The US solar industry is calling for a ten-fold increase in domestic manufacturing capacity to 50GW by 2030 underpinned by a proposed new federal tax credit that would more than double the 19GW of installations last year.
The target would encompass all key elements of a solar energy system supply chain, including polysilicon, ingots and wafers, cells and modules, racking and trackers, and inverters, according to the Solar Energy Industries Association (SEIA).
“Solar energy manufacturing is intensely competitive globally, and overseas manufacturers are often aided by significant support from local and national governments through a variety of public investments,” said SEIA CEO Abigail Ross Hopper.
“If we want to compete in this environment, the US government must also invest in its manufacturers across the entire supply chain, and these investments must be long-term and multi-faceted.”
Hopper said the US “didn’t need to produce every solar component installed domestically”, but should fill “critical gaps” in the national supply chain and “dramatically expand” domestic production capacity, adding “the long-term health of our industry depends upon it”.
President Joe Biden supports a potential ten-year extension of the solar investment tax credit (ITC) with a direct pay provision which would make project financing less dependent on availability of tax equity. The issue is under study in both houses.
Meanwhile, US Senator Jon Ossoff, a Georgia Democrat, has proposed an “advanced solar manufacturing production credit” for every stage of the supply chain, “incentivising domestic production necessary for producing solar energy technologies and creating tens of thousands of American jobs.”
Helped by significant national and local government subsidies and financing, Chinese solar supply chain companies have undercut their American rivals, driving down prices and making PV competitive with both natural gas and wind in some regions of the US. While consumers benefit, Chinese firms now dominate the US solar market with an 85% share, according to energy consultancy Wood Mackenzie.
President Donald Trump’s administration slapped tariffs on solar panels imported from China, but some Chinese suppliers were able to side-step them by shifting production to other Asian countries.
The tariffs have divided solar industry opinion in the US. The remaining solar manufacturers generally support them, but importers and installers are in opposition, partly because they raise prices and can cost market share.
Hopper told The Wall Street Journal that tariffs have had a detrimental impact on the US solar market, claiming the evidence shows they have not worked. SEIA’s 1,000 member companies include solar panel importers and installers.
To help the US achieve a carbon-free electric grid by 2035, Biden wants to establish a domestic clean-energy manufacturing sector that would end dependence on Chinese suppliers for batteries, solar and wind components.
The move to “re-shore” the supply chain would create millions of good-paying jobs, according to the White House.
Biden will need to decide how much the federal government will subsidise a ‘Made in America’ supply chain and then persuade Congress to approve the funding. Even then, there is no assurance panels and other components can compete on cost both with imports and other energy technologies.
The US solar market sped past the milestone of 100GW of generating plant in the first quarter of the year, adding a record 5GW of new PV as utilities stepped up build-out plans that could see 250GW in operation within five years.
