Another Blow to U.S. Solar: Environmental Policies Fail as Reconciliation Flounders

Production-based tax credits and other measures designed for solar, and wind manufacturing failed to make it into the House reconciliation bill last week, as the wheels fell off negotiations.

In an article by Reuters dated July 19, First Solar CEO Mark Widmar said that without government incentives for local manufacturers to build solar equipment here, imports would increasingly take a chunk of the domestic market.

Solar has been waiting for something positive from President Biden since he was elected. Biden said he would be the climate change fighting president that Obama had promised to be before him. Instead, tariffs and trade cases favorable to American solar producers have been scrapped under Biden. The President who once said that when he “thinks of climate change, he thinks of jobs” has done more to promote Asian solar imports than domestically made solar panels.

At the start of the year, the Biden administration weakened Section 201 tariffs on Asian solar imposed by the previous government by exempting double-sided solar panels, known as bifacial solar panels, from any port duties. These are the types of solar used mainly in large-scale utility projects. Almost all of this is now made in Southeast Asia, mainly by Chinese multinationals who have set up shop in Vietnam and elsewhere ever since anti-dumping duties have been in place on Chinese companies as far back as 2014.

Then in early June, Biden used unprecedented executive authority to usurp an independent Commerce Department trade case against those Chinese multinationals in Southeast Asia. He put that investigation on hold for two years, citing inflation concerns, solar supply chain constraints largely caused by China companies themselves, and inflation.

Since Biden’s climate policies have been announced, at least one company LG USA, has ceased operations at its solar panel facility in Alabama.

Biden said Thursday that he would act yet again on environmental policies to fight climate change, but he has held off on any executive orders on the matter. Instead, he announced “funding for climate change measures”, including upgrading infrastructure already in the infrastructure law – so nothing new there – and subsidies to states to weatherize buildings and homes. None of this is entirely new, or a benefit to solar companies here. He also pledged today to reduce greenhouse gas emissions, but if solar is going to be part of that fight, then the Biden administration has a choice to either support domestic producers or rely on Asian imports primarily from Chinese multinationals. So far, policy decisions have benefited the latter.

On July 14, the Department of Energy said it would set aside $27 million for solar panels made from cadmium telluride; a type of solar panel technology that does not rely on solar-grade polysilicon, a raw material primarily ground up in China. The United States is already a major producer of cadmium telluride panels thanks to First Solar.

An additional $29 million was set aside to reportedly go towards supporting work on panel designs that reduce manufacturing costs and developing the production of solar cells made from perovskites, a promising cheap alternative to polysilicon.

Polysilicon prices have been rising, making it more expensive to produce in the U.S., and giving that China-controlled supply chain a leg up in global solar power manufacturing once again.

When prices go up like this, it directly impacts domestic producers because solar cell prices rise. Solar cells are almost all made in Asia. These are the squares that are placed into solar modules you see on rooftops and at power stations. That supply chain is owned by the Chinese with little in the way on the policy side to shift that balance.

Lastly, on the day when the Biden administration declared an energy emergency and waived tariffs on Southeast Asian solar, sidelining the anti-dumping investigation into solar makers in Vietnam, Malaysia, Thailand, and Cambodia, all major solar exporters to the U.S. today, the Defense Production Act was promised as a tool. But that money is scarce and not seen as a remedy by any serious person in the U.S. solar industry.

“Since the solar cell was invented by Bell Labs in 1954, the U.S. has led the world in photovoltaic technology. The result of all that technology invention and innovation is that today China has a lock on the market, with 90% shares in key segments for the solar supply chain,” said Jeff Ferry, CPA’s chief economist and the author of the March 2021 report titled “Reclaiming the U.S. Solar Supply  Chain from China.”

“The growing manufacturers of solar modules in the U.S. today need support to enable further growth and overcome Chinese predatory practices. The Biden administration has ducked for cover on this issue, with the bifacial exclusion cutting the heart out of the 201 tariffs and the suspension of duties cutting off at the knees the anti-dumping case filed by Auxin Solar,” Ferry said. “We are trading dependence on a dozen producers of oil and gas, led by Saudi Arabia, Russia and others, for energy dependence on one country, China, which is our enemy.”

Just six months ago, we had at least two solar companies saying they were going to expand their U.S. manufacturing footprint. Smaller companies like Auxin, Meyer Burger, and Convalt were also saying they were ready to invest and make a big leap into large-scale solar. Once bankrupt Suniva is also a constant voice during International Trade Commission hearings saying it needs the right trade safeguards to become a solar cell producer in this country.

But so far, under the Biden administration that has touted both American manufacturing and clean energy as a policy guidepost, “all of that is in doubt,” Ferry said.