Tuesday, February 6, 2018

JinkoSolar to Build US Manufacturing Plant


Two weeks after the Trump administration’s unveiling of a 30% tariff on imported solar cells and modules, JinkoSolar (U.S.) Inc. (JinkoSolar) is planning to open a manufacturing plant in the US. Reports indicate that JinkoSolar is the company behind a plant under negotiation in Jacksonville, Florida.  The company announced in a press release its signing of a master solar module supply agreement for 1.75 gigawatts of solar modules to an unnamed US counterparty and that it would be constructing a manufacturing plant in the US in connection with the agreement.   The board of JinkoSolar had previously authorized the construction of a US manufacturing plant, but had not provided any further details. 

The plant under negotiation in Jacksonville with an unnamed foreign manufacturer, code-named “Project Volt,” is projected to cost $410 million and is expected to create 800 new jobs.  The Jacksonville City Council has approved $24.2 million in incentives for Project Volt, part of a $53 million incentive package from the city and state to entice the foreign manufacturer’s investment in the plant.   JinkoSolar has not confirmed that is the company behind Project Volt.

According to PVTech, the top-ten module suppliers by shipment volume in 2017 were all based in China and South Korea.  Previous attempts by large foreign manufacturers to establish plants in the US have been unsuccessful due to the inability to compete with imported modules.  The supply chain in the US is generally seen as less competitive with high operating costs. 

JinkoSolar is expected to produce modules in the US using tariff free imported cells, taking advantage of the 2.5 gigawatt quota included in the Trump’s administration tariff announcement.  Accounting for the 30% tariff on modules for the first year, the US modules are expected to be less expensive than modules made in Asia.   

Credit Suisse noted to investors that “JinkoSolar’s strategy to build U.S. module-manufacturing makes sense near term as U.S. modules will cost 15%-5% less compared to imported modules under tariffs through 2021, firm supply contracts protect downside if import-tariffs are withdrawn prematurely, and higher U.S. margins provide cushion against growing oversupply and lower margins in the industry.”  Additionally, JinkoSolar expects to take advantage of a “Made in America” premium on its modules upon expiration of the tariffs.