Scaling America's domestic solar supply chain

Despite the dark cloud of federal policy hanging over the solar industry, skyrocketing load growth is driving demand. The question is whether supply can keep up. In this episode, Shayle talks to Scott Moskowitz — VP of market strategy and public affairs at Qcells and board chair of the Solar Energy Industries Association (SEIA) — about the challenges of reshoring solar in the U. S. They cover topics like: How supply chain resilience incentivize reshoring efforts The specific state of polysilicon, wafers, cells, and module reshoring Why resource “clustering” has been a boon for Chinese solar manufacturing Industry challenges around permitting solar Why American solar remains so much more expensive per watt than Chinese solar The threat of technological obsolescence to funding solar projects Resources Catalyst: More 2026 trends: Solar costs, oil oversupply, and the startup slump Catalyst: Tumult in residential solar Open Circuit: Does residential solar have a bad product? Latitude Media: GlassPoint is back, and armed with global expansion plans Latitude Media: Tesla’s rooftop solar paradox Latitude Media: Can the US bring solar installation to below $2 per watt? Credits: Hosted by Shayle Kann. Produced and edited by Max Savage Levenson. Original music and engineering by Sean Marquand. Stephen Lacey is our executive editor. Catalyst is brought to you by Uplight. Uplight activates energy customers and their connected devices to generate, shift, and save energy—improving grid resilience and energy affordability while accelerating decarbonization. Learn how Uplight is helping utilities unlock flexible load at scale at uplight.com. Catalyst is brought to you by Antenna Group, the public relations and strategic marketing agency of choice for climate, energy, and infrastructure leaders. If you're a startup, investor, or global corporation that's looking to tell your climate story, demonstrate your impact, or accelerate your growth, Antenna Group's team of industry insiders is ready to help. Learn more at antennagroup.com. Catalyst is brought to you by EnergyHub. EnergyHub helps utilities build next-generation virtual power plants that unlock reliable flexibility at every level of the grid. See how EnergyHub helps unlock the power of flexibility at scale, and deliver more value through cross-DER dispatch with their leading Edge DERMS platform, by visiting energyhub.com.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Speaker 00

  Latitude Media, covering the new frontiers of the energy transition.

• 0:07Shayle Kann?

  I'm Shayle Khan, and this is Catalyst.

• 0:11Speaker 02

  I think we face two challenges when you're trying to build a factory, which is the first of its kind in the United States. One is that you have to find a contractor to build, say, a wafer factory that's never built a wafer factory before. And then you have to work with local permitting jurisdictions that have definitely never permitted a solar cell or wafer factory before. So there's a lot of education work that has to get done to overcome that. It is overcomable. It's not something that we can't do. We build things that are new in the United States all the time. It's just a matter of getting that infrastructure in place and doing the education work.

• 0:44Shayle Kann?

  Coming up, building solar in the U.S.

• 0:57Speaker 00

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• 1:41Speaker 00

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• 1:54Speaker 03

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• 2:29Shayle Kann?

  I'm Shayle Khan. I lead the early-stage venture strategy at Energy Impact Partners. Welcome. So, something I've noticed recently, I think there are two prevailing types of sentiment about solar in the United States right now. I'll tip my hand that I think one of them is right and the other one is wrong. The wrong one is basically quite negative. People have noticed the policy winds shifting, the gutting of the IRA, the slowing of federal permitting, and they get the impression that it's actually dark times for solar in the US. But anyone actually in the market generally sees the opposite. The tax credits still exist, demand is booming, thanks to load growth, speed to power, et cetera, all the terms that we've used a million times on this podcast. And if you look closely, sentiment

• 3:13Shayle Kann?

  towards solar, even within Magaverse, has thawed substantially. So it's actually boom times for solar right now. That's on the demand side. But what about the supply side? Are we in for an industrialization, a domestication of solar manufacturing? What would it take to really do that? It's an interesting conversation, I think one that isn't had enough. So, for this one, I brought on an old and dear friend. Scott Moskowitz is the VP of Market Strategy and Public Affairs at Q cells, which is the largest domestic silicon solar manufacturer. Scott is also the Chair of the Board of SIA, the Solar Energy Industries Association. So, he wears the hat of somebody who is making more wafers and cells for solar than anyone

• 3:57Shayle Kann?

  else, and also somebody who is representing the industry in policy discussions. Scott and I also worked together on solar more than a decade ago at GTM, which was my previous company before EIP. So it's good to be back talking solar again with Scott. Here he is. Scott, welcome. Hi, thank you. It's very good to see you. And I'm excited to have this conversation. I want to start with a question that, I don't know, feels initially like it's sort of obvious, but I think it's worth walking through it anyway, which is you're both personally and professionally a big proponent of building a domestic solar supply chain in the US. Why do you think that's important?

