RE+ exhibition highlights: U.S. module demand and domestic manufacturing

RE+ 2023 was held at the Venetian Convention & Expo Center in Las Vegas from September 11 to 14. InfoLink compiles trending topics and offers cutting-edge analysis of market trends.
 

Exhibition highlights

Most module exports to the U.S. are M10 and G12 bifacial modules from Southeast Asia. At RE+ this year, module makers promoted n-type products actively, presenting TOPCon, HJT, and back contact modules while negotiating for n-type module orders next year. The rise of n-type technology is evident.

For distributed generation projects, especially residential projects, module makers promote glass-backsheet modules with black, transparent backsheets, which embody lower production costs, lighter weight, and aesthetic appearance. For C&I and centralized generation projects, most module makers offer standard glass-glass modules.
 

U.S. module demand and potential constraints

Besides lofty tariffs and anti-circumvention inquiries on Southeast Asia, the biggest hurdle of exporting to the U.S. is the Uyghur Forced Labor Prevention Act (UFLPA). The act restricts the use of Xinjian-origin polysilicon. As a result, non-China clients are more inclined to products produced from non-Xinjiang polysilicon.

As shown in the graphs above, polysilicon production capacity in non-Xinjiang regions of China is far higher than that in the U.S. Still, Southeast Asian module makers face hurdles entering products to the U.S. even when using non-Xinjiang Chinese polysilicon, with many of the goods being detained or returned.

Most module makers use non-China polysilicon to ensure customs release. Previously, some module makers using non-China polysilicon manufacturers failed to clear in customs but made it through in September after shifting to non-China silica.

Out of strategic consideration, polysilicon manufacturers are cautious about production expansions outside China. Therefore, the supply of non-China polysilicon will continue constraining the development of the U.S. solar industry. Buyers have been securing supply through long-term orders.
 

U.S. module demand and market movements

In 1H23, U.S. module demand increased significantly, thanks to the Inflation Reduction Act (IRA) of 2022, the resumption of utility-scale ground-mounted projects, the increasing compliance of Southeast Asia modules, and inventory draws before the exemption of anti-circumvention tariff ends. Southeast Asian module makers sold 15-16 GW of modules to the U.S. in 1H23, with First Solar, Canadian Solar, Jinko, JA Solar, VSUN, Trina, and Boviet being the major importers. U.S. module demand is expected to reach 42-48 GW this year and increase steadily over recent years.

Demand from ground-mounted projects recovers as restrictions ease up. Module makers currently deliver at USD 0.35-0.4 (DDP) or even higher, mostly for previous orders. After RE+ 2023, forward prices fell, with the low-price range purportedly reaching USD 0.25-0.3/W (DDP). Tier-1 and Tier-2, Tier-3 module makers see the gap slightly widen between their prices for modules meeting UFLPA requirements and other non-Xinjiang modules. The gap may expand to USD 0.02 when the industry starts pricing Chinese and non-China polysilicon separately.

Module inventory abounded the U.S. distribution market. Interest-rate hikes affected module demand from distributed generation projects and put off households from investing in rooftop PV projects. In April, the NEM 3.0 reduced the export rate for residential PV systems. This measure hobbled the willingness of Californian residents to install PV systems. In the second half of 2022, module demand from residential projects shrank. Against these backdrops, modules for distributed generation projects saw a chaotic price trend. Recently, prices for modules for distributed generation projects, especially residential ones, plunged to USD 0.3-0.32/W, even lower than USD 0.3/W.
 

Production expansion: module takes the lead

This year, the market focused more on domestic production expansions. The IRA provides generous incentives for PV manufacturers to set up production plants in the U.S. Besides manufacturing production credit, the Investment Tax Credit (ITC) and Production Tax Credit (PTC) also provide a 10% domestic content bonus credit for projects that meet certain domestic content requirements. Therefore, module makers are concerned about subsidy acquisition and policy consistency.

Most production expansion plans are module production expansion. Presently, there are over 100 GW of expansion plans. Given higher barriers to entry, only few manufacturers announced polysilicon, wafer, and cell production expansions. Some of them may see progress falling behind expectations. In response to trade restrictions with the U.S., and even Europe in the future, some manufacturers plan expansions in places other than Southeast Asia, such as Saudi Arabia, Turkey, India, and Europe.

Besides Tier-1 module makers, this year saw several non-GW-scale Chinese module makers, non-China BOM manufacturers, and equipment manufacturers. Despite continuing trade barriers, the IRA attracts many manufacturers to deploy in the market.