By Nichola Groom
(Reuters) - Solar energy equipment manufacturer CubicPV on Thursday said it had scrapped plans to build a major U.S. silicon wafer factory, citing a collapse in product prices and soaring construction costs.
The announcement is a blow to the Biden administration's ambitions to create a homegrown solar energy supply chain to support surging U.S. demand for the renewable energy source. China produces about 98% of the world's wafers, the building blocks of solar cells that are assembled into panels.
CubicPV, which is backed in part by Bill Gates' Breakthrough Energy Ventures, had been seeking to become a pioneer in domestic wafer manufacturing with plans to complete a 10 gigawatt factory this year.
The company was poised to leverage generous new federal tax credits for solar projects that use American-made equipment. But rules unveiled last year allow solar facilities to claim the subsidy even if their panels contain overseas-made wafers -- an obstacle for rolling out domestic wafer factories.
At the same time, global prices for solar wafers have fallen 70% since the 2022 passage of the Inflation Reduction Act, President Joe Biden's landmark climate change law. A wave of new Asian solar production has prompted broad concern about the fate of many proposed U.S. factories.
A CubicPV spokesperson, Laureen Sanderson, would not comment on how specific policies impacted the project.
Instead of focusing on wafers, CubicPV said it will restructure and use its proprietary technology to make panels.
"Together with our Board, we've concluded that the one thing that could truly make a difference in humanity’s fight against climate change and the US's ability to realize a solar manufacturing renaissance is to invent a better panel," CubicPV Chief Executive Frank van Mierlo said in a statement.
Van Mierlo, who has led the company for 16 years, will step down as CEO. Tim McCaffery, global investment director with Thai industrial conglomerate SCG, a CubicPV investor, will lead the company through a transition period.