• 4:35Speaker 02

  You know, it's funny because you and I, we worked together a long time ago. And when we did, it was conventional wisdom that, you know, this supply chain for clean energy and lots of these industries in general hit up, you know, largely focused offshore. And, you know, we went from a conversation of how do we make renewables as cheap as possible, as quickly as possible, to where we are now, which is, you know, solar is cheap. And now it's a matter of where are these supply chains local, where are they located? And how do we ensure that they are resilient and durable for the scale that we want to be deploying this stuff in the years ahead? So, um, you know, I think it's remarkable that we're having this conversation now, given where we were years ago. But, you know, in my view, it's something that we've learned over 10 years of geopolitical

• 5:16Speaker 02

  shifts over a pandemic that tested supply chains in every industry, but really showed that we want to have supply chains domestically as much as we can, in particular for critical sectors like energy.

• 5:29Shayle Kann?

  Yeah, the history of it in solar is interesting. So when I started with looking at solar way back in the day, a couple, few years before you did, it was Germany, right? Germany was manufacturing most of the solar. And then Germany basically lost the battle to China and China scaled and took over and drove costs down. And then China kind of expanded out as a result of tariffs mostly from China to like Southeast Asia. So then a lot of solar started getting manufactured in Southeast Asia, but it's still Chinese companies for the most part. And then now there's this interesting, as a result, I don't know, of predominantly policy, you can tell me if there are other drivers that you've seen resulting in this? Now there's this interesting question of, at least in the US, I think more so than

• 6:11Shayle Kann?

  in Europe, are we going to build up a fully domestic, mostly resilient supply chain? We'll talk more about what that actually means because it's not a, it's not one thing. But do you see that as having been driven predominantly by policy? Or was there a push before that?

• 6:29Speaker 02

  You know, you had trade policy, which kept the industry for a lie for a long time. It didn't necessarily allow it to reach the scale that it is now. But, you know, I think there'd been a focus and an effort to reshore, you know, even prior to the Inflation Reduction Act being passed a couple of years ago. But, you know, it was really that piece of legislation that created, that it made it economically feasible to do it. And, you know, we're at a point now where, you know, if you're a buyer of solar panels in the United States. Pretty much every panel you're going to get is at least domestically assembled. And so most of the market at the moment really thinks that this is a domestically reshored market. You know, it's when you get upstream to cells, wafers, polysilicon that it becomes a, you know, still an open-ended question, but you know, we've really hit that point where pretty much everything that gets deployed to a customer comes from somewhere in the United States.

• 7:15Shayle Kann?

  Okay, so you hit on the next thing I want to talk about, which is that people who aren't steeped in solar world, think of the supply chain as being panels. And the final step is module assembly. And I mean, you could go downstream of that, I guess, and put on frames and inverters and stuff, but the final step in solar modules is assembly. And that, as you said, has been fairly domesticated. But, but we should talk about the whole supply chain because I think it is important to do so and to recognize what that looks like. So in the context of crystal and silicon solar, which is basically the entire market X for solar, the supply chain is polysilicon wafer cell module. So can you walk me through how much domestic manufacturing we have of each of those four steps?

• 7:59Speaker 02

  Yes, so even again, even before the IRA, we had a fair amount of module assembly, which was supported by trade policy. And we've had, you know, a historically decent amount of polysilicon for, you know, two decades now. And, you know, at the moment, we have enough module capacity to supply US demand. That's, you know, 40 to 50 gigawatts a year, and there's probably even more than that.

• 8:21Speaker 02

  On the poly side, we're probably 10 to 20 gigawatts. It's a moving target. Obviously, there's three big poly manufacturers in the US, or at least there have been historically. You know, one of one, one of which is RC silicon, which has switched to silane gas is, you know, something that we, my company, Q cells, really participated in. But then there's Hemlock and there's Vokker. Vokker mostly gets their semi-grade or solar-grade polysilicon from Germany. So it's really just a couple of players with probably 10 to 20 gigawatts or so of poly capacity. And then in the middle, cells and wafers, you know, you didn't, you had up until the IRA, you had zero. Of those factories, none, you know, and in fact, wafers, pretty much 99% of them were coming from China. They largely shifted to Southeast Asia over the last five years as a result of another trade case. But you've seen investments in that sector finally.

