The Manufacturing Of Solar Panels In The US Is Soaring Thanks To IRA Policies

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The Photo voltaic Vitality Industries Affiliation (SEIA) reported on September 9, 2024, that the insurance policies and incentives promoted by the Inflation Discount Act of 2022 have spurred the expansion of photo voltaic panel manufacturing within the US. This yr, the total output of US-made solar panels will probably be 4 occasions larger than it was earlier than the IRA was handed. In accordance with the US Solar Market Insight Q3 2024 report launched yesterday by SEIA and Wooden Mackenzie, the photo voltaic business has added 75 GW of recent capability to the grid, representing over 36% of all photo voltaic capability inbuilt US historical past. Almost 1.5 million American properties have put in photo voltaic for the reason that IRA handed.

Photo voltaic module manufacturing capability in the US now exceeds 31 gigawatts (GW) — an almost four-fold enhance for the reason that Inflation Discount Act grew to become legislation, the report says. In August 2021, one yr earlier than the IRA grew to become legislation, the US produced simply 8.3 gigawatts of photo voltaic modules. The nation put in 32.4 gigawatts of photo voltaic in 2023, that means the nation’s photo voltaic manufacturing capability is now near matching its tempo of photo voltaic deployment.

“The solar and storage industry is turning federal clean energy policies into action by rapidly creating jobs and powering economic growth in all 50 states, particularly in battleground states like Arizona, Nevada and Georgia,” mentioned Abigail Ross Hopper, the CEO of SEIA. “We are now manufacturing historic amounts of solar energy in America, and soon we will have enough domestic module production to supply nearly all U.S. demand for years to come.” Texas continues to dominate the photo voltaic market, main the nation with 5.5 GW of photo voltaic capability put in within the first half of 2024. States with intently watched elections this November, together with Texas, Florida, Nevada, Ohio and Arizona, are among the many high 10 photo voltaic states in 2024.

“The solar industry had a great second quarter, mostly due to growth in the utility-scale segment,” mentioned Michelle Davis, head of world photo voltaic at Wooden Mackenzie and lead writer of the report. “But future solar growth is being hindered by broader power sector challenges — interconnection backlogs, electrical equipment shortages, and constraints on labor availability. The industry also faces uncertainty related to newly proposed tariffs and the presidential election. There is currently a lot to navigate in the solar industry.”

Photo voltaic Panels & Photo voltaic Cells

Most photo voltaic modules are constructed with photovoltaic cells based mostly on polysilicon wafers. Whereas the US has roughly sufficient polysilicon capability to fulfill its wants, it nonetheless has no operational amenities that may flip that uncooked materials into the photo voltaic wafers and cells that remodel mild into energy. That might change early subsequent yr, when Hanwha Qcells begins manufacturing wafers and cells at its end-to-end manufacturing facility in Cartersville, Georgia. Within the meantime, China nonetheless makes many of the USA’s photo voltaic wafers.

Nonetheless, US solar panel manufacturing capability continues to broaden sooner than the remainder of the home provide chain. Final quarter, manufacturing began up at a brand new Qcells factory in Georgia, at a Sirius PV facility in Georgia, and at a Meyer Burger plant in Arizona. Because the IRA was signed, the large names in Chinese language module manufacturing, together with greater than 30 different firms, have introduced plans to launch US factories or develop their present capability. This rush to supply photo voltaic panels within the US has been spurred by the IRA’s cleantech manufacturing incentives, which reveals that the carrots offered by the IRA are far simpler than the sticks method of imposing tariffs on Chinese language items taken by prior administrations.

The truth is, the US photo voltaic manufacturing increase could possibly be sufficiently big to permit the nation to quickly change into a internet exporter of photo voltaic panels for the primary time in many years, Canary Media says. If  all of the introduced progress plans are realized, the US might broaden its module capability to 53.9 gigawatts by the top of 2024 and 139.5 gigawatts by 2027, based on the report, greater than the nation is more likely to want itself.

Even when that seems to be true, China has left American photo voltaic within the mud. Its photo voltaic panel manufacturing capability on the finish of final yr was over a terawatt — 25 occasions greater than America’s present complete. Jenny Chase, the longtime photo voltaic analyst at BloombergNEF, factors out that photo voltaic module manufacturing facility capability is usually 1.5 to three occasions larger than annual put in capability on this overheated, underutilized market. BloombergNEF recorded 428 gigawatts of world photo voltaic installations in 2023 and forecasts that almost 600 gigawatts of photo voltaic will probably be put in by the top of this yr.

