A skidding industry suddenly positions itself for a major resurgence
But Dalton’s gamble by Qcells North America may have paid off with an ambitious climate package now on its way to President Biden’s office. The bill, negotiated in part by Sen. Joe Manchin III (DW.Va.), would provide billions of dollars in taxes and other incentives to U.S. solar manufacturers, arming them with government support on the scale that China has used to corner the market.
“It’s a landmark climate bill, but it’s also one of the – if not the — the most important industrial policy bills of this era,” said Harry Godfrey, who oversees national manufacturing policy for Advanced Energy Economy, a trade group that represents clean technology companies looking to increase U.S. production. .
The industry’s boom comes at a time when solar power matters to America.
Bringing back national production is no longer a nostalgic aspiration. It’s a national security issue. Solar panels produce some of the cheapest electricity, an important asset at a time of skyrocketing energy prices and aggressive climate targets. China’s dominance on the solar supply chain as well increasingly threatening the energy independence and financial health of the United States.
“This is a competitive global market in which the United States has lagged,” said Scott Moskowitz, chief marketing strategist at Qcells North America, a subsidiary of Korean industrial giant Hanwha. “This country has never had policies that created an environment conducive to competition. This law changes a lot of things. This will encourage businesses to invest in new manufacturing in Georgia and across the country. »
Qcells established a manufacturing beachhead in Dalton in 2018 at the request of local authorities. Its panels are assembled using wafers and cells sourced overseas, but the company aims to help reboot a domestic supply chain so that every component of a solar panel can be made in America.
“There’s no shortage of demand,” Moskowitz said, standing on the floor of the sprawling Dalton plant. “It’s just a question of whether factories like this can exist in this country and be profitable.”
The energy security risks created by the collapse of the U.S. solar industry over the past decade have been highlighted amid gripping power shortages around the world, propelled by Russia’s control over main energy sources and supply chains. But the current state of solar production leaves America’s energy transition vulnerable to the whims of another rival superpower.
“Project developers here were willing to rely on China for panels and never thought about the long game and how overly dependent we would become,” said Mark Widmar, chief executive of First Solar, one of only solar manufacturing giants still in business in the United States. States. “We are at a vulnerable inflection point. If we can’t figure that out now, I’m not sure we’ll be in a place where we can have a national industry.
Widmar said in an earnings call on Thursday that if the climate package passes, his business will seek to expand more aggressively in the United States.
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China now controls more than 80% of solar panel production. This includes ordering 95% of the production of certain elements essential to the manufacture of a panel, in particular polysilicon and wafers. Much of the polysilicon supply for global solar panels is processed in China’s Xinjiang region, where companies are accused of using forced labor.
The International Energy Agency warns in a new report that the lack of diversified supply chains leaves the United States and other countries with a fragile energy base.
China’s strategy of investing over $50 billion to dominate the solar supply chain is paying huge dividends for this country. As American companies struggle to bring new factories online that can supply enough panels for a few gigawatts of power, a single installation currently under construction in China will produce 20 gigawatts of solar capacity, which represents 1 out of every 7 panels produced worldwide.
This is a harsh reality in the United States, where the the modern solar cell was invented and who not long ago was positioned to lead the industry. Seven factories have closed here since 2018 alone.
The challenges facing the industry are underscored by an ongoing struggle between the companies that manufacture the panels and the American developers who buy and install them. The meager US production has strained alliances in the solar world. Domestic manufacturers want the Biden administration to enforce trade laws that would restrict the flow of Chinese panels to the United States. Developers and installers have protested a Commerce Department investigation into possible tariff dodging, warning that there are so few panels made in the United States that it would trigger shortages, soaring prices and the cancellation of big projects.
The investigation threatened to choke off the flow of solar panels to the United States, undermining Biden’s clean energy goals. Last month, the White House took steps to avert a shortage by exempting U.S. buyers of potentially illegally imported panels from penalties for two years.
The move landed like a punch to the manufacturers. They were unimpressed with the flanking measures Biden unveiled at the time to boost US manufacturing plants, which included the Defense Production Act pledge.
But the outlook has improved dramatically for U.S. manufacturers with the relaunch of the climate bill, emerging Thursday night after a reversal of Manchin. The senator’s earlier opposition had appeared to condemn the bill.
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Biden administration officials say the incentives are motivating U.S. manufacturing to increase production during the period when tariffs were eased, showing it can keep up with demand intense of panels. At that point, according to the White House roadmap, the federal government would resume aggressive trade law enforcement, further stimulating the industry.
The big American buyers of solar panels still say they are ready to step in and buy American. A group of solar project developers have pledged to spend $6 billion on US-made panels over the next four years. The group says it wants to send a signal to the market that if the industry is growing domestically, there are ready and willing buyers.
“We are trying to get this national supply chain going again,” said Leo Moreno, president of AES Clean Energy. “This is a very important commitment from leading players.”
The plan relies on the approval of the tax and other incentives in the climate package. “For this to be successful in the long term, vendors need to evolve,” Moreno said. “If the grants end up not going through, they won’t be able to.”
One company that is already scaling is First Solar, a company that built its business plan around Biden’s climate agenda. It’s building its third factory in Ohio and using a different technology than others in the industry, making thin-film modules that can be made without the imported cells and wafers used in 95% of solar panel production.
Back in Dalton, the same community that sent Anti-Solar Crusader Rep. Marjorie Taylor Greene (R) to Congress is clamoring for the grants.
Dalton has long been known as the “flooring capital of the world,” a nod to the many textile manufacturing operations that make carpets and other materials used in home construction. Still, he is keen to diversify, seeking to attract industries less vulnerable to fluctuations in the housing market.
“We want them to be able to make solar panels here and be as competitive as they are anywhere else,” said Carl Campbell, executive director of the regional development authority, which lobbied Qcells to move to Dalton. “We’ve had a lot of people calling us up and saying, ‘Hey, how can I get involved? I want to help build something that will make a difference. … No matter where you stand politically, I think everyone can support good jobs with good benefits to do something that could help our world.