Construction of U.S. solar-manufacturing plants by Chinese companies is surging, putting China in position to dominate the industry, as other American factories struggle to compete despite federal subsidies. Chinese companies will have at least 20 gigawatts’ worth of annual solar panel production capacity on U.S. soil within the next year, enough to serve about half the U.S. market. The group includes seven companies backed by Chinese firms including Jinko Solar, Trina Solar, JA Solar, Longi, Hounen, Runergy, and Boviet. Chinese-backed companies have advantages over U.S. competitors due to heavily subsidized supply chains for raw polysilicon and unfinished solar modules and low-cost government financing. They also collect U.S. subsidies for “clean” energy manufacturing embedded in the 2022 Democrat-passed Inflation Reduction Act (IRA).
The projected rapid increase in U.S. solar panel production by Chinese-owned companies should represent a concern for the Biden-Harris climate agenda. While the administration is looking for new investment that creates U.S. jobs in “clean” energy, the Biden-Harris administration wants to prevent over-reliance on China as it pushes the U.S. economy to transition to renewable energy. Renewable energy and other supposedly “clean” technology that is being pushed on U.S. consumers is China’s strength that it has been developing over decades to lead the world in their manufacture. Part of China’s advantage is its reliance upon cheap coal-fired electricity, consuming over half of the world’s annual consumption.
Chinese Influence on U.S. Solar Manufacturing
Chinese companies, by far the top suppliers of solar and electric-vehicle battery components imported to the United States, are accounting for one-fifth of the solar factories announced since the United States adopted new climate-justified subsidies. The United States put tariffs on Chinese solar products and banned goods linked to China’s Xinjiang region over concerns about forced labor to try to develop a domestic solar manufacturing industry. It is now considering new duties on components made in other Asian countries where Chinese manufacturers have established facilities.
Chinese companies building factories in the United States so far are mainly investing in module production, in which solar cells imported from Asia are assembled into panels. Longi, the world’s third-biggest solar producer, for example, is producing solar panels in Pataskala, Ohio through a joint venture with U.S. solar developer Illuminate USA. The five-gigawatt plant is among the largest announced since passage of the IRA, and the company is also exploring the possibility of building a cell facility. Illuminate USA is an American company, majority owned by Invenergy, who owns both the facility and the land in Ohio where over 1,000 Americans will be working to assemble more than nine million high-quality solar panels annually later this year.
Trina, the No. 4 global manufacturer, plans to start a five-gigawatt panel factory in Texas this year, and is also planning a cell facility. Trina’s U.S. subsidiary is a U.S.-registered company that sources the polysilicon it uses to produce its equipment from European and U.S. sources.
U.S. solar project developers that are interested in low-cost supply are welcoming the Chinese companies. The American Clean Power Association, a trade group, said the U.S. solar-manufacturing sector is attracting global and domestic investment and U.S.-headquartered companies make up most of the operating and planned panel production.
Top U.S. producers, Hanwha Qcells and Arizona-based First Solar, however, are pushing for the United States to impose new tariffs on component and equipment imports from countries where their Chinese rivals have built factories to supply the United States. “We’re just asking for legitimate U.S. manufacturers to have a chance to compete with these gigantic Chinese-owned companies,” said Tim Brightbill, attorney for the American Alliance for Solar Manufacturing Trade Committee. The group’s rivals argue that placing duties on some cell imports and not others is unfair and will stifle construction of U.S. factories.
Non-Chinese Solar Manufacturing Cannot Compete
Non-Chinese manufacturers in the United States have found it hard to compete against cheap Chinese imports and are worried by China’s large U.S. presence. It is estimated 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 panels plus solar cells, wafers and ingots that go into the panels, but progress stalled a year ago as global panel prices plunged 50 percent to levels below Convalt’s cost of production.
The Biden-Harris 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.
Conclusion
It is difficult to imagine how a greenfield manufacturer can produce solar panels as quickly as a Chinese manufacturer, who has all the advantages, including heavily subsidized supply chains for raw polysilicon and unfinished solar modules and low-cost government financing. The Biden administration needs to realize that the best situation for America is to develop its massive fossil fuel resources for which China depends and must import from the United States or another large producer, such as Russia or OPEC. China has been working on developing its “clean” energy technologies for decades to become the leader in their manufacture and to have the world dependent on them. And, it seems to be working!
