Global Courant
For more than two decades, workers at a factory in Perrysburg, Ohio, near Toledo, have been making something that other companies in the United States long ago stopped making: solar panels.
How the company that owns the factory, First Solar, managed to stay afloat when most solar panel production left the United States for China is critical to understanding the viability of President Biden’s efforts to build a to establish a large domestic green energy industry.
Mr. Biden and Democrats in Congress last year approved hundreds of billions of dollars in federal incentives for the production of solar panels, wind turbines, batteries, electric cars and semiconductors. The efforts amount to one of the most comprehensive applications of industrial policy ever undertaken in the United States.
As a result, many companies, including First Solar, have announced the construction of a total of dozens of factories across the country. But no one is quite sure whether these investments will be sustainable, especially in businesses such as battery or solar panel manufacturing, where Chinese dominance is deep and strong. Chinese manufacturers benefit from lower labor costs, economies of scale and incentives from a government eager to control industries critical to combating climate change.
First Solar has survived the shift 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 hasn’t been an easy ride and the company has struggled at times, especially after the 2008 financial crisis.
“They’re kind of a unicorn,” says Michael Heben, director of the Wright Center for Photovoltaics and Innovation at the University of Toledo, who has worked with First Solar. “It’s been a rocky history. Revenues have been pretty lumpy.”
Some analysts warn that efforts to make solar panels in the United States are misguided. Even in the best of times, the company produces modest profits and does not employ many people. It would be better to import panels from low-cost manufacturers to quickly switch from fossil fuels to renewable energy, said Jenny Chase, solar analyst at Bloomberg New Energy Finance.
“Solar panels would have been cheaper,” Ms. Chase said, if policymakers had not pushed for domestic production. “In the United States, even with the manufacturing boom, it will still be expensive.”
But many lawmakers and business leaders insist that the United States must make solar panels. They argue that it would be unwise for the country and allies such as the European Union and Japan to continue to depend on China for such an important technology. Supply chain chaos during the pandemic and growing economic hostility between Beijing and Washington underscored the enormous risks.
One thing is certain: the world will need many more solar panels to eliminate greenhouse gas emissions. The capacity of solar energy installed worldwide should be at least twenty times greater than today and possibly even seventy times, energy experts say.
“We need very large amounts of solar energy around the world,” said Nancy Haegel, director of the National Renewable Energy Laboratory’s National Center for Photovoltaics. “While it is a very ambitious goal, it is also achievable given the growth of solar photovoltaics in recent years.”
First Solar CEO Mark Widmar said he was confident his company and others could quickly 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 factories, and is building one in Alabama. It also has factories in Vietnam and Malaysia and is working on a factory in India.
“It’s scary,” Mr. Widmar said at the Perrysburg plant as he described the company’s plans. “It really is David versus Goliath.”
Mr. Widmar, 58, who grew up in a working-class family in South Bend, Indiana, about a two-and-a-half-hour drive from Perrysburg, said he was motivated by a desire to create American jobs and expand America’s technological lead .
He was the first in his family to attend college – his father worked in a mailroom and his mother was a secretary – and earned a degree in accounting and finance from Indiana University.
Shortly after becoming CEO five years ago, Mr. Widmar said he pushed his engineers to roll out a new generation of solar panels that would generate more energy at a lower cost per watt. The move was risky because it required the removal of old equipment and a major investment in new machinery, a move that sharply reduced production in 2018.
“I said, ‘Let’s make a splash,’” Mr. Widmar said. “Many CEOs would not have made that decision. I knew we had to grow.”
First Solar began in 1990 as Solar Cells, founded by Harold McMaster, an inventor and businessman who pioneered the production of tempered glass, which is used in skyscrapers and solar panels.
In the 1990s and 2000s, the solar panel industry grew rapidly in the United States, Europe and Japan. But like many other booming industries, hard times soon arrived, and many companies, including Solyndra, which was backed by the Energy Department during the Obama administration, went bankrupt.
At the same time, the Chinese government and Chinese companies doubled down on the technology. They greatly expanded panel production, sharply cutting costs.
First Solar, which benefited from investments by the Walton family that founded Walmart, survived in part by quickly scrapping plans to expand production. This has saved the company from selling panels at a significant loss. 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 First Solar helped support was strong growth in Europe, where many countries, especially Germany, offered generous subsidies to encourage the use of solar energy.
Yet First Solar is not immune to the ups and downs of the sector. The company lost more than $100 million in 2019 before making about $400 million each in 2020 and 2021. Last year it lost $44 million, which the company attributed to volatile freight and shipping costs.
Mr. Widmar said the Inflation Reduction Act, Mr. Biden’s signature climate bill, paved the way for a growing domestic solar manufacturing industry. But he worries the bill could become “a political football” — a real threat given that some Republican lawmakers have tried to repeal all or part of the legislation.
He also said the United States must protect domestic producers from what he described as unfair Chinese competition. “If we want to have a diverse, competitive and sustainable solar manufacturing industry, China’s anti-competitive behavior must be addressed,” he said.
One of First Solar’s advantages, Mr. Widmar said, is that it is not as exposed 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 it had discovered the use of forced labor by subcontractors at its factory in Malaysia. The subcontractors had forced migrant workers to pay fees to get work and withheld wages and passports. Mr Widmar said he was determined to make the findings known, compensate the workers and get the subcontractors to return their passports.
“I am an auditor by nature,” said Mr. Widmar. “I’ve always felt that in order to sleep at night, you always have to do the right thing.”
Human rights activists worry that as manufacturers ramp up production of solar panels, forced labor, also called “modern slavery,” will become increasingly common. Walk Free, a human rights organization based in Australia, estimates that 50 million people Across the world in 2021, approximately 10 million more were living under forced labor conditions than in 2016.
Michael Carr, executive director of the Solar Energy Manufacturers for America, a trade group, said more domestic manufacturers like First Solar are needed to ensure the United States has a safe supply of panels not tainted by forced labor.
“Module production in the United States is picking up,” Mr. Carr said. But, he added, “our international competitors have built a really significant lead.”
