Gregg Patterson, CEO
Since passage of the Inflation Reduction Act (IRA) in August 2022, the US has come a long way toward reshoring many aspects of the solar supply chain, but other key pieces have been left out.
Manufacturers have announced over 85 gigawatts (GW) of solar photovoltaic (PV) investments including 18 new manufacturing plants, primarily solar wafers, cells, and modules.¹
Among them are some of the largest-ever US module manufacturing commitments: a 3.5 GW factory in Lawrence County, Alabama, and 5.2 GW of new manufacturing capacity across two locations in Georgia.²,³
All in all, industry analysts expect federal support and the $150 billion in additional private sector investment to dramatically increase module manufacturing by 2030.
Missing are incentives for domestic production of solar module frames, one of the leading drivers of module costs after solar cells.
The IRA’s intent is to incentivize the production and use of US-made solar modules and their components, as well as associated materials like steel for the structural components, racking and trackers used in PV projects. The IRA does this with both manufacturing incentives and incentives for the use of domestic content like steel in PV projects.
Why not incentivize the domestic manufacturing of steel module frames?
Module manufacturers are beginning to adopt steel module frames because they are stronger and domestically produced, and offer a superior carbon footprint compared to imported Chinese aluminum frames. Because the module frame constitutes an integral part of the structural elements of a PV system just as do the steel racks and trackers, steel module frames should be accounted for in the IRA incentives for the use of domestic steel.
Explicitly recognizing US-made steel solar frames as domestic content would help accelerate the clean energy transition, supporting the reduction of greenhouse gas emissions (GHGs) and the expansion of US solar manufacturing.
“Right now we are doing a good job of building solar wafer, cell, and module production capacity in the US, but we are still dependent on China for solar module frames. Because these are produced from virgin aluminum they bear a pretty high carbon footprint,” says Michael Parr, executive director of the Ultra-low Carbon Solar Alliance.
IRA’s big-picture objectives
Together with the Bipartisan Infrastructure Law and the CHIPS & Science Act, the IRA dedicated $2 trillion in federal spending to improve US economic competitiveness, innovation, and industrial productivity.
The IRA itself spread investment across a wide range of sectors, including clean energy and healthcare. Within clean energy, the IRA set up numerous tax credits and incentives for carbon management, residential energy efficiency, energy innovation, and other provisions to stimulate private investment.
Upon passage of the IRA, steel manufacturers lauded the creation of a new Department of Energy program supporting advanced industrial technologies, including low-carbon steel.4
Later, as Treasury and the Internal Revenue Service sought public input on IRA implementation, steel manufacturers voiced support for domestic content bonus tax credits for steel products if every stage of the steelmaking process occurs in the US.5
This framework incorporates a large portion of solar structural components, including torque tubes for single-axis trackers and piles that anchor solar energy systems to the ground. The framework should explicitly recognize domestic steel solar module frames.
Clean energy advocates and analysts submitted almost 4,000 comments through March 1 requesting clarification on how to qualify for various IRA provisions, including domestic content bonus credits for steel products.6
Guidance that clearly identifies and incentivizes domestic steel module frames to support a projected 30-50 GW of module production can have a huge impact on the economic and climate-related objectives of the IRA and further de-risking and decarbonizing the solar supply chain.
“We have come quite a way in domestic solar manufacturing in a short time thanks to the IRA. One critical element of the supply chain we need to accelerate here is module frames, and recognizing steel frames as domestic content under the IRA would certainly help,” Parr said.
Opportunity for domestic steel
We are ramping up domestic PV module manufacturing rapidly, but that manufacturing continues to depend on imported module frames, an ongoing risk in the solar supply chain and an unacceptable impact on climate change.
Supply chain constraints and restrictions on international trade already contributed to a 16 percent year-over-year drop in US solar deployments, taking the market down to 20.2 GW in 2022. While Wood Mackenzie analysts expect the market to rebound this year, the US continues to face “major uncertainties.”7
US production of steel module frames would safeguard an important part of the supply chain and contribute to all the big-picture objectives of the IRA. It would reward innovation and strengthen economic competitiveness, enabling solar and steel manufacturing to join forces and unlock a new market segment. Together, the solar and steel industries can aggressively drive the transition to domestic energy independence.
Steel manufacturers around the world can take advantage of the opportunity to activate existing steel ecosystems to produce solar module frames. Responding to the same geopolitical conditions affecting international trade, European leaders have proposed a clean energy manufacturing initiative aimed at increasing solar energy production and reducing carbon emissions in the industrial sector.8 If the European Union adopts the proposed Net-Zero Industry Act, the European steel industry could begin to deliver the economic benefits of domestic production wherever steel manufacturing exists across the EU.
Meanwhile, everywhere that manufacturers can substitute steel frames for aluminum, they can also deliver notable climate-related benefits.
The Ultra Low-Carbon Solar Alliance, working with producers of low-carbon solar module technologies, has shown that technologies enabling lower supply chain carbon are already in the market, and buyers can cost-effectively cut GHG emissions by sourcing modules with lower CO2 emissions during production.
With aluminum module frames, the production process creates 217 tons of CO2 for each 1 MW of output. Using recycled steel, emissions drop this impact to 15 tons per MW.
Each steel module frame contributes about 90 percent less GHG impact.9
Given the advantages of domestic steel module frames, it makes sense for federal policy to support their production here in the US.