As constructive as SEIA is concerning the progress of photo voltaic within the US, others are sounding alarms about an over-reliance on Chinese made solar panels. Their considerations echo these about an inflow of low cost Chinese language made electrical automobiles. Within the Chinese language model of a managed economic system, there is no such thing as a penalty for producing extra photo voltaic panels than there’s a demand for. Oversupply results in decrease costs which delights some however threatens home industries.

Tariffs On Photo voltaic Panels Are A Double Edged Sword

A brand new report by The Guardian says that whereas the Biden administration claims the IRA is answerable for a booming new business that’s curbing the results of the local weather disaster and creating excessive paying jobs throughout the nation, the extra difficult reality is that the US is mired in a protracted working commerce battle with China, which is flooding the market with artificially low cost photo voltaic panels that carry an uncomfortably massive carbon footprint and threaten to obliterate the home business. The worth of photo voltaic panels has plummeted 50% over the previous yr, largely due to deliberate Chinese language overproduction of key parts and a recreation of worldwide cat and mouse over commerce guidelines, business insiders say. Chinese language firms have proved skillful at transferring their manufacturing crops to different nations and shifting methods to work round US tariffs and different deterrent measures.

The worry, shared by a lot of US photo voltaic panel producers who’ve managed to outlive a turbulent market over the previous few years, is that the increase in renewable power being touted in Washington would possibly in reality be serving to China to strong-arm its technique to a worldwide monopoly. It already manufactures greater than 80% of the world’s photo voltaic panels. “China has dominated the solar manufacturing sector for a decade, using a familiar playbook to those of us who’ve watched what the OPEC cartel has done to oil markets,” Mike Carr, govt director of the Photo voltaic Vitality Producers for America coalition, wrote lately. “OPEC has demonstrated again and again that you can either join them or be run over. Now China is doing the same thing in solar to stifle our manufacturing renaissance before it gets a chance to take off.”

If this menace is just not extra broadly identified, it’s partially as a result of such costs are extremely engaging to rich buyers and set up firms focused on slapping as many photo voltaic panels on homes and companies as attainable, regardless of the supply. The SEIA has argued that policing China extra rigorously might strangle progress and put jobs in danger to the detriment of the Biden administration’s local weather objectives.

US producers and commerce specialists argue that low costs for photo voltaic panels are solely momentary and that bowing to Chinese language pursuits isn’t any resolution. Within the phrases of Tim Brightbill, a lawyer representing a number of US producers in a proper commerce criticism, if Chinese language producers reach taking on the US market and power home producers into liquidation, it received’t be lengthy earlier than they “jack up prices without fear of competition.”

Mark Widmar, CEO of First Photo voltaic, agrees. In testimony to Congress in March, he made reference to the various US photo voltaic firms which have gone out of enterprise over the previous 20 years as a result of they have been priced out of the market. “The relentlessness of the Chinese subsidization and dumping strategy threatens the viability of many manufacturers who may never be able to get off the ground or have the ability to finance the startup or growth of their operations.” Brightbill added, “Chinese companies don’t have any comparative advantage, only artificial advantages. They rely on government subsidies, and on lack of enforcement of labor and environmental laws.”

The Biden administration and Congress have now lifted the moratorium on duties, eliminated the tariff exemption for bifacial panels, doubled tariffs on photo voltaic panel parts imported straight from China, inspired additional investigation of unfair Chinese language buying and selling practices, and proposed cracking down on a home tax exemption that’s inadvertently benefiting Chinese language producers working on US soil. New restrictions on China and different South Asian nations which can be circumventing worldwide commerce guidelines are anticipated to be imposed over the subsequent few months. US photo voltaic panel producers hope this can make it simpler to benefit from tax and different incentives included within the Inflation Discount Act.

SEIA is continuous to foyer in opposition to many of those strikes, arguing that they threat slamming the brakes on a booming business. US producers, nonetheless, see a chance to ascertain themselves extra solidly and make cleaner, greener, larger high quality panels which have their very own enchantment to shoppers. “We strongly believe you can have solar deployment continuing to increase and fight climate change while at the same time having a strong domestic manufacturing industry,” Brightbill mentioned. “All we’re asking for is a chance to compete against these giant Chinese companies that have come to dominate the market in the last decade.”

The Takeaway

For all of the beneficial properties made in US photo voltaic manufacturing during the last two years, its future — and the hundreds of fine paying jobs it’s anticipated to create — stays weak not solely to business dynamics like interconnection delays, tools shortages, and labor shortfalls, but in addition to a doubtlessly radical shift in federal power coverage in a second Trump administration. What all of it boils right down to is that the photo voltaic revolution in America is way from assured and being within the enterprise of producing photo voltaic panels within the US is fraught with financial and political hazard. Preserve your arms contained in the automobile and your seat belt mounted till the trip comes to an entire cease.