Biden’s Solar Factory Boom Slows as Cheap Imports Flood Market

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(Bloomberg) — The climate law signed by President Joe Biden unleashed a flood of promised $16 billion in investments in solar manufacturing, as companies unveiled plans to set up factories across the U.S. and raised hopes of an erosion of China's dominance in green technology.

But less than two years later, manufacturers have quietly postponed or slowed their plans for at least four of those plants. High borrowing costs and record-low solar panel prices — the result of the influx of cheap imports into the market — have made some projects uneconomic. These decisions highlight the limits of US government support when it comes to wresting control of existing clean energy supply chains from China.

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“The stimulus in the FRA puts us in a position in the United States to get a lot of announcements and a lot of hope,” said Mike Carr, executive director of the Solar Manufacturers for America Alliance. But market conditions have created “some severe headwinds when it comes to new industrial investment.”

The United States has already tried — and failed — for more than a decade to nurture a domestic solar supply chain. But a series of intermittent tax incentives and tariffs were no match for the brute force of China's commitment to market control. Most of the factories built as part of this manufacturing push have long since closed their doors.

Now, plant delays and cancellations are ramping up pressure on Biden to prevent a repeat. In the wake of the IRA, companies have proposed building or expanding U.S. manufacturing capacity for a range of equipment used in solar projects, representing a $16 billion investment, according to the American Clean Energy Association. Some of these plans are at risk.

The administration this week is expected to expand existing tariffs to include the double-sided boards that make up the vast majority of U.S. imports, according to people familiar with the matter. Manufacturers also want the White House to forcefully enforce the deadline for the use of other panels that were imported duty-free.

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Solar advocates have pressed the president to remove a 25% tax on critical manufacturing equipment imported from China when the administration changes so-called Section 301 tariffs. Some panel makers have asked the federal government to impose new duties on cells and panels coming from Southeast Asia, arguing that Sold for less than production costs.

Read more: US solar makers seek more tariffs that threaten the troubled sector

Manufacturers have slowed the timelines for some proposed U.S. plants and pulled the plug on at least one of them. Some are awaiting government directives regarding the extent to which they will benefit from the tax credit aimed at stimulating local content in renewable energy projects.

For example, Enel SpA sought to build a solar cell and module factory in Oklahoma, through its subsidiary 3Sun USA LLC. The project was first announced in 2022, with plans to begin construction in the fall of 2023 and begin initial production this year. But construction has not yet begun, and now Enel's new leadership is shifting spending toward higher-margin projects and regions.

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Read more: Enel CEO looks to cut costs to shift from spending of his predecessors

An Enel spokesperson said: “3Sun USA is currently working on finding a majority financial partner for the project.” “This is a condition for the project to begin construction. The company will provide further updates in due course.”

In San Antonio, Texas, Mission Solar Energy was aiming to more than triple its manufacturing capacity to 1 gigawatt annually in 2024. Although the company has expanded the size of its production facility — cutting the ribbon this month — However, it has not begun to order, and company spokeswoman Laura Waldrum said that the company is installing equipment to enhance production. She added that completing this stage “will depend on market conditions, such as demand and competition from imports.” “At this time, we do not have a specific timeline for completing the project.”

Technology company CubicPV Inc. has discontinued Massachusetts in February announced its plans to establish a solar chip factory in the United States, citing a “major collapse” in prices.

Even where projects are progressing, timelines have been delayed.

For example, Canada-based Helen is still working on building another gigawatt of panel production capacity in Minnesota, which would more than double its current production. But instead of bringing it all online this year, as originally announced, Helen now intends to install half of it in 2025. The shift was driven by “general market instability and out-of-control imports,” said Martin Buchtaruk, the company's president. levels.”

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While Biden's inflation-reducing law was seen as the first-ever U.S. industrial policy for solar, it has turned out to be an unbalanced policy, with some subsidies focusing on the panel industry at the final assembly stage of the supply chain rather than at the beginning. Where key components such as alloys and chips are manufactured. Companies can win advanced industrial tax credits to help pay for manufacturing facilities, but under current Treasury guidance, they do not benefit from a separate subsidy aimed at encouraging local content in renewable energy projects.

Solar manufacturers are pressing the Biden administration to revise its initial guidance to require the local content tax incentive so that it better encourages renewable energy developers to use panels made from U.S.-produced wafers and other subcomponents.

There are bright spots. First Solar Inc. Expanding US thin-film board production capacity. Qcells North America has already ramped up production capacity at a panel manufacturing plant in Georgia and is building another to produce solar ingots, wafers, cells and finished panels. In Ohio, Invenergy LLC and LONGi Green Energy Technology Co. began producing panels at their Illuminate USA factory earlier this year.

While growth in the U.S. panel industry will likely boost demand for domestically made components, “it's very difficult to build a factory and make it capable of manufacturing,” Art Fletcher, Invenergy's head of local content, said at a news conference in New York. “Competition with everything that's going on.” BloombergNEF summit in New York last month. “We have a thriving industry that's just starting to take off, and we have to protect that industry.”

-With assistance from Alberto Brambilla.

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