Dive Brief:

• GE plans to triple its manufacturing capacity for solar and battery energy storage systems to 9 GW per year by the end of 2022, the company announced Tuesday.
• The expansion is in part due to the “robust” demand outlook for the solutions, as well as growth in the company’s backlog over the past few months, according to GE. The systems will be manufactured at a new factory near Chennai, India.
• The announcement comes as renewables and storage projects across the U.S. are seeing impacts from global supply chain constraints. According to some experts, the domestic solar industry is particularly vulnerable to these challenges, as there is almost no domestic solar module manufacturing capacity.

Dive Insight:

Multiple factors have fed into the supply chain crunches facing the solar and storage sectors, including labor shortages, transportation backlogs, as well as the after-effects of the COVID-19 pandemic, which led to a temporary shutdown of manufacturing in different countries.

The battery storage industry is also facing a lack of availability of raw materials – in particular lithium – leading to a supply and demand mismatch and skyrocketing prices. The U.S. solar industry just had its lowest quarter since the beginning of the pandemic in terms of installations, according to a recent report from the Solar Energy Industries Association and Wood Mackenzie, installing 24% less capacity in Q1 2022 than the first quarter of 2021. Meanwhile, the industry is also grappling with the implications of a Commerce Department investigation that began in March.

GE’s new factory has ramped up to meet increasing industry and customer demand, the company’s Renewable Hybrids CEO Prakash Chandra said in a statement. Solar and battery energy storage will continue to be key drivers in delivering hybrid systems that enable the energy transition, Chandra added. 

GE Renewable Energy – a $16 billion business – announced the launch of its Renewable Hybrids factory in South India this February. The facility, which employs 250 people, manufactures the company’s FLEXINVERTER and FLEXRESERVOIR products, the former a containerized solution for utility-scale solar and storage facilities, and the latter a system-integrated battery energy storage solution. 

The company’s announcement aligns with the expected ramping up of solar module and battery manufacturing, in response to current supply shortages as well as expected continued growth, Morten Lund, partner with the law firm Stoel Rives, said in an email.

“There will be more announcements like this in the next few years,” Lund added.

He noted, however, that GE appears to be adding only “final product” manufacturing which, while helpful, won’t address the larger supply chain concern for either solar or storage. Lithium prices remain high, and more battery factories will only aggravate that situation, Lund said. 

“What is needed (among other things) is additional lithium refining capacity,” he said.

The new factory will be used to support the growing demand for hybrid projects around the world, a company spokesperson said in an email, adding that "as a result of the growing demand there is a need to increase capacity across all elements of the supply chain, and we are helping on that front with this facility."