Major electricity providers across the U.S. have established goals to significantly increase their deployment of renewables. Some supply chain challenges are tied to unsustainable practices in parts of the solar supply chain, such as labor practices and high carbon emissions. These supply risks threaten utilities’ renewables goals. Utilities can take steps to de-risk their solar supply chain.
Former Michigan PSC Chair Sally Talberg recently published an article in Utility Dive about the role that utilities can play in addressing solar supply chain challenges. The ongoing problems in the global supply chain and government responses to sustainability concerns have created significant supply risks for solar panels, slowing deployment.
As renewables commitments ramp up and demand for modules grows, these supply risks will also increase if these sustainability challenges are not addressed. This will create a major issue for utilities and direct corporate purchasers that depend on solar to meet their clean energy goals.
In her op-ed, former Chair Talberg discusses a combination of policy and business strategies that can help to secure a more geographically diverse, sustainable, reliable and transparent solar supply chain that is able to meet growing demand for solar panels.
Leverage purchasing power
There will need to be significant expansions in solar manufacturing to meet projected global demands for panels. Where that manufacturing occurs will define the reliability of panel supply in the future. Utilities can leverage their purchasing power to increasingly demand sustainably produced solar panels with low levels of embodied carbon. This will motivate manufacturers to build capacity in low-carbon economies, diversifying and strengthening the solar supply chain.
Utility regulators also have an important role in understanding these dynamics affecting the solar industry and overseeing utility solar procurement to mitigate near- and long-term risks. Actions utilities take to buy better solar can ensure stable and cost-effective supply and fundamentally change the trajectory of the solar manufacturing outlook. Regulators can help address these issues by requiring or encouraging the consideration of supply chain risk and embodied carbon in future utility solar procurements. A concrete, common-sense step that can be done today is requiring the disclosure of carbon emissions and component sourcing in both utility requests for proposals and when new solar projects are submitted for regulatory approval. A low-carbon solar standard that can facilitate better solar specification will be available soon as well.
The Global Electronics Council is currently updating the EPEAT PV sustainability ecolabel to include embodied carbon criteria. This will create a standardized method for determining embodied supply chain emissions with third party validation and allow corporate purchasers and major utilities to specify ultra low-carbon solar panels. As former Chair Talberg explains:
“Utilities and other purchasers can drive change and lead on environmental, social and governance issues by sending clear demand signals through procurement standards like the EPEAT PV standard. Manufacturers will respond to that signal by locating new manufacturing in economies with lower carbon emissions.”
Support smart policy
Policy can also help de-risk the solar supply chain and encourage domestic manufacturing. The Build Back Better plan currently working its way through Congress contains several provisions that will help diversify the solar chain such as an ITC extension with a domestic content “sweetener” and the provisions of the Solar Energy Manufacturing for America Act (SEMA) that will incentivize a rapid scale up of manufacturing across the solar supply chain here in the U.S.
With clear market signals for sustainable low-carbon solar panels, utilities can motivate manufacturers to create a better solar supply chain with more manufacturing in low-carbon economies and help secure a reliable supply of solar panels into the future.