A declining industry is suddenly positioned for a major resurgence
But Qcells North America’s gamble on Dalton may have paid off with an ambitious climate package now headed to President Biden’s desk. The bill, negotiated in part by Sen. Joe Manchin III (DW.Va.), it would deliver billions of dollars in taxes and other incentives to US solar power manufacturers, equipping them with government support on the scale of what China used to corner the market.
“This is a landmark climate bill, but it is also one of, if not the — the most important industrial policy bills of this era,” said Harry Godfrey, who oversees national manufacturing policy for the Advanced Energy Economy, a trade group that represents cleantech companies eager to ramp up production in the US. USA
The boost to the industry comes at a time when solar power is set to America.
Recovering 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 when energy prices are soaring and climate goals are aggressive. China’s dominance over the solar supply chain also it represents a growing threat to the energy independence and financial health of the United States.
“This is a globally competitive market where the United States has fallen behind,” said Scott Moskowitz, who heads marketing strategy at Qcells North America, a subsidiary of Korean industrial giant Hanwha. “This country never had policies that created the possible environment to compete. This legislation changes things a lot. It will make companies want to invest in new manufacturing in Georgia and across the country.”
Qcells established a manufacturing beachhead in Dalton in 2018 at the urging of local officials. Its panels are assembled using wafers and cells from abroad, but the company aims to help reestablish a domestic supply chain so that all components of a solar panel can be made in the United States.
“There is no shortage of demand,” said Moskowitz, standing on the floor of the sprawling Dalton factory. “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 US solar manufacturing industry over the past decade have come into sharp relief amid energy shortages gripping the world, fueled by Russia’s control over energy sources. key energy and supply chains. But the current state of solar production it 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 they never thought about the long term and how overly dependent we would become,” said Mark Widmar, CEO of First Solar, one of the only solar manufacturing giants still operates in the United States. states “We are at a vulnerable tipping point. If we can’t figure this out now, I’m not sure we’re in a place where we can have a national industry.”
Widmar said on an earnings call Thursday that if the climate package passes, his company will look to expand more aggressively in the United States.
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China now controls more than 80 percent of solar panel production. That includes controlling 95 percent of the production of certain elements that are essential to making a panel, including polysilicon and wafers. Much of the world’s supply of polysilicon for 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 a lack of diverse supply chains leaves the United States and other nations on an unstable energy foundation.
China’s strategy of investing more than $50 billion to dominate the solar supply chain is paying huge dividends for that country. As US companies scramble to get new plants online that can supply enough panels for a few gigawatts of power, a single facility now being built in China will produce 20 gigawatts of solar capacity, accounting for 1 in 7 panels produced in the world. all the world.
It’s a harsh reality for the United States, where the modern solar cell was invented and not long ago positioned itself to lead the industry. Seven factories have closed here since 2018 alone.
The challenges facing the industry are underscored by an ongoing battle between the companies that make the panels and the American developers who buy and install them. 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 potential tariff evasion, warning there are so few US-made panels that it would lead to shortages, rising prices and the cancellation of major projects.
The investigation threatened to cut off the flow of solar panels into the United States, jeopardizing Biden’s clean energy goals. Last month, the White House moved to prevent a shortage by exempting US buyers of potentially illegally imported panels from fines for two years.
The move landed as a punch to the stomach for manufacturers. They were unimpressed by accompanying measures Biden unveiled at the time to boost American manufacturing plants, which included participation in the Defense Production Act.
But the picture improved dramatically for American manufacturers with the resurgence of the climate bill, which emerged Thursday night after a Manchin twist. The senator’s earlier opposition seemed to condemn the legislation.
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Biden administration officials say the incentives give U.S. manufacturing a motivation to ramp up production during the period that tariffs have been eased, showing it can meet intense demand for panels. At that point, according to the White House roadmap, the federal government would resume aggressive enforcement of trade laws, further boosting the industry.
Large US buyers of solar panels say they remain ready to step up and buy American products. A group of solar project developers has 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 expands nationally, there are ready and willing buyers.
“We are trying to get this national supply chain up and running,” said Leo Moreno, president of AES Clean Energy. “It is a very big commitment from the main players.”
The plan depends on the approval of the tax and other incentives in the climate package. “For this to be successful in the long term, providers need to scale,” Moreno said. “If the subsidies end up not going through, they won’t be able to.”
One company already scaling is First Solar, a firm that built its business plan around Biden’s climate agenda. It is building its third plant in Ohio and uses a technology unlike any other in the industry, making thin-film modules that can be made without the imported cells and wafers used in 95 percent of solar panel production.
Back in Dalton, the same community that sent Rep. Marjorie Taylor Greene (R) on the anti-solar crusade to Congress is backing the grants.
Dalton has long been known as the “flooring capital of the world,” a nod to the many textile manufacturing operations that make rugs and other materials used in home construction. However, it is keen to diversify and is looking to attract industries that are less vulnerable to housing market fluctuations.
“We want them to be able to make solar panels here and be as competitive as anywhere else,” said Carl Campbell, chief executive of the regional development authority, which pushed Qcells to locate in Dalton. “A lot of people have called and said, ‘Hey, how can I get involved? I want to help build something that makes a difference.’ … Regardless of where you are politically, I think everyone can support good jobs with good benefits to do something that can help our world.”