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First Solar, the largest U.S.-based solar panel manufacturer, announced on Tuesday it is planning to spend up to $1 billion to construct a new manufacturing facility in the U.S. The company’s announcement comes after the passage of the Inflation Reduction Act of 2022, which provides funding for clean energy initiatives and incentives for domestic manufacturing.

The new factory is expected to generate up to 3.5 gigawatts of solar power annually. The decision to expand its facilities in the U.S. marks a turnaround for First Solar, which in recent years has outsourced its manufacturing abroad, mainly to Europe and India, citing an unfavorable policy environment at home.

Rise in Domestic Clean Energy Investments

The passage of the Inflation Reduction Act in mid-August prompted a surge in investments in clean energy technologies and facilities. This week, Honda announced a joint venture (JV) with South Korea-based LG Energy Solutions to build a $4.4 billion EV battery factory in the U.S. Tesla recently announced a partnership with Panasonic to build a similar-purpose factory in Oklahoma.

Shares of First Solar (FSLR) are rising 0.6% in pre-market trading, and are up 40% year-to-date.

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