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The phrase “Buy American” conjures up reactions ranging from proud patriotic fervor to ugly nationalist jingoism. When it comes to solar photovoltaics, the term took on a seemingly specific meaning when it was attached as a domestic-content provision to the American Recovery and Reinvestment Act (ARRA). What appeared straightforward enough—that solar power-plant projects funded with ARRA monies should deploy U.S.-made modules or U.S.-made cells in foreign-made modules—was actually not very straightforward at all, and ended up potentially helping only locally assembled modules and penalizing companies with cells being strung up in modules overseas.
After consultation with—and pressure from—U.S. PV cell manufacturers and other interested parties, Cathy Zoi, the Assistant Secretary of Energy for energy efficiency and renewable energy (EERE), recognizing that the determination of “ where final ‘manufacturing’ occurs in the context of the complex solar production chain is complicated,” issued a waiver of the Buy American requirements last week.
In the name of the public interest, she chose to facilitate, for the next six months anyway, the “more inclusive” approach of allowing both U.S.-made modules with foreign cells and foreign-made modules with exclusively (as in 100%) U.S. cells to qualify under the provisions of the Recovery Act.
I reached out to Suniva’s Bryan Ashley for comment. The company’s chief marketing officer was actively involved in clearing up the confusion about the local-content clauses and assuring that his U.S. company would benefit from what it was supposed to in the first place.
“The Buy American provision in the Recovery Act was very confusing in its wording,” he explained in his email reply. “When applied to solar modules, the language can actually be construed to favor less U.S.-made content--and thus less U.S. manufacturing and fewer U.S. jobs.
“Suniva’s modules have well over 85% U.S. content, which includes our cells made near Atlanta, GA. The module assembly, which is a relatively simple process of far less value than the manufacturing of the components (especially the cells), happens to take place in Asia.”
“Yet if a narrow interpretation of the provision is made, it could be concluded that this final module assembly alone is what is required to comply, but the source of the component parts (including the cells that represent the largest portion of the value and intellectual property in a solar array) is not relevant,” he continued. “Conversely, a module that contains almost all foreign-made components (including cells), but has final assembly alone take place domestically, will comply.”
“This was clearly not the intent of the provision. The DOE agreed that public interest is best served by supporting the domestic solar-cell manufacturing industry at this time and issued the clarification waiver,” he said.
“Since the dynamic concerning the economics that the highest value and largest portion of IP lie in the cell and most jobs lie in manufacturing the components, not the final assembly, we are very confident that this waiver will merit extension beyond the initial 6 months,” he concluded. (Ashley has not heard yet when DOE might decide to extend the waiver or even make it permanent.)
There are a few other items of interest in the waiver document. Regarding thin-film PV modules, the memo says that “in the event that a thin-film installation is being purchased with EERE Recovery Act funds, it would meet the Buy American provisions as long as the modules were manufactured in the U.S.”
Then there’s the issue of many of the numerous components that go into solar modules and power systems. The waiver applies to the widgets as well.
The document states that the decision “also resolves questions regarding the applicability of the Buy American provisions to numerous individual manufactured goods that are incidental in cost and technological significance but are ultimately incorporated into the final solar installation.
“These items, such as charge controllers, combiners and disconnect boxes, breakers and fuses, racks, trackers, lugs, wires, and cables, but excluding inverters and batteries [emphasis added], are generally low‐cost incidental items that are incorporated into the installation of PV modules and arrays….
“This public interest waiver for all incidental and ancillary items eliminates potential questions and ambiguities concerning whether the incidental items are final manufactured goods or merely components of a larger solar module or array,” it says.
Now that the fog around the Buy American provision of the Recovery Act has cleared, solar project developers in the U.S. can show their colors, taking advantage of the government incentives while benefiting a wider swath of the homegrown PV manufacturing value chain when they make their procurement decisions.
(To read the entire "memorandum of decision" from DOE Asst. Sec. Zoi, click here to go to the linked document on Suniva’s website.)
