A new company backed by one of the largest solar module manufacturers in India will soon be setting up the first of several U.S.-based solar panel manufacturing plants.
The new U.S.-headquartered venture, VSK Energy LLC, is a renewable energy startup formed with major ownership and technology contributions from Vikram Solar Ltd., a company which is already a major player in the solar industry.
Based in Kolkata, West Bengal, India, Vikram Solar is a relative giant in solar panel production. With an annual manufacturing capacity of 3.5 GW and with installations of their products already on six continents, they are also more than just a regional player.
Chinese manufacturers currently dominate the solar industry with four out of the top five suppliers based there. Only Canadian Solar, which ranks fifth in total production volume, comes from outside the People’s Republic of China (PRC), and even it is lead by an ethnic Chinese named Shawn (Xiaohua) Qu, who was born in Beijing and maintains close ties to China.
Chinese companies have been able to dominate the industry due to use of forced labor and government subsidies.
The top five global industry leaders in this field for 2022 were LONGi with 47 GW of output, Trina Solar with 43 GW, Jinko Solar with 43 GW, JA Solar with 39.75 GW, and Canadian Solar with 21.1 GW.
This places Vikram Solar as a distant follower to those companies, with less than 10% of the capacity for even the lowest of the top four players.
Vikram Solar is interested in the U.S. market as a means of ramping up that market share, and with two advantages over potential expansions it might be considering in other countries.
One is that the White House backed Inflation Reduction Act (IRA) will be providing a direct tax credit worth up to 10% of the cost of setting up the factory. This of course is separate from any local tax credits and long-term financial incentives states and local governments might also provide.
The other is that the U.S. is, for now at least, a protected market, where Vikram’s Solar’s new American venture will not be subject to the weak tariffs placed on China’s solar panels and components.
The first manufacturing plant to be built by the new venture will be based in Brighton, Colorado, and constructed at a cost of $250 million. On a fast-track to begin producing modules as early as 2024, the plant is targeted to make 2 gigawatts of solar cells in its first year, with an eventual plan to double its capacity in the long term. It will initially employ over 900 people, if they can be found.
The state of Colorado is kicking in $9.1 million of its own tax credits for the Brighton plant, in return for its promise of creating new jobs. However, that advantage won't go very far given that Colorado has a very high cost of living and corresponding labor cost.
Besides Vikram Solar as a foreign partner for the entity, the VSK Energy LLC venture includes Phalanx Impact Partners, a private equity firm which specializes in “green” projects, and Das & Co., an investment and development enterprise which already has other solar industry positions in both India as well as the United States.
VSK Energy LLC has revealed it will begin construction soon on a second major solar production plant in an as-yet-unidentified state somewhere in the southern U.S. This $1.5 billion project will eventually produce wafers, solar cells, and ingots used to produce solar panels. When it comes online in 2025, it will employ over 1,500 people.
The partnership is an important one for India as well. Within its home country, the government has helped subsidize investments in domestic solar production with the goal of decreasing dependence on Chinese suppliers. According to a recent analysis, it has made such inroads that it is expected to become wholly self-sufficient in solar panel production by just three years from now.
VSK’s announcement comes soon after another major foreign partner, Italy’s Enel SpA, announced in late May that it would be investing over $1 billion in a solar cell and panel manufacturing plant based in low wage Oklahoma. It too will be taking advantage of the 10% project tax credit provided by the IRA, plus additional local incentives.
Together with VSK’s new plants, these facilities will make a major difference in making a major step toward solar panel purchasing independence from China. They will also help keep domestic solar installations ramping up for the foreseeable future and help minimize carbon emissions in the U.S. for the long term.