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Solar Energy and U.S. Manufacturing

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Yes, supporting renewable energy will create good paying U.S. jobs.

In fact, solar has been one of the fastest growing sectors in the labor market. Most of those jobs fall into the “installer” category – the people who are on the roof, or in the field, actually bolting things together. But, the value chain runs from the laboratory, through engineering and design, and to manufacturers before the hardware gets to the contractors.

U.S. manufacturing is one area where we can do better and an area that the incoming Biden administration, with Energy Envoy John Kerry, has highlighted. It should come as no surprise to those who know me that I have some ideas on that. We should keep a couple of additional goals in mind as we try to increase U.S. manufacturing of solar products.

  • Increased penetration of renewable energy will displace workers in coal, oil and gas and their related value chains. Those workers are not always mobile. Find ways to increase solar employment in those geographies.
  • Sustainability will be increasingly important to minimize manufacturing’s carbon footprint. Find ways to favor low energy intensity manufacturing and complete recycling.
  • Favor diversity. Direct experience shows us that the greatest value of diversity is in diversity of thought. Different approaches to problems bring different solutions and there is great strength in that.

Our thoughts on solar manufacturing:

No tariffs. Protectionism does not work. The increased cost is ultimately borne by the consumer in the form of higher installed cost and increased cost of the solar-generated electricity. Whether the tariffs are levied on the imported goods or the raw materials, the costs will be passed along through the value chain.

Role of the ITC. The investment tax credit (ITC) certainly helps to make solar more competitive against alternative energy sources. However, it currently provides no incentive for American-made products. The benefits of the ITC do not necessarily trickle down to the manufacturing sector, so it is far better to provide incentives for domestic manufacturing through other measures.

Level the playing field. My personal opinion is that we need to provide direct incentives in order for U.S. manufacturing to be competitive with subsidized overseas manufacturing. In our case, we already use a very cost-effective, high volume manufacturing process – injection molding. Labor costs are not as significant at high volume, so the cost of production in the U.S. is only slightly higher than overseas and that cost is easily offset by transportation costs. BUT – tooling cost in the U.S. is 5X higher than offshore! We found the same to be true for steel fabrication. The pain points are likely different for other manufacturing methods, so the solution will be to analyze those value chains and provide relief at the appropriate point. For example, low cost loans to support tooling development will result directly in U.S. job growth. Issues in other parts of the value chain may require other solutions.

Focus on displaced workers. This is essential. Creative destruction is a great concept for describing the steady progress of renewable energy toward being our most cost effective energy source. Fortunately, we are starting to recognize the societal impact of this growing revolution. Government policies absolutely must incorporate incentives to transition the fossil fuel workforce into equally valuable (to those workers) renewable energy jobs.

Sustainability. Incentives might be appropriate to favor low energy intensity materials and manufacturing methods. For example, one significant benefit of thin film solar cells, especially the developing perovskite materials, is the low processing temperatures relative to mainstream silicon cells. The production of plastic materials and fabrication of plastic parts use less energy than the production of steel and aluminum. If chosen and managed correctly, plastics can be recycled into new hardware at with even lower energy cost. Yes, plastics are currently produced from fossil fuels, but bio-derived synthesis is already happening and is expected to expand.

Diversity. We have always hired and promoted a diverse workforce and will continue to do so. Direct experience taught us that diversity, in all senses, makes a stronger, more resilient company and there is no reason to give that up. The smart companies will do this and thrive.

Tessolar’s Pledge

All products sold in the U.S. will be made in the U.S.
We will favor manufacturing in regions where fossil fuel related employment is threatened.
We will advocate for rational domestic manufacturing supports.
We will reclaim and recycle our hardware into new products.
We will continue to promote diversity in all forms.

Thanks for reading.

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