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An FTZ is a designated geographical area where special customs procedures are applied. Manufacturers within an FTZ can import goods for manufacturing duty-free and avoid paying import duties if the final product is exported out of the United States. These zones aim to encourage domestic production of goods and boost the country's exports.

The Connection with Solar

With the rising demand for solar products in the United States, more solar manufacturers are establishing operations within the country. While the primary requirement of an FTZ is to export American-made products, there are still benefits for U.S. solar manufacturers operating within these zones, especially when selling to the domestic market.

Benefits of Working in an FTZ

Companies operating in an FTZ can defer paying duties on inventory until the products are ready to be sold. This allows them to invest more capital in their operations upfront. Additionally, there are tax advantages, such as reduced property taxes, which can further support a manufacturer's operations.

Solar Companies in FTZs

While several solar companies have been approved to work within FTZs, none are currently active. For example, JA Solar and KORE Power have approved sites in Arizona, while REC Silicon and Wacker Polysilicon have approvals in other locations. Trina Solar is seeking approval for its under-construction plant in Dallas, aiming to import foreign components and sell finished solar panels in the U.S. market.