• 9:06Speaker 02

  There's more cell manufacturing than there is wafer manufacturing. At the moment, there's only two companies, Q cells and Hemlock Corning, that are making wafers, or about to start making wafers in the United States. So there's more cell, but it's again, it's an ongoing effort of reshoring. I really think of it in like, you know, it's probably like four stages of this. There's where we were pre IRA of an industry that was kind of surviving. There's where we are now of an industry that has made a lot of investments and sort of on a path to reshore. The third would be, you know, finally having some self sufficiency to serve the entire US market. And then aspirationally, the fourth would be, you know, being competitive on a global basis and scaling for export. So, you know, I think we're, you know, we're kind of at part two of hopefully a four step process of where the industry really builds itself back up.

• 9:49Shayle Kann?

  Yeah, I've always thought it's interesting that people didn't even appreciate that prior to the IRA, prior to a bunch of investment in wafers and cell manufacturing in the US, which there's still not that much wafer manufacturing, as you said, in particular. There's more cell, but not much wafer. A typical supply chain would be polysilicon. If solar grade polysilicon is made in the US or maybe in Germany, it's then shipped to China or increasingly in recent years to Southeast Asia, where it is turned into wafers and cells, at which point it is shipped back to the United States to be assembled into modules. That was kind of like a very typical supply chain. And the question is, can we like build those intermediate pieces? Let me ask you this, though. Why, if you

• 10:34Shayle Kann?

  look at that sort of historic barbell of we had some polysilicon, we had a fair amount of module assembly, why are the ones that, why are those the ones that got domesticated first? And people would assume it's low labor, basically. Are those the things that require the least labor per watt? Or is it something else?

• 10:53Speaker 02

  On the poly side, the predominant cost for polysilicon manufacturing is the cost of energy, electricity to input. And so you have, you look at RAC silicon, it's in Washington State, they have some of the cheapest hydroelectricity in the world, right? Same in Michigan, a lot of nuclear, a lot of coal, a lot of natural gas, like very low, relatively low electricity prices. And that sort of drove and enabled a lot of poly, which is also supporting the semiconductor industry, right? So, you know, there's a matter of which solar grade poly manufacturing is critical to semiconductors. On the module side, you know, part of it was just that it's, the economics can make sense. It's not necessarily labor, it's the fact that it's bulky manufacturing, shipping costs matter, and it's relatively quick and simple. Not to say that they're not really incredible

• 11:36Speaker 02

  factories. We've had module manufacturing in Georgia for the last eight years. Anytime anyone visits it, they're blown away. It used to be, you know, it's like, oh, we don't need these factories here. They're highly automated, there're not a lot of jobs. But even a, you know, two gigawatt module assembly plan is going to be 800 people, well-paid manufacturers, engineers, technicians, all sorts of stuff. And it's a really impressive, complicated process. But it's not, it doesn't require the same amount of capital investment, chemical infrastructure, lots of complicated localized type supply chains that you would have for, say, cells and wafers. So it was easier to do modules first.

• 12:11Shayle Kann?

  So that, I guess, gets to the next thing, which is, let's talk about cost competitiveness. We have incentives. I mean, and it's hard to be apples to apples, right, in terms of total costs between the US and China in particular, right? Because there's like all these hidden subsidies in China. But as you think about it, let's start with module assembly, which is where, as you said, it sort of was easiest to make the case that it was economic to produce domestically. If you think of the closest you can come to, to an apples to apples comparison, how close to cost competitive are we? Module assembly in the US for the US market versus module assembly in China for the US market, excluding tariffs?

• 12:50Speaker 02

  I'll put it into his first, let's like, let's compare in the US market in general, right? And whether or not solar, if it even if it went more expensive, like it's a reality that it costs more to manufacture things in the United States than it does in China or other parts of the world. I think one of the things we've learned in the last five years is that even when a product is made in the United States and in solar, solar specifically, it is still cost competitive with other forms of technology. You look at Lazard's LCOE models and those cost charts, solar is always going to be right on the bottom. And that is even when you have US manufactured goods into the mix, right? So it's a, I think in the US, we've proved that you can make it here and have it still be an appropriate technology. The question that you're asking is how do you make it scale or be competitive

• 13:31Speaker 02

  on a global basis? That's what 45X was designed to do, right? It was designed to overcome the cost differentials between making something in the US and making it in China or other parts of Asia. And we're getting closer to it, but it's still something that requires scale and it requires localized clustering of manufacturing investments because, you know, if you look at what things cost to make in China relative to anywhere else, a solar panel, you can often buy them on a global basis for seven, eight, nine cents a watt, right? And the reality is we're not quite there in the United States, even with 45X. But when you have a slew of other policies involved, whether that's domestic content, whether that is trade policy, whether that's other types of mechanisms which drive demand

• 14:15Speaker 02

  for US manufactured stuff, again, it's going to be cheap relative to natural gas and every other form of energy.

• 14:19Shayle Kann?

