January 2024 Cleantech Roundup: Solar Manufacturing | Electric Vehicles | Evolving Carbon Markets | Fuel Cells
This month, we’re highlighting the evolving domestic solar manufacturing sector, changing supply chain and market dynamics for electric vehicles, how carbon markets are getting better and worse at the same time, and some headlines about fuel cells.
US Solar manufacturing: Both Demand and Inflation Reduction Act Driving Growth
First Solar, the largest domestic manufacturer of solar (based in the City of Glass, Toledo Ohio), recently sold $700 worth of tax credits for 96 cents on the dollar. This was the first such sale of these Inflation Reduction Ace tax credits, which are transferable (which means they can be sold). This is a good sign that this tax credit market is starting to develop and work — I had seen previous estimates that tax credits might trade at a 15–20% discount, so a good sign that these were discounted a mere 4%.
Also in US Solar Manufacturing news, Microsoft announced that it has a deal with panel manufacturer QCells for 12 gigawatts of production capacity over the next 8 years. This is a little unusual since Microsoft isn’t a solar developer, although they are one of the top corporate installers of solar. It appears to be a reflection of potential for supply chain challenges in the medium term, but also a signal that Microsoft is trying to send to encourage domestic supply, by reaching way up the chain.
Meanwhile, solar developer NexAmp announced its second headquarters in Chicago in light of major growth kicked off by state legislation encouraging community solar (NexAmp’s focus area)
Electric Vehicles: China, Tax Credits, and Plug-ins
- China recently implemented new export controls on graphite, a primary ingredient in EV batteries. China dominates graphite supply, so this is a potential supply chain threat for domestic EV manufactures. The move is likely to spur more interest in battery recycling as well as domestic processing capacity.
- Here’s the list of electric vehicles that qualify for full IRA tax credits this year. It’ll get longer in future years as companies both introduce more models, but also re-orient their supply chais to qualify.
- In other news, GM announced it would make a new plug in hybrid. The press on this characterized this as a waffling retreat (from only developing new EVs). I think this is overblown — the speed of transition does matter, but companies have to be responsive to consumer demands too. Plug-ins aren’t the long term future (because the cost advantages to electrifying the drivetrain really accrue when you don’t have to put in a second set of parts), but it is not worth hating on them — they are a good step in the right direction, and one that US consumers seem to like.
Evolving Carbon Markets
Voluntary carbon markets are in a period of significant change, with declining volume in 2023 overall, even as durable offsets increased significantly. There continues to be a shakeout underway where lower quality credits are losing share to more durable, often more technological complex, carbon removal credits (which also cost significantly more).
I think the real question for less durable credits (like those related to forestry) is whether standards are clarified and these credits continue to retain any value at all, or if they end up like penny stocks — which would be a bad outcome, since forests and soil can sequester a huge amount of carbon!
On the other hand, durable carbon offset markets are in a period of creativity, investment, and growth. According to a recent CDR.FYI report (which tracks durable carbon dioxide removal), most CDR buyers expect prices to be over $100 a ton by 2050. Still, buyers anticipate demand will be driven by lower prices and clearer standards (related to durability, additionality, verification, etc…).
Hey would you look at that, a couple different headlines about fuel cells!
Mercedes Daimler is testing hydrogen fuel cell trucks in Germany (fueled by liquid hydrogen), and Honda and GM are kicking off a joint venture to manufacture fuel cells for Honda’s next gen fuel cell CR-V. I am bullish and bearish on these two fuel cell announcements, respectively — I’m not sure why anyone would buy a hydrogen field CR-V when they could grab a Tesla Model Y (or a hybrid CR-V for that matter), but no one pays me to be an auto analyst.
Sometimes Capital Expenditures Hertz
I previously highlighted how Hertz made a big investment in electric vehicles; now they are selling a third of their EV fleet.
