By Michael Gray, COO
Because primary aluminum production is virtually nonexistent in the US, raw aluminum material generally travels a long way before it reaches the US. As we ramp up domestic solar module production, it’s time to reconsider the best material for module frames.
Aluminum has had a lock on the market for module frames. Until recently this might have seemed like business as usual, but the impacts have become highly disruptive. Aluminum in the supply chain increases your greenhouse gas (GHG) footprint while driving up your inventory costs and exposure to supply shortages.
Steel production in the US is abundant and geographically distributed. As a result, it takes literally one day for Origami Solar module frames produced with US-made steel to reach any current or future module manufacturing plant in the US.
The energy transition is driving a transition in materials away from raw aluminum, a symbol of the past generation’s solar manufacturing monopoly, and towards a burgeoning partnership between solar and steel. Due to the strength of the steel industry in the US, and nearly every other continent or economy where there is focus on domestic solar manufacturing, such as the European Union and India, the transition is shaping up to be a smooth one for solar module manufacturers and module buyers.
Capacity to scale
The US produces relatively little primary aluminum compared to steel, and almost all the raw aluminum used in the US is imported. The bulk of the supply comes from China, Bahrain, the United Arab Emirates, India, Canada, and Mexico. In 2022, US raw aluminum imports totaled about 5.9 million metric tons. During the same time, raw aluminum production in the US was only 860,000 metric tons.
Raw steel production in the US dwarfs primary aluminum production.
In 2022, the total output of US-made steel was 94.7 million tons, according to the American Iron and Steel Institute. In other words, the US produces more steel in four days than the total output of US raw aluminum in an entire year.
It’s clear that the US steel industry has far more capacity than the US aluminum industry. It’s also clear that buyers pay a premium for aluminum extruded in the US due to the small scale of production. The premium has averaged 25 cents per pound in 2023. US-made steel has a cost advantage compared with US-made aluminum.
While aluminum in the supply chain adds risk for solar companies, steel makes the supply chain leaner, more agile, and more cost effective.
With few assurances about delivery times through the long and complex supply chain, especially from China and Southeast Asia—four to five weeks via boat through the Panama Canal to a US port of entry followed by truck or rail transport to the final destination, with risk of unexpected delays at several points along the route—module buyers would have to carry more inventory, perhaps enough to last several months. A domestic supply chain based on one-day truck deliveries means module buyers can scale back inventory and still avoid project delays due to product unavailability
Steel is more agile in that you can set up a roll forming line in a matter of months, if additional demand necessitates the expansion of an already robust steel industry. A map of North American Steel Producers from American Metal Market shows 99 steel mills operating across 30 US states.
For a raw aluminum industry that’s starting off with far less US production than steel, by contrast, any new extrusion factories would take years to complete construction and ramp up production. Extruded aluminum also needs to be tethered to a natural gas supply. High carbon emissions makes aluminum production a risky investment that runs counter to US policy goals stemming from the 2022 Inflation Reduction Act (IRA).
In addition to material cost savings, steel enables you to reduce freight costs, packaging costs, and costs associated with project development disruptions such as the latest round of antidumping and countervailing duties on solar module imports from Cambodia, Malaysia, Thailand, and Vietnam.
Readiness for solar manufacturing expansion
Origami Solar has invested two years developing the premier low-carbon steel supply chain in the US and European markets. Our steel ecosystem is anchored by strategic partnerships with US Steel here in the US and ArcelorMittal in Europe to provide the optimal steel alloy and corrosion protection to support solar frame requirements now and in the future. Origami has also partnered with premier roll forming companies to support virtually just-in-time deliveries to US customers.
Other solar industry leaders have also formed strategic partnerships with steel producers to scale up domestic solar manufacturing.
In September, Array Technologies announced a long-term agreement with Steel Dynamics to procure steel coil for Array solar tracker systems from flat roll steel mills in Indiana, Mississippi, and Texas.
Also in September, NEXTracker unveiled a steel tube manufacturing facility in Las Vegas that will be owned and operated by Unimacts. The Las Vegas factory represents the sixth manufacturing plant that NEXTracker has opened in the US since 2022, showing a commitment to a domestic supply chain, US jobs as envisioned by the IRA, and strong business acumen.
Through the work of the Clean Energy Buyers Association, the Ultra Low-Carbon Solar Alliance, and the Global Electronics Council’s Electronic Product Environmental Assessment Tool (EPEAT), end customers are making their voices heard about the need for dramatic reductions in embodied carbon from the solar supply chain. Switching to steel contributes significantly to this objective.
The transition is well underway.
Featured image photo courtesy of US Steel.