  You mentioned that in the context of polysilicon, the main cost is energy, which is why we've got REC in Washington and so on. For wafer cells and modules, what are the, like, walk me through the, the cost stack? How much of it is capex, labor, equipment, materials? Like, what should I be thinking about as the things that really drive it so that we can really understand the comparison between what it costs in China or other parts of Asia versus here?

• 14:48Speaker 02

  I'd say it's a mix of the capital cost to build the plants. You know, it's one of the things that is a big reality is that it's just more expensive to build a structure here. If you look at the, like, you can search what it costs to build a factory for a couple gigawatts of cells in the United States versus what it's going to cost someone to do it in Vietnam. You know, just the construction cost alone is dramatically different. And that's whether, you know, this is a result of, uh, not electricity prices, but steel cry, steel prices and contracted labor and all sorts of like permitting and other things that are a bit different in other parts of the world. But otherwise, like, you know, the equipment you can buy on a global basis and it's relatively commoditized, whether that's for a panel, glass, frames, junction boxes, all sorts of things. You might have to pay a tariff on some of those things.

• 15:32Speaker 02

  But otherwise, like, those are the real, you know, on a, on a, on a generalized basis, the cost difference just becomes an aggregation of factors. It's not any one particular thing. But again, that's what 45X is really built to address is to try to make sure that any differences you might face is going to make sure that the US can be competitive. And it's also, you know, not something that said it's going to do this forever. It was supposed to incentivize investment, create some certainty of demand and then build enough scale. Because that's the other thing the US hasn't had. You know, we've had a bunch of like a couple hundred megawatt plants here and there, but we're competing on a global basis versus five, 10, 20 megawatt type plants, right? Much, much larger facilities. So when you hit those economies of scale, all of those things become much, much smaller. So that's what we're focused on.

• 16:16Shayle Kann?

  You, I think you mentioned like, we need like a clustering of manufacturing. One other thing that I've heard over the years is that one of the advantages that China has had as it has scaled up the supply chain is just that there is an abundance, there are, there are multiple suppliers of everything, whether it's equipment or whether it's materials or whatever. And not only are there multiple suppliers, but they're in the same region and easy to access and shipping costs are low and you can switch and it's resilient supply chain and so on. And so if you're trying to stand up A supply chain from virtually nothing, particularly if we're talking wafers or cells, which you guys are doing at Q cells in the US, you don't benefit from that. So like, is that a meaningful disadvantage?

• 17:01Shayle Kann?

  Just that, you know, we don't have enough suppliers for basically everything that you need?

• 17:06Speaker 02

  It's definitely a challenge to reshoring. It's like one of the critical first steps of it, right? You know, I think we face two challenges when you're trying to build a factory, which is the first of its kind in the United States. One is that, you know, you have to find a contractor to build, say, a wafer factory that's never built a wafer factory before. And then you have to work with, you know, local permitting jurisdictions that have definitely never permitted a solar cell or wafer factory before. So there's a lot of education work that has to get done to overcome that. It is overcomable. It's not something that we can't do. You know, we build things that are new in the United States all the time. It's just a matter of getting that infrastructure in place and doing the education work. The supply chains, yeah, you're buying a lot of things off global markets and, you

• 17:47Speaker 02

  know, you're doing work to not just reshore your own part of the market, but other parts of the market. First Solar's been good at this in Ohio. They have, you know, they've got a local glass float manufacturer who they've, you know, supported and helped invest over the years. And, you know, I think a good analog is the auto industry, you know, in the South in particular where I live. You've had, since like the late 80s, you've had a bunch of global car manufacturers move down here. You've had BMW in South Carolina, you have Honda, you have Kia, Hyundai, Volkswagen's up near Chattanooga. Like, they have been building factories here for the last three decades or so. And in doing so, they've created a lot of those clusters. So it's, it's kind of one of those like chicken or egg problems. And the chicken in this case is the factories, right? The eggs are gonna, the new, all of the supply chain and all the other clustering things

• 18:31Speaker 02

  will come as a factor of there being demand for that product here. But you can't have, you know, one's not going to come without the other. So we've been saying that on the module side. For a while, we've had that factory in Dalton, Georgia for eight years where it makes modules, but it was the first of its kind in the Southeast. And a lot of the stuff was coming from around the world, and now more of it is coming from the US as it's created that economy of scale and that demand.

• 18:54Shayle Kann?

  What was the calculus internally when you all made the decision to build vertically integrated, to go wafer cell module? You were already, as you said, manufacturing modules, and a bunch of folks were doing that, but the rarer decision was the one to vertically integrate all the way up to wafers. So like, walk me through that calculus.

