By Nichola Groom
(Reuters) - First Solar Inc (NASDAQ:FSLR) on Thursday announced plans to spend up to $1.1 billion on what will be its fifth U.S. factory to meet booming demand for American-made solar panels.
It is the second time in the past year that the top U.S. panel maker has announced a major expansion of its domestic manufacturing footprint. President Joe Biden's Inflation Reduction Act, a law passed last year that incentivizes homegrown production of clean energy equipment, is underpinning a boom in solar factory investments.
"By expanding America's solar manufacturing base, and the value chains that support it, we are working to ensure that the U.S. enters the next decade in a position of strength, fully capable of producing the technology it needs to complete its transition to a sustainable energy future," First Solar Chief Executive Mark Widmar said in a statement.
The new 3.5 gigawatt (GW) factory will increase First Solar's U.S. manufacturing capacity by a third to 14 GW, the Tempe, Arizona company said in a statement.
It has yet to select a location for the factory, which will begin production in 2026 and create 700 jobs. First Solar currently produces panels in Ohio and will open an Alabama facility in 2025. It also has operations overseas in Malaysia and Vietnam.
U.S. solar project developers have flocked to First Solar's cadmium telluride products in part because the technology does not rely on polysilicon, a raw material primarily made in China and used in the vast majority of panels. First Solar has an order backlog of 78 GW, the company said.
Under the IRA, projects that use equipment made in the United States can qualify for a bonus tax credit worth 10% of the facility's cost. The law seeks to reduce the nation's reliance on Chinese-made products.
First Solar said the Series 7 panels it will produce at the new facility will be made with 100% U.S. components as defined under the Treasury Department's rules for the IRA tax credits.
The White House applauded the announcement.
"Today's announcement by First Solar, a proud American company, represents another huge investment in American manufacturing and building our supply chains here at home - that's what Bidenomics is all about," Biden said in a statement.