Shanghai-based JA Solar announced on Tuesday that it has leased space for a $60 million manufacturing facility in the U.S., its first, to be built in Phoenix, Arizona. The move comes less than a year after the Inflation Reduction Act (IRA) provides domestic producers of solar goods with tax credits. But it also comes at a time when U.S. Customs and Border Protection, at the direction of the Uyghur Forced Labor Prevention Act (UFLPA), is going after China-based solar supply chains for using forced labor. Nearly $500 million of solar goods from Chinese companies were held up at ports last year, Axios reported recently.
JA’s Arizona facility will benefit from the IRA while facing the constant threat of having its products held up at ports due to the UFLPA.
“Arizona is proud to welcome JA Solar’s first U.S. manufacturing facility to Phoenix,” said Governor Katie Hobbs.
The company will manufacture photovoltaic (PV) products and is expected to be operational by the end of 2023, creating over 600 new jobs. The China-owned facility will be the largest solar manufacturing plant in Arizona with the capacity to make 2 gigawatts of solar panels each year.
Arizona is becoming a destination for the new renewable energy-related market. Luxury EV car maker Lucid Motors set up there. And now JA Solar, one of the world’s top five solar producers. But unlike Lucid, JA Solar has a target on its back with many in Washington considering them guilty until proven innocent when it comes to their solar supply chain.
Over 1,000 solar shipments were stopped at the border last year due to the UFLPA law and Withhold Release Orders (WRO), a separate issue, run by the Customs and Border Protection (CBP) agency. CBP said it has seized 1,053 shipments of solar equipment between June 21, 2022, when the UFLPA law went into effect, and Oct. 25. Customs said none of those shipments have been released yet.
While JA Solar is not the target of a WRO, Chinese polysilicon producer, Hoshine Silicon Industry Limited is a target. It is unclear if JA Solar contracts Hoshine, but a 2021 report titled “In Broad Daylight: Uyghur Forced Labor in Global Solar Supply Chains” by Laura Murphy and Nyrola Elima of Sheffield Hallam University in England said that a handful of companies, such as Daqo and GCL-Poly, both of which are part of the Commerce Department’s Entity List of companies that require a U.S. government approval before Americans can do business with them.
JA is a solar giant. It has steadily increased its global footprint, with overseas shipments in the first half of 2022 accounting for 67% of its overall total sales.
The IRA, coupled with a sense in the solar industry that tariffs will remain, is leading to more investment in American-made solar. China’s Jinko Solar has been in Florida, for example, since the Section 201 solar safeguard tariffs were enacted by the previous administration. Jinko solar products have been held up at ports before. JA Solar has escaped this hold-up so far.
The UFLPA places a “rebuttable presumption” that goods from the region are made with forced labor, and it places the burden of proof on buyers to show that the imported goods have no connection to forced labor. To be in compliance with UFLPA, companies must provide a comprehensive supply chain mapping, a complete list of all workers at a facility, and proof that workers were not subject to conditions typical of forced labor practices and are there voluntarily.
“Chinese solar equipment companies should not be eligible for the IRA tax credits,” said CPA chief economist Jeff Ferry. “Encouraging Chinese-owned companies to build here in the U.S. does nothing to give us true independence from Chinese domination of the industry. The U.S. and the world urgently need true diversity of supply for all renewable energy equipment.”
Ohio-based First Solar, the only U.S.-founded solar company in the top ten of solar manufacturers worldwide, announced in November that they would invest over $1 billion on a new factory in Alabama.
Industrial policies like the IRA, anti-dumping duties against Chinese multinationals in Southeast Asia, and the Section 201 solar safeguards all led to these investment plans. Without them, Chinese manufacturers would continue to dominate the global solar supply chain.