• 19:14Speaker 02

  It was, I would say it was a function of the lessons learned from the pandemic, right? Where, not only, well, two things, in fact. The pandemic and pandemic and trade issues. So on the trade side, you've had, you know, again, a dozen years of various trade cases, but then you also had the passage of the Uyghur Forced Labor Prevention Act, which, you know, really affected the supply and origin of polysilicon and all the things upstream of that coming from around the world. And for customers, it made them want to know, you know, they learned very quick, we were talking about module cells wafers. People all of a sudden had to learn what quartzite was and metallurgical grade silicon and things that they'd never even thought of before and where their products came from. So for

• 19:55Speaker 02

  us, you know, customers were saying that they wanted to know where every single piece of that solar panel came from, and they wanted as much of it domesticated to prevent any supply chain risk moving forward. They know where it comes from, they have a sense of what it's going to cost, they know it's going to be a good product. So for us, you know, we really went about trying to localize everything, to build a fully US supply chain. So we started with announcing the factory in Cartersville, which is 3.3 gigawatts of modules, ingots, modules all the way to ingot and wafer, cells included. And we had also made an investment in RAC silicon in Washington State to restart the poly plant that had been stranded there after they lost all of their wafer customers around the world.

• 20:36Speaker 02

  And that was a really challenging endeavor. We ended up, that plant, as I mentioned, has shifted over to silane gas, but we've been, you know, working on some really strategic sourcing of polysilicon as well. But, you know, that was really the motivation for it. And it was, you know, the 45X incentives, domestic content incentives, that really created the economic ability to make that type of investment.

• 21:03Speaker 00

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• 21:45Speaker 00

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• 23:13Shayle Kann?

  Have we seen a wave of fast followers? I mean, you mentioned there's Emlock, Bakker, et cetera, but you know, 3.3 gigawatts compared to a 50 gigawatt market is still pretty small. Especially versus the 50 plus gigawatts of module assembly capacity, which as you said, does already exist here. So are we seeing, like, where are we on the trend line?

• 23:36Speaker 02

  You know, we're, I mentioned, you know, the four phases of reshoring this. We're on that part of where we have a lot of one thing, we have a lot of modules, we're still trying to reshore the other aspects of it. And it's part of, it's, it's a success story. It's a huge success story. We've had, you know, manufacturing as a whole has contracted in the United States over the last five years, except for clean energy manufacturing. You know, it's been, you know, you look at Rhodium had reports of, you know, how much investment came out in the, in the two years following the IRA is relative to before it in this sector in particular, and it was five times easily. So you've, you've got really strong success stories in this market. You've seen other manufacturers sells, all sorts of things have come. The challenge has been to get to that third piece of self-sufficiency. We've, we've struggled with a couple of things.

• 24:21Speaker 02

  One was how that policy has been implemented, both during the Biden administration and into the Trump administration. It was, you know, it took a long time to get guidance issued on things like domestic content and lots of these other pieces of it. And then there's of course been changes with OBBBA. But then the other was sort of some of, you know, these macro market conditions that we saw predominantly stemming from China, which was that, you know, over the last five years in China, the big piece of economic news was that their property sector crashed. And when that happened, you know, they're, they, you know, they really did compensate by essentially doubling down in export oriented manufacturing of solar batteries and electric vehicles, the same three markets that were, you know, really driving all of that investment that folks like Rhodium were tracking.

• 25:06Speaker 02

  And what that did was it really Oversupplied the entire global market and it really had an impact on how much manufacturing investment actually came to be in the last three years. So I think we saw a huge amount of growth, but you know, it didn't allow for a complete transition of reshored supply chains into the US. So we're still looking for, you know, that next phase and trying to figure out, you know, what's going to drive those, those new investments that get that, that are needed to really hit self sufficiency.

• 25:33Shayle Kann?

  I'm curious how you think about it's complicated. I have complicated feelings about this, but part of the results of how the US has tried to address the supply chain for solar, a combination of carrots and sticks, basically to have domestic supply, which seems to be working to some extent. I mean, certainly Q cells is a good example of it and there are others as well. So success story. On the other side of the coin, you know, we pay 30 cents a watt for solar modules in the US or something like that. And the global average price is probably 10 cents a watt. So I don't know, how do you, how do you reconcile your feelings about the fact that we are building a domestic supply chain, but paying three times the cost of the rest of the world for solar modules?

