OPIS Insights

Watch: Barron’s Senior Energy Writer Laura Sanicola and OPIS Senior Editor of US Solar Colt Shaw discuss what’s ahead for energy this week.

Watch this week’s episode for insights into the news about tech giants building out solar manufacturing capacity in the US to service data centers in space.

Transcript:

LAURA SANICOLA: Hi everyone. This is Laura Sanicola, author of Barron’s Energy Insider. And I’m here today with Colt Shaw, Senior Editor for US Solar at OPIS. Colt, thanks for joining me.

COLT SHAW: Thanks for having me on again.

SANICOLA: So I had the idea to bring you on because I was reading headlines about Elon Musk building out a really crazy amount of solar manufacturing capacity in the US, ideally to service data centers in space. And I figured you could help me contextualize a little bit here what’s going on. This is bigger than all of the solar installs in the US to date. Is it not?

SHAW: Yeah. By, like, a good margin too. So he announced a hundred gigawatts of fully domestic US solar by the end of 2028. And to put that in context, like you said, I think there’s about sixty something gigawatts of just modules in the country at the moment and sub ten gigawatts, sub five gigawatts of wafers, sub ten gigawatts of cells. So he and, you know, these plants typically take a few years to grow online. So he’s talking about more than doubling, you know, the US output of solar manufacturing in that, you know, short period of time. So there’s definitely some, you know, wondering how legitimate this was, but now we’ve seen this week, they are moving ahead with at least a ten gigawatt cell plant in Bastrop County, Texas. The board of commissioners there voted to nominate the project for the state level program that would give it tax incentives to move to move ahead with development.

And at the time when he mentioned his solar ambitions in January, they also started up old production lines for Tesla residential solar panels in Buffalo, New York. So they are taking steps toward this. The ultimate goal is kinda tough to see right now, how it would materialize just given all of the kind of supply chain constraints and and, you know, restrictions on foreign suppliers you can work with.

But, you know, if the space solar thing sounds a little far fetched, he’s not the only tech giant looking at this. Meta, I believe, last week, just signed a deal with a space solar company that they intend to use to power their AI data center. So that that could be on the way sooner than we think. And, yeah, he’s eyeing, you know, basically kinda coring that market for themselves and, you know, vertically integrating the whole thing.

SANICOLA: So I would imagine this is gonna have a big impact, just all this demand from for the various components that go into making solar modules just given the size of these proposed projects.

But remind me again, I mean, I know manufacturing in the US is challenging and expensive because we put a lot of restrictions on content that comes from China and other parts of Southeast Asia that considered, you know, pretty integral to making these modules. So what what does Elon Musk face in trying to do this?

SHAW: Yeah. Well, I mean, solar modules made in the US with US components are just, yeah, you know, far and away more expensive than those imported from Southeast Asia. But, you know, I guess the economics are probably a little different when you’re, you know, shooting them up on a satellite, and, know, he might not be as constrained to trying to save a few cents per watt. So that could be part of his intention to just kind of control his own supply chain, especially with, like I mentioned, all these kind of FIOC restrictions. And, again, just with the the way trade probes move, you know, the supply chain he sets up today could be in trouble six months from now. So, you know, kinda doing it himself makes sense.

But, yeah, like I said, he he’s subject to all the, you know, the same headaches that the solar industry is going through at the moment. I believe last month, the Chinese government blocked a sale that Musk was trying to or a purchase from Musk of solar manufacturing equipment from a Chinese company.

A few months before that, it was reported that he’s trying to get Malaysian polysilicon. Chinese polysilicon dominates the, you know, the global industry. So the fact that he was for Malaysian polysilicon indicates that his team is probably aware of the kind of risk around two thirty two, which is, you know, investigating imported polysilicon. And some people think, you know, Chinese polysilicon is going to be especially at risk.

So he’s clearly trying to figure out a way to do this, but he’s also talking about having polysilicon involved, I believe. So he’s got a big a big task ahead of him. But, you know, if they were to if these date you know, the space solar data center plan doesn’t materialize, he could immediately kinda step in as a big player in just the open module market. I mean, as a as an American company, they’re already on good, you know, good standing in terms of foreign currency of concern restrictions, which are kind of, you know, aimed at stopping Chinese control of the industry and Chinese companies from benefiting from tax incentives. So it’d be good there. But, you know, it’s not exactly like a straight road from here to a hundred gigawatts, so we’ll see how that kinda plays out.

SANICOLA: And would he be competing with domestic manufacturers like First Solar or really all global manufacturers of modules if those data centers didn’t pan out and he had to redirect the supply elsewhere?

SHAW: I think he could. I mean, you know, an entry of, ten or twenty gigawatts even of, you know, new modules to the market would definitely have some impact on price. But just US modules made with US cells alone, not including wafers and polysilicon are a really good deal more expensive than imports, and we really don’t even know what a fully domestic module would look like at this point in terms of pricing. I mean, there’s some estimates that that would be over, like, twice the cost of, you know, of a of a fully imported module. So if he does kind of build out this supply chain, it might be tough to turn around and and sell those hyper expensive modules to someone that’s just looking for the cheapest, you know, supply to get a a solar farm thrown up. So will be interesting. Hundred gigawatts sounds ambitious, but, you know, he’s clearly trying to lay some groundwork for it.

SANICOLA: Yep. This is not unusual for this particular entrepreneur to try and do. Alright. Well, listen. Thanks so much for joining me, Colt, and breaking this down for us, and thanks everyone else. We’ll see you next week.