to re-shore [solar manufacturing] both in Europe, but also in the U.S.,” says Enrico Viale, Enel’s North American operations head.
Enel carries a diverse portfolio, including wind, solar, geothermal, and hydropower total of 55 gigawatts, with more than eight gigawatts rooted in the United States and Canada. Based in Rome and branded as one of the largest utilities and renewable power development firms, Enel hopes to increase those numbers by 75 percent in 2024.
Bertolino reasons that the new domestic factory will be a catalyst in meeting that growth. With a desire to establish operations quickly, Enel plans to determine the factory’s location by the end of 2022 and initiate construction by the end of 2024. Potential build sites range from the Great lakes to the state of Texas.
Considering Enel’s Italian plant expansion carries a $622 million price tag, construction costs of its facility in the United States is expected to surpass such a budget. According to Viale, the company seeks to enter purchase agreements with prospective developers interested in Enel’s solar panels due to their ability to produce more electricity than standard mainstream panels.
Armed with financial capabilities and its claim of superior technology, Enel stands to pioneer the path of domestic solar panel manufacturing. While other companies publicize the desire, only Enel has taken steps to make the idea a reality. As the demand for solar panel grows, the United States stands to benefit from a potential spike in production with the bonus of easing crippling supply chain shortages.
Nick Vaccaro is a freelance writer and photographer. In addition to providing technical writing services, he is an HSE consultant in the oil and gas industry with twelve years of experience. Vaccaro also contributes to SHALE Oil and Gas Business Magazine, American Oil and Gas Investor, Oil and Gas Investor, Energies Magazine and Louisiana Sportsman Magazine. He has a BA in photojournalism from Loyola University and resides in the New Orleans area. Vaccaro can be reached at 985-966-0957 or email@example.com.