• 26:16Speaker 02

  I, I think it's because we know that we're not at the end goal of this. You know, the end goal is not to have that particular thing be the fact pattern forever. You know, I think we're trying to get to a point where we have much more scale than we currently have, you know? So in, you know, companies like Q cells that have made multiple investments in these supply chains, companies like first solar, which are building basically the same, you know, modular type factory in various parts of the United States are focused on trying to get to that phase. But it just takes a little bit of time. And, you know, part of it is that, um, you know, I think we, we have learned that, you know, customers aren't going to voluntarily pay that 30 cents over 10. They don't want to be paying more. And it speaks to me to the importance of policy. You know, you really need industrial

• 27:01Speaker 02

  strategy to say, we're going to continue to invest in this market so that we can scale it and make sure it's globally economically competitive around the world. And that is still a work in progress because, you know, we've had carrots, we've had sticks. On both counts, you know, there has been, you know, back and forth on those types of policies. And I think that's one thing you sort of need is you need some sort of continuity and continued push to say this is a strategic investment or strategic sector that we're going to invest in. And I think, again, I think the public sentiment is there that, you know, we want to reshore industries and specifically energy. But it's just going to take a little bit of time and a little bit more focus because of the way that these markets have sort of shaped up.

• 27:45Shayle Kann?

  Tell me if you agree with this or not. I think there's, there's maybe an extent to which we sort of got lucky with the timing, which is we instituted a set of policies that has resulted in both a resurgence in manufacturing, or maybe I guess an emergence of manufacturing. We never really made wafers ourselves in the US before anyway. So an emergence of manufacturing for solar in the US, which resulted in higher prices than the rest of the world is seeing. But that has basically coincided with this period of unprecedented demand for new energy generation, thanks to AI predominantly, which has meant that the fact that solar PPA prices have gone up over the past couple of years, not

• 28:29Shayle Kann?

  down, which is a narrative violation for some people, but is true.

• 28:32Speaker 02

  Yeah, right.

• 28:33Shayle Kann?

  Has made that fact palatable. And we are still, you know, I mean, you've been talking about the supply side, but on the demand side, you guys are selling a lot of modules, right? And like, that price is being borne by the market reasonably well. And in fact, I think that the outlook for solar demand in the US seems pretty rosy at the moment. So maybe we sort of lucked out with the timing.

• 28:54Speaker 02

  A little bit. Would you attribute those rises in PPA prices specifically to component and supply chain type stuff, or also financing costs or other? Like, to me, it's not specific to

• 29:02Shayle Kann?

  It's all things, right?

• 29:03Speaker 02

  It's not specific to any particular market. So I think we've, you know, as our prices have gone up, you know, some of which just tracks general inflation levels too, right?

• 29:12Shayle Kann?

  Yes, it's a bunch of things, right? I didn't mean to imply that the PPA price is exclusively a result of module prices being high. That is a factor amongst a bunch of factors that have driven those prices up. Some of the other component of it is like a supply-demand thing. You just can't charge more for PPAs because there is such a demand for power that you can get quickly, which solar happens to be.

• 29:36Speaker 02

  Yeah, right. No, I want to talk a lot more about that just because, goodness gracious, the politics in general of the energy industry have changed like crazy over the last three months, and they've changed twice. First with, you know, we saw in all of the elections back in November and December, the impact of electricity prices and data centers, and what that has done to essentially local elections everywhere. It's the only thing that anyone is talking, it's one of the top topics in every state house in America at the moment. And then second, with the war in Iran, which has led, you know, creates another energy-type situation, which we saw after Russia had invaded Ukraine several years ago, in which electricity prices went up around the world as a result of gas, you know, changes in supply to natural gas.

• 30:20Speaker 02

  And then Europe, specifically, that led to a wave of clean energy, right? And I think, you know, that plus where we are with data centers in the US, you know, the reality is, again, even at 30 cents a watt, and if we're made in the US, we are still the cheapest and fastest thing to deploy in pretty much every scenario. So there's a lot going for, you know, for the market from that perspective. But the other thing, too, like, to your earlier point of like, why do we even want this stuff in the US to begin with? There's really, like, I think back to, one of the things I used to, an example I used to give a lot was that, you know, Arena, Arena tracks, you know, jobs in the energy and the solar industry in particular around the world. And, you know, up until right now, China's installing like five to 10 times the amount

• 31:02Speaker 02

  of solar that the US is, but historically was usually like two times the amount in any given year. But if you looked at the jobs figures for how much the US had versus how much China had, it was like 250,000 jobs in the US and 3 million in China. So they were installing twice as much, but they had 10 times as many jobs. And it was really a matter of how much of the supply chain that they had. And, you know, to me, that's always been one of the core reasons to talk about, you know, independent of supply chain certainty and national security and all these other aspects of it. You know, when you have a manufacturing basis, you have political power. You have lots and lots of durable, really good jobs that you want to support. And that's one of the reasons I think China went from, you know, installing two times as much solar as the US to 10 times is because they had

