China has taken the lead in global solar construction, thanks largely to cheap labor and government subsidies, which have cut production costs by 85% since 2010. But now the US is offering incentives to manufacture modules domestically. Will this policy challenge China’s dominance?
This is a sensitive topic, with some solar panel companies saying China is building economies of scale that will help it deploy as much as 33,000 megawatts of solar power domestically in 2023. There is. But U.S.-based solar manufacturers argue that Chinese subsidies are distorting the market and that the tariffs are necessary. Some argue that newly enacted tax credits make domestic solar panel manufacturing competitive.
“We need to manufacture our solar modules in the United States. Think about the overall cost,” said Michael Gray, chief operating officer of Origami Solar, during a panel discussion at the San Diego Intersolar Solar and Energy Storage North America Conference. says. This includes customs duties and shipping charges. “If you’re going to push for the cheapest solution, this is it. It reduces your carbon footprint and gives you tremendous benefits. The Control of Inflation Act is a great thing, and it’s going to force us to manufacture products in the United States.” We’re trying, but we can’t do it with tariffs.”
The U.S. installed 21,000 megawatts of solar power last year, more than in 2022, according to the Solar Energy Industry Association and Wood Mackenzie. In fact, solar power accounted for 48% of all new generation capacity added in the first three quarters of 2023. Currently, solar power supplies 161,000 megawatts and is expected to reach 377,000 megawatts by 2028. They predict that by 2050, solar power will become the world’s largest source of electricity generation capacity. US grid.
In 2017, Donald Trump imposed a 30% tariff on Chinese solar panels to “save” U.S. solar panel manufacturers, which account for 5% of the global production market. The Solar Energy Association and U.S. power companies oppose the tariffs, saying they would raise the price of solar panels and hurt buyers.
President Biden temporarily lifted these tariffs, but the White House now plans to reinstate them in June 2024. The U.S. Department of Commerce has discovered that some companies, a division of Chinese solar power manufacturers, are enforcing U.S. final tariff laws by routing their products. Via Cambodia, Malaysia, Thailand, and Vietnam. The agency named BYD Hong Kong, NewEast Solar, Trina Solar, Vina Solar and Canadian Solar as violators.
Biden’s Balancing Act
This presents a “catch-22” for the Biden administration, which aims to significantly reduce heat-trapping emissions by increasing the amount of renewable energy. At the same time, the White House aims to build America’s manufacturing base through tax credits in the Inflation Control Act, particularly those earmarked for building solar panels, wind turbines and electric vehicle batteries.
“This legislation will impact prices, reduce costs in the marketplace and create additional profit potential for manufacturers,” said Entelligent CEO Sean Burke. “Assembling solar panels in the U.S. means potentially lower prices, making solar power more affordable and more widespread.”
Specifically, solar panel users can receive a 30% tax credit on purchases in the U.S., known as the Residential Clean Energy Credit. The credits end in his 2035 year, although lawmakers could extend the program. If a customer buys solar panels built in this country, he will also receive a 10% credit. Solar companies that manufacture panels in the United States include First SolarFSLR, Mission Solar, and Qcells.
Since the passage of the Inflation Control Act, the private sector has announced at least 210 new and significant green energy and clean vehicle projects across the country, according to the Environmental Entrepreneurs Association (E2). This would create 74,181 jobs and bring in $86.3 billion. This includes wind and solar farms, as well as many electric vehicle and battery manufacturers. Thirty-eight states, both red and blue, would share the benefits.
Take Kansas, for example. Panasonic is building a $4 billion electric vehicle battery factory to power TeslaTSLA, creating 4,000 jobs. And if the electric vehicle industry continues to make inroads, that’s just the beginning for manufacturers. Meanwhile, Georgia has attracted a $2.5 billion investment from South Korean solar power company Hanwha Q Cell.
However, are domestic manufacturers able to produce high-quality products? Battalion Energy CEO Enrico Ladendorff told the audience that buyers will need to work with partners to build monitoring and adaptive controls. Additionally, companies should ensure that everything is tested by a third party.
The goal is to make manufacturing facilities in the United States more bankable, reduce capital costs, and create economies of scale. To this end, Asia currently manufactures and exports most solar modules. However, these modules have glass and steel frames, with only a small percentage of solar cells.
“We use boats to transport glass over long distances,” Chris Case, chief technology officer at Oxford PV, told me. At a minimum, modules should be built near where customers use electricity. He argues that energy security is at risk if the United States fails to expand solar power manufacturing.
Some may argue that the Biden administration cannot build a domestic renewable energy base while imposing tariffs on Chinese-made solar panels, which could increase costs and negatively impact deployment. This is a reasonable measure. The IRA tax credit is intended to offset rising prices and establish a permanent solar power industry here. And Kansas and Georgia are harbingers of what will happen if these policies work.
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