Chinese Manufacturers Could Earn Up To $125 Billion in U.S. Renewable Energy Tax Credits

U.S., European, and Chinese solar equipment manufacturers have rushed out announcements of investment in factories to make U.S. solar panels and related equipment since the Inflation Reduction Act (IRA) was signed into law last year. The tax credits designed to spur a move to solar energy are generous and the U.S. could soon be producing up to half of the solar panels it deploys each year.

The problem is that as the IRA law is currently written, Chinese companies qualify for tax credits paid for by the U.S. taxpayers, just as American companies do.

A Goldman, Sachs analysis projected that “green energy manufacturing” could cost the U.S. taxpayer some $156 billion in payments to manufacturers of solar and wind power. With 8 of the 10 largest solar equipment makers headquartered in China and 10 of the 15 largest wind equipment makers Chinese, it is very likely that those Chinese companies could decide to build manufacturing facilities in the U.S. to profit from the IRA subsidies and the growing U.S. market. Chinese producers have about 80% of the global market for renewable energy equipment. If the Communist government directs those companies to replicate that market share in the U.S., Chinese companies could end up raking in $125 billion courtesy of the U.S. taxpayer.

An even worse thought is that if renewable energy serves as a model for the EV and battery industry, industries where Chinese companies already lead the world, Chinese companies could lay claim to those U.S. tax credits. The tax credits for EVs and batteries are some eight to ten times as large as those for renewable energy.

We counted six Chinese solar equipment makers who have already announced U.S. investment plans to take advantage of the IRA tax credits. Chinese solar equipment makers have easy access to capital, since the Chinese Communist government backs solar industry expansion with plentiful loans.

In the eight months since the IRA was signed by the president, these six companies have rolled out plans to build factories to assemble solar panels and other solar components in the U.S. In most cases the solar cells inside the panels will come from China, or Chinese-owned facilities elsewhere in Asia. Table 1 below tallies up the Chinese investment plans that have already been announced. We find those plans already bring Chinese profit from the U.S. taxpayer beyond the billion-dollar level.

This is objectionable on many grounds. First of all, Chinese solar makers benefit from slave labor in Xinjiang, since much of China’s polysilicon, the raw material of which solar cells are made, is manufactured in Xinjiang. Secondly, electric power is a strategic resource in the U.S. It is dangerous and foolish to allow Chinese companies, already dominant in imported solar panels, to extend their reach even further by increasing their U.S. manufacturing presence.

Finally, it is foolish on economic grounds. China already operates its solar equipment industry as a government-controlled monopoly. The Communist government assigns companies targets for production and export. It regulates engineering parameters like the size of solar cells down to the millimeter, to help China’s monopoly grow and squeeze out other nations’ solar equipment industries. Allowing Chinese companies to own any chunk of the growing U.S. solar equipment industry would only play into the Chinese government’s long-term game plan for worldwide domination of the crucial renewable energy industry.

There are efforts in Congress to legislate to bar Chinese-owned companies from profiting from U.S. IRA tax credits.

Table 1. In Year One, Chinese solar manufacturers already break the billion-dollar threshold.

Chinese Solar Facilities, Announced U.S. Investments as of April 2023
Solar Modules (Panels)
Company Capacity (Megawatts)
Longi 5000
SEG Solar 2000
Jinko 1200
Hounen 1000
JA 2000
SPI Energy-Solar4America 2400
Total  13,600
Tax credit value  $                 952,000,000
Solar Wafer Production
SPI Energy-SEM Wafertech 3000
Tax credit value  $                 144,000,000
Grand total, Year 1  $              1,096,000,000

Source: Corporate press announcements, press reports, CPA calculations


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