• 31:47Speaker 02

  a big domestic industry to support. And then the second aspect on the, on the next wave of that is, you know, solar has become so cheap. We're seeing it all over the world. There's all these articles in the last, you know, couple of months about, you know, solar being installed in Cuba and South Africa and all these places where they have their own energy crisis. Yeah. And like that is because of unbelievably large availability of low cost solar panels, which for them predominantly comes from China. But, you know, for us, I think it's a huge opportunity that we ultimately want to be supplying those things to, particularly with, you know, Europe and Mexico and all these allied government, all these countries around the world that the US does a lot of businesses, business with. I think the same way we want to be a player in LNG and all these other energy markets, we want to be a player in this market. So, you know, I think that's where

• 32:32Speaker 02

  we have a really strong drive to, to narrow that gap of that 10 to 30 cents that you've identified, you know, it's not, it's, it's the objective to really get to that point where long-term we're competing on a global market.

• 32:43Shayle Kann?

  Yeah. And I, you know, as bullish as I am on solar demand in the US and bullish on solar manufacturing growth in the US as well, I don't want to let the solar industry off the hook on this. I was just thinking, I, I think this is back when you and I worked together. Um, I wrote this paper with Varun Sehvaram in 2015 or something like that, who's, that Varun has been on the pod, is now the CEO of Emerald AI. But we wrote this paper for, I don't know, Nature Energy or something like that, that was titled Solar Needs A More Ambitious Cost Target. And I forget about this paper for like years at a time. And then I get some email of somebody citing it every couple of years. But at that time, we were saying, you know, the this was on a CapEx basis for systems, not not LCOE. But you know, the the goal at the time had been the DOE had this

• 33:26Shayle Kann?

  program called the Sunshot program. And the stated goal of the Sunshot program was to get to $1 a watt fully installed solar. And the point of the paper was to say, that's not ambitious enough, right? We need, we need like a far lower cost than that ultimately, especially given that we're going to deploy a lot of solar and in the places that it's at high penetration, it's going to have decreasing value on its own. So we said, I don't remember exactly, something like 25 cents a watt fully installed, or something like that, which should be the target. I still feel that way. Right? Like, I think it is, we have an amazing solar industry, and it's come an incredibly long way in the decade since then. But I still think that we can't like rest on our laurels. I'm concerned about the fact that PPA prices have gone up over the past two years. There

• 34:09Shayle Kann?

  was a lot of sort of adjacent industries banking on like the marginal price of electricity going to zero ultimately, and really thinking of that as being like a solar price is going to go to zero over time thing. And the fact that we are directionally headed in the opposite direction, or at least have been recently, is not good news to me. So like, I'm very excited about solar and super optimistic, but I like want to hold the industry's feet to the fire and say, we still need a more ambitious cost target.

• 34:37Speaker 02

  It's fine. I remember that paper. It was the solar will eat itself type argument.

• 34:41Shayle Kann?

  Yeah, it was, it was that, right. As a result of solar eating itself, we are going to need solar to be a lot cheaper.

• 34:47Speaker 02

  Yeah, and it's, and it's, it's funny, I, you know, it makes me think I put solar panels on my roof last summer while the tax grants were still here. And, you know, the price of the panels relative to the overall installation is still so small. And it's like the same exact things that we were talking about 10 years ago, which is that, you know, the soft costs are still high, right? And it's still, like, you know,

• 35:07Shayle Kann?

  For residential in particular, like, we really didn't solve that for residential. We've like addressed a little bit of it with utility scale, not actually that much, but a little residential, it's crazy.

• 35:16Speaker 02

  And I was a customer who knew my installer because they were friends of mine. And like, I had no acquisition cost, right? So it was still. You know, there's still just the other components and the permitting and the applications, all sorts of things are still a work in progress. But you know, on a manufacturing basis, yeah, I agree. And like, we've seen that around the world where prices have gone from, you know, we, I mean, even in the US, we got below a dollar. While would it still cost, it probably still costs, it might even be a little bit more on a utility scale basis right now. Though it's also not apples to apples, because for the most part, utility projects have batteries now when they did not use two in the past. So, still, still thinking about it. But I, yeah, I think it's a good, it's a good push and something we should be thinking hard about.

• 35:56Shayle Kann?

  All right. So I guess to, to wrap it up, what, if you had to pick, like, what is the hardest thing? What's the biggest choke point? If you're trying to scale up this middle of the supply chain for solar in the US, and gets wafers, cells, what are you finding to be the hardest thing?

