Non-Chinese manufacturers continue to find it hard to expand production here against a rise of low cost imports by Chinese multinationals spread throughout Southeast Asia. This is especially true for those companies who need solar cells to make their solar panels. This is one segment of the market China has cornered. Judging by the bills in the House and Senate, some in Congress are worried about China being the largest foreign country beneficiary of the IRA.
The Institute for Energy Research warned last month that as many as half of the announced U.S. factories may not materialize. U.S.-based Convalt, for example, is struggling to bring online 10 gigawatts of U.S. capacity at a factory it started building in upstate New York in 2022. Convalt’s plant would make both solar panels and solar cells, plus the wafers and ingots that go into the cells. Progress stalled a year ago because solar prices plunged due to massive overproduction by the Chinese companies.
This is the China way, more often than not. When it comes to a global commodity, and solar is becoming that, if China is challenged, they dial up the volume on the factory floor to crush global prices. When it comes to all things solar, China sets the solar price like OPEC sets the oil price.
The Department of Energy said that developing a domestic solar supply chain would take time and that the United States must rely on foreign businesses for their expertise. Congress did not write the IRA so foreign businesses could grow, especially at the expense of American ones.
Many of the biggest manufacturing investments announced in the first year of the IRA have been delayed or paused due to deteriorating market conditions, geopolitical risks involving China, and a lack of policy certainty, according to the Financial Times.
For its report, the FT considered planned investments in both the Inflation Reduction Act and Chips and Science Act and said that of the largest planned projects ($100 million or more), a total of $84 billion worth of investments are now delayed or on hold.
That does not seem to be the case with China’s multinational solar companies.
Canadian Solar’s $250 million greenfield project in Mesquite, Texas started producing solar panels in June.
Despite public pressure in Ohio (something the local editorial writers at The Columbus Dispatch called “xenophobia”), Longi and its partner Illuminate delivered their first utility grade solar panels in June to Invenergy, the American renewable power generation company that owns Illuminate. Without Longi, there would be no Illuminate solar panels.
As of May, Trina Solar said it was going forward with its 1.3-million-square-foot solar manufacturing facility in Wilmer, Texas. That plant should be operational by the end of 2024.
Jinko Solar, which was subject to an FBI search of its California sales offices in 2023 that cost them a $2.3 billion grant from the City of Jacksonville, is still going ahead with its expansion plans in Florida, the company said in April.
Is There Any Stopping China from Being the Solar OPEC?
Some $50 billion has been invested, or announced to be invested into the United States by multinational solar companies since the passing of the Inflation Reduction Act (IRA) in 2022. Tax incentives, coupled with a big domestic market, made it attractive and more financially feasible to manufacture and sell here. But one country outnumbers all the rest as the home base for those multinationals – China.
JA Solar announced plans to build a $60 million factory in Arizona. Trina Solar and Canadian Solar, which is headquartered in Canada but does the majority of its manufacturing in China and Southeast Asia, announced plans to spend $450 million, combined, in Texas. Longi Green Energy Technology said it wants to build a $220 million factory in Ohio in partnership with U.S. firm Illuminate USA. China solar giant Jinko Solar, one of the world’s top 3 producers of solar panels, is already plugging the solar cells it imports from its Southeast Asia factories into solar modules at its Jacksonville facility. They said they will invest $52 million to expand there. These ties to American labor and foreign direct investment make it harder to challenge China solar.
Some are trying.
Despite these big investments in their home states, Senators Marco Rubio (R-FL) and Sherrod Brown (D-OH) have written bills that seek to ban China multinationals from benefiting from the IRA. Rubio was first on the scene in 2023. He introduced the Protected Advanced American Manufacturing Act, which specifically sought to revoke China companies from the 45x tax credit in the IRA. Rep. Carol Miller (R-WV-1) introduced the bill in the House in December.
Brown’s bill has bipartisan support – Sens. Bill Cassidy (R-LA), Rick Scott (R-FL) and Jon Ossoff (D-GA) all joined forces in July 2024.
China is the solar OPEC.
Some 80% of all solar panels are either made in China or by Chinese multinationals. Solar cells, which get plugged into solar panels, are almost exclusively made in Asia by Chinese players in the market.
