Chinese solar firms will soon be in a position to serve about half the US market, in what would be a worrying development for President Joe Biden’s climate agenda.
Construction of US solar-manufacturing plants by Chinese companies is surging, putting China in position to dominate the nascent industry, as other American factories struggle to compete despite federal subsidies.
Chinese companies will have at least 20 gigawatts’ worth of annual solar panel production capacity on US soil within the next year, according to analysis of corporate statements, government documents, and interviews with eight companies and researchers.
The group includes seven purely Chinese-owned companies – Jinko Solar, Trina Solar, JA Solar, Longi, Hounen, Runergy, and Boviet.
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Biden’s administration is keen for new investment that creates US jobs in clean energy, but his government is also desperate to prevent an over-reliance on geopolitical rival China as the economy transitions from oil and gas to renewables.
Chinese-backed companies have distinct advantages over competitors in the US, such as heavily subsidised supply chains for raw polysilicon and unfinished solar modules, as well as low-cost government financing.
Like non-Chinese companies, they also collect US subsidies for clean energy manufacturing embedded in the 2022 Inflation Reduction Act, Biden’s signature climate law.
“You have a stacked deck here. It’s hard to imagine that anyone, particularly a greenfield manufacturer, can do it as quickly as a Chinese manufacturer,” said Paula Mints, founder of solar industry research firm SPV Market Research, referring to new factories.
She and one other researcher added, however, that the Chinese investment would help the domestic solar manufacturing industry mature while creating jobs.
“They have a lot more experience building factories and setting up supply chains,” said David Feldman, a solar market researcher with the US Department of Energy’s National Renewable Energy Laboratory.
Local and state officials in places where Chinese firms are setting up factories, including Texas, Arizona, Ohio and North Carolina, have welcomed the investments.
US Solar Manufacturers Struggling
Non-Chinese manufacturers in the United States, by contrast, have found it hard to compete against a flood of cheap imports and are worried by China’s outsized presence. As many as half of the announced US factories may not materialise, Reuters reported last year.
US-based Convalt, for example, is struggling to bring online 10 GW of US capacity at a factory it started building in upstate New York in 2022.
The Department of Energy told Reuters that developing a domestic solar supply chain would take time and that the US must rely on foreign businesses for their expertise.
Chinese companies, by far the top suppliers of solar and electric-vehicle battery components imported to the US, now account for one-fifth of the solar factories announced since the US adopted new climate subsidies, according to research firm Wood Mackenzie.
The United States has tried to ease its import addiction to Chinese solar products with tariffs, and has also banned goods linked to China’s Xinjiang region over concerns about forced labour. It is now considering new duties on components made in other Asian countries where Chinese manufacturers have set up.
Chinese companies building factories in the US so far are mainly investing in module production, in which solar cells imported from Asia are assembled into panels.
Push For New US Tariffs
Longi, the world’s third-biggest solar producer, for example, is pumping out panels in Pataskala, Ohio, through a joint venture with US clean-energy developer Invenergy called Illuminate USA.
The five-gigawatt plant is among the largest announced since passage of the IRA, and the company is also exploring the possibility of building a cell facility.
Trina, the No4 global manufacturer, plans to start a five-GW panel factory in Texas this year, and is also planning a cell facility.
While Chinese producers face opposition from US manufacturers, panel-buying US project developers interested in low-cost supply welcome them.
The American Clean Power Association, a clean-energy trade group, said the United States solar-manufacturing sector is attracting global investment and noted that the plants are creating thousands of jobs.
Top US producers, Hanwha Qcells and Arizona-based First Solar, are pushing for the US to impose new tariffs on component and equipment imports from countries where their Chinese rivals have built factories to supply the US.
“We’re just asking for legitimate US manufacturers to have a chance to compete with these gigantic Chinese-owned companies,” said Tim Brightbill, attorney for the American Alliance for Solar Manufacturing Trade Committee, the group seeking new tariffs.
- Reuters with additional editing by Sean O’Meara
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