TOYO doubles solar cell production capacity in Ethiopia

From the newsletter

Solar solutions provider TOYO Co., Ltd has announced a $47 million expansion of its solar cell manufacturing facility in Hawassa, Ethiopia, doubling its capacity from 2 GW to 4 GW. This move follows strong global demand for high-performance solar cells and builds on the successful completion of Phase 1 production, set to begin in Q2 2025.

• Africa’s solar manufacturing is nascent but poised to grow 15% annually from 2025 to 2030. TOYO’s expansion in Ethiopia signals Africa’s growing appeal for renewable manufacturing, leveraging Ethiopia’s low labor costs, tax incentives, and proximity to Middle Eastern and European markets.

• At the same time, Morocco, South Africa, Egypt, and Nigeria currently lead in scale for solar manufacturing. Together, these four countries account for the bulk of Africa’s PV manufacturing capacity and experience. If successful, Ethiopia is positioning itself as a competitor for PV manufacturing and potential export.

More details

• Construction of the second phase begins this April and is expected to conclude by July. The new facility will be adjacent to the existing Phase 1 site in Hawassa, utilising shared infrastructure for efficiency.

• TOYO reports strong pre-orders for its solar cells even before Phase 1 production begins, reflecting robust demand globally. Equipment installation and trial runs for Phase 1 are already underway, with formal production scheduled for early Q2 2025.

• The company aims to integrate upstream and downstream processes within the solar supply chain, positioning itself as a full-service provider. 

• Ethiopia's strong investment climate and prime location, combined with its 90% hydropower-based electricity, make it ideal for renewable energy manufacturing. TOYO's Hawassa facility leverages these advantages, benefiting from logistical ease and contributing to local industrial growth, while aligning with sustainable energy practices.

• Moreover, TOYO's Ethiopian solar cell facility will capitalise on the booming U.S. solar market and global demand, while also reducing import costs for African solar manufacturers like those in Egypt. This will boost regional industry growth and create jobs, aligning with TOYO's global expansion strategy.

• TOYO’s integration strategy, which includes spanning wafers, silicon, cells, and modules, positions it uniquely against competitors who rely on fragmented supply chains. This vertical integration could enhance profitability and operational resilience amid fluctuating global demand.

• Currently, China leads the world in solar manufacturing in the world with 78% of the world's production​ . This starkly contrasts with Africa, whose share is less than 1%. The trajectory is, however, changing rapidly. Egypt has a 2GW panel manufacturing plant in Masdar, currently in the pipeline. This, among others like the Almaden Morocco plant (1 GW capacity) in Morocco, the 1.2 GW Arena Solar plant in South Africa, are contributing to a step in the right direction for Africa.

• Policy support is also building, which is key to this revolution. Many African governments are sending positive signals to investors through renewable targets, incentives, and trade frameworks. While challenges remain, the groundwork is being laid for an expansion of solar manufacturing. Countries like South Africa, Morocco, and Egypt have explicit plans and policies to become solar manufacturing hubs, and others are following suit.

Our take

• Ethiopia might be a solar manufacturing threat! TOYO's $47 million investment, while seemingly modest, is a powerful signal of Ethiopia's potential to disrupt the African solar manufacturing landscape dominated by Morocco, South Africa, Egypt, and Nigeria. By leveraging its low labor costs, tax incentives, and strategic location near key markets, Ethiopia is actively positioning itself as a competitive alternative.

• TOYO's integration is a strategic advantage. The company’s attempt to control more of its supply chain offers potential benefits. It could improve efficiency and reduce some risks, giving them a more stable position in a fluctuating market.

• Policy + money = flourishing solar industry. The combination of Ethiopia's conducive investment environment, driven by government incentives and its proximity to major markets, and TOYO's substantial investment creates a powerful synergy for renewable energy development.