Supply chains, clean energy, and national security

As solar energy adoption accelerates, reliable and secure supply chains will be essential

By Nancy Rivera and Jake Levine

In many respects, the year 2021 was a very good year for renewable energy.

A new report from the International Energy Agency (IEA) shows that the world is on course to set an all-time record for new installations of solar panels, wind turbines, and other renewable technologies, and that global renewable electricity is expected to rise more than 60 percent in 2026 from 2020 levels, as more governments adopt ambitious clean energy goals.

Yet there has long been a somewhat precarious foundation of solar supply chains concentrated in a few markets and the COVID pandemic highlighted supply chain vulnerabilities across many industries, including solar.

While the world needs more clean sources of energy to reduce emissions and help mitigate the threat of climate change, it also needs to ensure as a matter of economic and national security that the supply of renewable technologies comes from a more diversified set of reliable sources.

This week DFC joined forces with First Solar, Inc., the largest solar module manufacturer in the Western Hemisphere, to strengthen supply chains by building a major new manufacturing facility in India. The plant will produce solar modules that are made responsibly and reliably to one of the world’s largest emitters with renewable energy targets that make it one of the largest solar markets.

DFC’s financing will support the construction of a 3.3 GW solar module manufacturing facility in Tamil Nadu, India, bolstering manufacturing by a key U.S. ally, and avoiding unfair trade practices, as well as abusive and distortionary industrial policies used by the People’s Republic of China (PRC). First Solar is the only major solar manufacturer that produces thin film modules that do not rely on silicon inputs, which will help boost supply chain transparency throughout the renewable energy sector.

The PRC currently produces nearly 70 percent of the world’s polysilicon supply, more than 95 percent of solar ingots and wafers, and more than three-quarters of the world’s PV cells, the three critical inputs for finished solar panels. Over decades, the PRC has strategically used unfair trade practices, as well as abusive and distortionary industrial policies, to dominate the global production of crystalline silicon solar modules and inputs for such modules, thus driving out of the market non-PRC companies.

DFC has committed to not supporting any projects that utilize forced labor in their supply chain and, in the solar sector, is specifically focused on diversifying global supply chains for solar manufacturing. This agreement with First Solar significantly advances the U.S. values-driven leadership in development.

First Solar’s plans to build a new facility in India come on the heels of plans unveiled earlier this year to build a new $680 million factory in northeast Ohio that will strengthen domestic supply of solar modules in the U.S. and create new jobs.

At a time when industries from toys to pharmaceuticals have experienced significant disruptions resulting from unreliable supply chains, it is clearer than ever that we must reconsider the source of the goods and services that are essential to everyday life. This First Solar-DFC partnership is a major step in ensuring the world will be able to meet its rapidly growing demand for clean energy.

Nancy Rivera is Managing Director, Structured Finance and Insurance, and Jake Levine is Chief Climate Officer at the U.S. International Development Finance Corporation (DFC).