• 36:14Speaker 02

  I still think it's the, the general economics. You know, even when you do have a high price market like the US, we are still competing on a relatively global basis. One, because products still are imported from around the world. And then two, pretty much every manufacturer, whether they're headquartered in the US or in China, has built a factory in the United States, too. Right? So you have pretty high volumes of, you know, if you are selling modules in the US with US-made cells, you're competing against someone selling modules with imported cells and all sorts of things. So, you know, you really need customers that are going to give you assurances that they're going to be off-takers for 20 years that that factory will be around, or however long it is. And, you know, I think, I, I think, it's funny, because I, if Jenny Chase from Bloomberg was listening on this

• 36:58Speaker 02

  interview, she'd be like, 20 years for a module factory. Most of these factories get built, and then they are unecon, like, they're, the economics change after five years. Because, you know, this is an industry in which, you know, I, I usually say there's two rules of thumb. One, demand grows faster than people think it will. And two, prices fall faster than people think they will. I think we're talking about how the latter is sort of changed over the last three or four years. But, you know, it's still just a really, really complicated market. And it just takes that, again, real strong focus to say, we're going to continue to reshore this market and value that. Because, you know, it's just, it's, it's different than, say, other industries in which we are already, you know, highly competitive. Think

• 37:42Speaker 02

  aviation, or pharmaceuticals, or automotive, or things like that. But

• 37:48Speaker 02

  On a global basis, you're competing against heavy, heavy scale in a market that's, you know, even though we're still growing, is relatively mature on a manufacturing basis, right? Solar panel manufacturing, especially to the extent that it's clustered in China, is, you know, these products are incredible. They last for a long time, they're cheap, they are. We continue to have them get better, but they're really, really incredible products. So, you know, you really have to understand that you're not just, you're, you're competing, but you don't have the luxury of saying, oh, we're kind of inventing this thing and we're going to get premiums off the bat. You really have to compete right away. So it just takes that, that long-term commitment, both from customers, from government and others, to say that we're going to be really focused on this.

• 38:32Shayle Kann?

  There's also this like thing about the capital markets in the US that's different from China, which is, as you said, right, like Jenny would tell us that these factories are going to become obsolete in five years anyway. And in China, the way it seems to work is like, that's just kind of the cycle of how industry is built, right? Like they scale up really fast, they end up with oversupply, there's a bunch of shakeout of all the companies. Like I remember back in the day when you and I were working together, who were the biggest solar manufacturers in the world? It was like Yingli and Trina and Suntech, right? Right, like all these names that, that really don't exist anymore, but now there's a new wave and it's Longji and it's JA and I don't know who else you could tell me, but the point being like, that's the, that's the natural cycle in China. It's, it's harder to do that in the US. Like if you're going to, you know,

• 39:17Shayle Kann?

  raise capital for a factory that's supposed to last 20 years, your investors, be they public market investors or infrastructure investors or whoever, would like to see some degree of certainty for a good chunk of that 20 years. It's really hard to have that market where you just have this like constant churn of capital investment.

• 39:36Speaker 02

  Yeah, that, I mean, that also explains sort of the whack-a-mole that you see on this, on these global trade fights that occur when you have, you know, factories that start in China, then they go to Taiwan and Southeast Asia, then other parts of Southeast Asia. Now they're popping up all over the Middle East and Africa and all sorts of places. You know, with that cycle in mind, but I mean, that's part of what. You know, the loan programs office and the Energy Dominance Council, whatever, that's what DOE has been really effective at, right? They've been trying to find industries like this that they can de-risk and really give some step in in a place where those private capital markets might not otherwise do so.

• 40:10Shayle Kann?

  All right, Scott, this was super fun and it's great to see you.

• 40:13Speaker 02

  It's good to see you, too. This is fun. And by the way, before we close, you know, for folks like me that used to work with Shale, you know, I was talking to someone recently about, you know, joking how there's like a commonality of people talking about NPR speak and among the, well, among Shale for like, among the small army of analysts that you that you hired and raised through your tutelage, we kind of joked that there's Shale speak because so many of us learned our matters of, you know, persuasion and presentation styles from you. So it's kind of neat to be, have it come full circle and get to do this podcast with you.

• 40:47Shayle Kann?

  My wife would be horrified to hear that there's an army of people who speak like me. I appreciate it.

• 40:53Speaker 02

  You're welcome.

• 40:54Shayle Kann?

  All right, Scott, thanks.

• 40:55Speaker 02

  All right, thank you.

• 40:58Shayle Kann?

  Scott Moskowitz is the Vice President of Market Strategy and Public Affairs at Q cells. He's also the Chair of the Board at Cia. This show is a production of Latitude Media. You can head over to latitudemedia.com for links to today's topics. Latitude is supported by Prelude Ventures. This episode was produced by Max Savage Levenson. Mixing and theme song by Sean Marquand. Stephen Lacey is our Executive Editor. I'm Shale Khan and this is Catalyst.