Tigo Energy, which produces hardware and software solutions for solar systems across the world, last week announced a manufacturing partnership with the U.S.-based solar manufacturer and retailer EG4 Electronics.
As part of the new agreement, Tigo, which is headquartered in Silicon Valley, will set up production of optimizers and EG4 inverters in the U.S., and EG4 will bundle them and sell them to customers. The move adds to Tigo’s domestic manufacturing capacity, which has so far been focused mostly in Asia; EG4’s parent company Energy Access Innovations has recently opened a large manufacturing facility in Texas.
According to James Dillon, Tigo’s chief marketing officer, the decision to bring some of the company’s manufacturing capabilities to the U.S. was made with the purpose of taking advantage of the 45X tax credit for clean manufacturing. “The logical trigger was the tax credit,” he told Latitude Media.
The credit, introduced by the Inflation Reduction Act, can be used by domestic manufacturers of clean energy equipment to reduce their federal tax bill. To the relief of the industry, it was left largely intact by the GOP’s “One Big Beautiful Bill,” which dialed back many clean energy tax incentives.
Of course, it’s still a complicated time for the U.S. solar manufacturing industry, which is still adjusting to the new tariffs and sourcing rules introduced by the Trump administration. But for Tigo — and for certain peers like solar tracker company Nextracker, which announced its acquisition of Origami Solar this week — there is still sufficient incentive to onshore.
For the optimized inverters Tigo will produce with EG4, the 45X tax credit is expected to amount to 11 cents per watt, which Dillon said should be enough to offset the increased cost of manufacturing in the U.S. versus in Asia.
“Offshoring manufacturing is cheaper; there’s a reason why the entire world manufactures in Asia,” Dillon said. “And we haven’t [started production] yet, so we don’t have the specifics. But the goal is to have the tax credit offset the increase in costs.”
Tigo’s new domestic production will target its U.S. customers, who currently constitute about 22% of its customer base. U.S. customers are increasingly interested in building projects with domestic products that can help them comply with increasingly complicated sourcing requirements, such as “foreign entity of concern” regulations. The U.S. production will not substitute Tigo’s offshore manufacturing, however; for the rest of its global customers, which are spread over more than 100 countries, Tigo will continue producing optimizers in China and Thailand.
Despite the timing of the announcement, which came just a few months after President Trump signed the OBBB into law in early July, Dillon says Tigo’s decision was not influenced by recent policy changes.
“Who knows what [President Trump] is going to do?” he asked rhetorically, adding that, while the decision to bring some manufacturing to the U.S. was indeed triggered by the existence of the 45X tax credit created by the 2022 Inflation Reduction Act, Tigo wouldn’t have followed through if it didn’t think it had long-term benefits.
“Manufacturing in the U.S. is a good thing regardless,” he said, citing benefits like a simplified supply chain and reduced shipping costs, as well as supporting more U.S. jobs.
In fact, Dillon thinks recent policy changes — despite the preservation of 45X — are bound to send the U.S. solar industry into a “solar coaster” of “chaotic up and chaotic down,” and that Tigo’s global diversification will help it weather the storm easily.
“The beauty of being worldwide is that we saw a little bit of a drop in Asia last quarter, but two quarters before that, Asia was our strongest quarter,” he said. “Like any investment, spreading your risk is a wise thing.”
More broadly, Dillon thinks onshoring manufacturing could allow the solar industry to work on the quality of its product. Dillon, who worked in the semiconductor industry for 15 years before moving to storage and solar, says that the failure rate for semiconductors is generally so low it’s measured in parts per billion. Solar panels, on the other hand, have an average failure rate of 0.05% annually, which “is orders of magnitude off.”
“The entire industry, start to finish, needs to work on qualities, from the manufacturer to the designer to the salesperson,” he said, noting that onshoring manufacturing could help it do just that. “It’s not the fact that it’d be in the U.S., but the fact that we are going to be able to start something from scratch, take the learning from every prior generation, and build it in.”
