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The Next U.S. Energy Revolution Is Here

First Solar’s manufacturing plant in Perrysburg, Ohio.

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Megan Jelinger/REUTERS/Alamy

Until now, the U.S. clean-energy revolution has been imported. Other countries make almost all of the batteries, solar panels, and critical chemicals used in America. But the revolution is starting to come home, a move that could shake up the renewable-energy supply chain.

Companies like
Panasonic Holdings
(ticker: 6752.Japan),
General Motors
Honda Motor
(HMC), and
LG Chem
(051910.Korea) have announced billions of dollars in investments in new U.S. battery factories this year alone.
First Solar
(FSLR) just announced plans for an Alabama solar module factory that will be its fourth in the U.S., putting it on track to quadruple output by 2025. And last year,
Siemens Gamesa Renewable Energy
(SGRE.Spain) said it would build the first U.S. factory to manufacture offshore wind turbine blades, in Virginia.

Companies that make the building blocks of these materials are ramping up production, too. Glassmaker
(GLW), for instance, is restarting idled polysilicon production for solar panels at a Michigan plant.

The accelerating trend toward onshoring—the opposite of offshoring—is driven by several factors. Importing all of these products is no longer a viable strategy because old supply chains have failed repeatedly in recent years. And the U.S. is increasingly wary of relying too much on China for materials.

Company / Ticker Recent Price YTD Change Market Value (bil) 2024E P/E Comment
First Solar / FSLR $169.47 94.4% $18. 15.9 Largest U.S. maker of solar modules
Flex / FLEX* 20.59 12.3 9.3 8.5 A top contractor for renewables factories
Quanta Services / PWR 146.20 27.5 20.9 18.8 Ready for the electrification of U.S. energy

*Estimate for fiscal year ending March 2024; E=estimate

Source: Bloomberg

“This shouldn’t be a surprise, given all the shocks to the system—like trade wars, Covid, chip shortages, logistics bottlenecks—the list goes on,” wrote Paul Lundstrom, chief financial officer of
(FLEX) in an email to Barron’s. Flex helps companies design and build their factories, and is working on projects with major solar companies like
Enphase Energy
(ENPH) to add production of renewable-energy supplies in the U.S.

The biggest factor fueling the shift, however, may be the newfound commitment by the U.S. government to funding domestic production. The Inflation Reduction Act, passed this summer, dedicates hundreds of billions worth of subsidies and loans to the industry, with a substantial portion of that for manufacturing.

Government support could make the cost of producing an item like a solar panel in the U.S. even cheaper than making one in China by 2026, according to Credit Suisse analyst Maheep Mandloi. Today, the U.S. makes just 1% of the most popular kind of solar module, and they cost about 40% more than the Chinese ones.

China also dominates the battery supply chain, but the U.S. is poised to take market share. Domestic battery supplies have become crucial because car buyers can’t get the full $7,500 tax credit for purchasing an electric car unless the battery is made in North America. Plans for new battery factories like the ones that GM is building with LG Chem are on track to drive a tenfold increase in U.S. battery production by 2025, according to S&P Global Commodity Insights. The U.S. could control 14% of lithium-ion cell production by then, up from 4.7% last year.

Moving production back to the U.S. has clear advantages, including shortening delivery times for American customers. For
Fluence Energy
(FLNC), a battery company based in Arlington, Va., onshoring makes production much faster and more flexible. “It provides us the ability to respond to a customer within two to four weeks rather than 16-plus weeks,” says Carol Couch, who is leading Fluence’s manufacturing expansion.

But companies also will face challenges, such as how to maintain profits while paying higher wages and land costs in the U.S. Some of that will depend on rules that the U.S. Treasury Department hasn’t finished writing. Key issues that need to be worked out include wage requirements for workers at these plants and guidelines for just how much of each piece of renewable equipment must be made in the U.S.

For now, a few players stand out as clear beneficiaries of the trends.

One is Tempe, Ariz.–based First Solar, the largest U.S. manufacturer of solar modules. The company uses unique technology to create a specialized solar film that can be fully assembled in a matter of hours in one factory. At its current pace, First Solar could supply about 20% of the modules used in the U.S. by 2025. The stock, however, already reflects much of that growth, rising 94% just this year. It trades at 38 times its expected earnings over the next four quarters.

To buy in to onshoring at a better price, investors should consider some of the manufacturing companies that specialize in this sort of work. Flex, for instance, trades for just nine times expected earnings and is positioning itself as a go-to contractor for renewables factories. “We have the expertise and the footprint to help our customers take advantage of these opportunities,” said CEO Revathi Advaithi on the company’s latest earnings call.

Quanta Services
(PWR), whose near-term earnings growth trajectory is more impressive than Flex’s, trades at 21 times expected earnings, a loftier multiple and a premium to the broader market. But few companies are as well positioned to profit from the electrification of the U.S. energy system. Renewable-energy infrastructure already accounts for 22% of Quanta’s revenue, and the company forecast 8% to 10% annual revenue growth in that area before the Inflation Reduction Act. There’s little doubt that the subsidies will boost the company’s growth rate considerably.

A new U.S. supply chain is being built. As the energy starts to flow, cash will, too.

Write to Avi Salzman at


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