Andy Klump on the Future of the Solar Supply Chain, Domestic Manufacturing and the Impact of Climate Change on PV Equipment

This article was originally published in pv magazine – December 2021 edition, titled, “All eyes upstream”.

The United States faces a number of compelling issues in its push to expand solar. Clean Energy Associates CEO Andy Klump recently spoke to pv magazine about supply chains, domestic manufacturing, climate change, and COP.

The Biden administration has a goal of expanding solar by three to four times in the coming years, but is also challenging China on trade issues. What progress has the U.S. solar industry made in the past 12 months to address its supply chain issues?

While the first half of 2021 demonstrated strong growth in solar installations, the U.S. solar installation market is challenged by the current trade issues with China. The 27% drop in imports in Q3 2021 reflects this trend, as three major manufacturers have been blocked from importing modules due to the Withhold Release Order (WRO). A recent FAQ published by U.S. Customs and Border Protection in mid-November provided additional guidance to importers to avoid importing forbidden products, which will help the industry manage risk better in this area.

The antidumping and countervailing duty (AD/CVD) case raised in August had the potential to impact seven manufacturers in Thailand, Vietnam and Malaysia, but the November decision by the Department of Commerce to throw out the case has alleviated this risk for now – though there is some potential for future filings. The industry looks forward to future growth despite these recent challenges, and developers and IPPs need to monitor developments in Washington closely, as there are several measures in pending legislation that could help boost growth.

Given the heightened scrutiny solar supply chains are receiving by Customs and Border Protection, what internal systems and business practices do companies need to invest in to better manage supply chain issues?

Most global manufacturers of PV modules have Manufacturing Execution Systems (MES) in place to track suppliers and identify the provenance of their upstream materials. Most MES have been in place and operational for the past decade or more, with some mid-size suppliers implementing them more recently, but many module manufacturers only focus on cell and module manufacturing and therefore only trace their upstream supply to the wafer level.

Other manufacturers are vertically integrated from cell and module into ingot and wafer production, so they monitor their upstream supply of polysilicon. As many module manufacturers have never been asked to monitor their suppliers’ suppliers, the request of the WRO to trace components to the metallurgical grade silicon (MGSi) is a new topic, and some are checking with polysilicon suppliers for the traceability of their MGSi; however, this request is an unusual one and extremely difficult to implement as many MGSi suppliers lack a sophisticated MES or the desire to implement a new system.

There have been considerable investments made in U.S. solar manufacturing over the past few years by domestic and overseas manufacturers. Can these facilities be competitive in higher-cost countries like the United States?

Cost is still a major factor in the manufacturing process, but due to high levels of automation and advanced manufacturing platforms, the bigger factor with respect to cost is the advantage of the overall supply chain, including consumables and proximity of suppliers. The United States has the potential to reshore more manufacturing domestically, but an extensive overhaul of the supply chain is needed to ensure that these costs remain in line with industry trends. Additionally, the impact of higher logistics and shipping costs, and delays due to Covid-19, has highlighted the fact that manufacturing in the United States, along with subsidies, can lead to a rebirth of domestic manufacturing.

CEA’s Andy Klump sees Potential for PV manufacturing to return to the United States, but doing this cost effectively will require a major overhaul of the entire supply chain.

Turning to end-product quality, are solar products produced today robust enough to withstand the effects of a rapidly changing climate? Where does CEA see the need for particular attention to make solar equipment more resilient?

Climate change is placing additional operational stress on solar arrays due to, for example, more extreme and potentially damaging storm events and higher ambient temperatures. Many of today’s racking and balance of system (BOS) components have been tested based on industry standards set a number of years ago and consequently, some of the current extreme weather events are causing more stress than these components were designed to withstand. Although some manufacturers have adjusted their specifications for these adverse conditions, others are pushing for lower-cost options and components, which may lead to more damage rather than less. Consequently, some customers are requesting their manufacturers increase the rigor behind their component specifications to increase resiliency, so there is some tension in the market on this point. CEA has been educating clients on the importance of reevaluating bill of materials (BOM) selection and completing more extensive in-line production monitoring (IPM) during our Quality Assurance Program (QAP) to withstand intense weather events. Best-in-class downstream companies can use a comprehensive QAP to ensure that they monitor the impact of their equipment selection on overall performance, despite severe weather events worsening over time.

The most recent COP negotiations in Glasgow wound up last month – how is the solar ecosystem likely to change as decarbonization and electrification accelerate through global economies?

There is an increased demand for ESG compliance as larger, well-established fund managers are financing large-scale solar deployments and therefore a higher level of scrutiny will be placed on ESG. In addition to ESG funds, solar consumers are becoming more discerning of the carbon content in solar components and consequently, upstream manufacturing steps produced with low-cost hydro energy may be in more demand than low-cost coal.

In the past, certain countries such as France and South Korea have paid additional tariff levels for low carbon content modules, but I predict that this trend will increase. Furthermore, residential homeowners will continue to demand electric vehicles, so a bundled solar installation with EV charging and backup battery system will become the standard in future. I anticipate that larger global manufacturers who prioritize these trends will enter into this sector, and the recent acquisition of REC Group by Reliance Industries in India is one good example.