Domestically made solar is on the upswing thanks to the IRA, but “there is great risk that the largest beneficiary of the IRA’s solar energy tax credits may be China,” First Solar CEO Mark Widmar told the Senate Finance Committee in March.
Widmar said in his written remarks that the “relentlessness of the Chinese subsidization and dumping strategy” has led to a steep drop in solar cell and module prices globally, leading to a U.S. oversupply of “30 to 40 gigawatts” in solar panels by the end of 2023.
According to a July 29 report by the Institute for Energy Research:
The report also noted that China’s companies produce these products in China and in Southeast Asia at factories plugged into coal fired power plants. This line of thinking is often used to “add insult to injury” to policy makers who are gung-ho on solar, and want full deployment as fast as possible even if making it requires burning the dirtiest of all energy sources.
Another ‘Solar Apocalypse’?
China has wiped out American solar before. Can they do it again? This is the concern among many on Capitol Hill, including in the White House. But unlike oil and gas, anyone can produce solar. The trick is creating a business, regulatory and legal environment that allows for a locally-made solar panel supply chain to flourish.
On May 14, the Biden administration imposed higher tariffs on solar cells in an attempt to control the flow of those goods into the country. Tariffs were raised from 25% to 50%. They also imposed 14.25% tariffs on double-sided solar panels, the kind mostly used by large utility companies, but increased the allowable amount subject to lower tariffs from only five gigawatts to 12.5 gigawatts this week.
“The present system is not working,” said Jeff Ferry, CPA’s chief economist. “Every solar module producer we speak to is worried stiff about declining prices and doubtful future profitability. The IRA has stimulated investment but even billions of dollars of tax credits are not sufficient on their own to build a healthy industry. A number of reforms can transform the current environment into one that can build a healthy, profitable, U.S.-owned solar manufacturing industry,” he said, and one of those reforms is using quotas to limit imports, and restrict China from IRA tax benefits.
Read “The Coming Solar Apocalypse”, by CPA Chief Economist Jeff Ferry
Non-Chinese manufacturers continue to find it hard to expand production here against a rise of low cost imports by Chinese multinationals spread throughout Southeast Asia. This is especially true for those companies who need solar cells to make their solar panels. This is one segment of the market China has cornered. Judging by the bills in the House and Senate, some in Congress are worried about China being the largest foreign country beneficiary of the IRA.
The Institute for Energy Research warned last month that as many as half of the announced U.S. factories may not materialize. U.S.-based Convalt, for example, is struggling to bring online 10 gigawatts of U.S. capacity at a factory it started building in upstate New York in 2022. Convalt’s plant would make both solar panels and solar cells, plus the wafers and ingots that go into the cells. Progress stalled a year ago because solar prices plunged due to massive overproduction by the Chinese companies.
This is the China way, more often than not. When it comes to a global commodity, and solar is becoming that, if China is challenged, they dial up the volume on the factory floor to crush global prices. When it comes to all things solar, China sets the solar price like OPEC sets the oil price.
The Department of Energy said that developing a domestic solar supply chain would take time and that the United States must rely on foreign businesses for their expertise. Congress did not write the IRA so foreign businesses could grow, especially at the expense of American ones.
Many of the biggest manufacturing investments announced in the first year of the IRA have been delayed or paused due to deteriorating market conditions, geopolitical risks involving China, and a lack of policy certainty, according to the Financial Times.
For its report, the FT considered planned investments in both the Inflation Reduction Act and Chips and Science Act and said that of the largest planned projects ($100 million or more), a total of $84 billion worth of investments are now delayed or on hold.
That does not seem to be the case with China’s multinational solar companies.
Canadian Solar’s $250 million greenfield project in Mesquite, Texas started producing solar panels in June.
Despite public pressure in Ohio (something the local editorial writers at The Columbus Dispatch called “xenophobia”), Longi and its partner Illuminate delivered their first utility grade solar panels in June to Invenergy, the American renewable power generation company that owns Illuminate. Without Longi, there would be no Illuminate solar panels.
As of May, Trina Solar said it was going forward with its 1.3-million-square-foot solar manufacturing facility in Wilmer, Texas. That plant should be operational by the end of 2024.
Jinko Solar, which was subject to an FBI search of its California sales offices in 2023 that cost them a $2.3 billion grant from the City of Jacksonville, is still going ahead with its expansion plans in Florida, the company said in April.
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