For years, the United States has erected ever-higher barriers to imports of Chinese solar panels, arguing it was the best way to protect domestic suppliers.
Most of the production lines of global photovoltaic giants are in China. Over the past year, they have quietly launched plans to build or expand solar panel factories in Ohio, Texas and other places. This is part of a wave of companies building factories in the United States after the introduction of generous production subsidies under the 2022 Inflation Reduction Act.
About 80 gigawatts of new solar panel capacity projects have been announced since the Inflation Cut Act, with nearly a quarter of the new capacity announced, according to an analysis by The Wall Street Journal There are Chinese companies behind it. According to calculations by The Wall Street Journal, if the solar panel factories announced so far are built, these companies will become significant beneficiaries of relevant subsidy policies, and will receive a combined annual government subsidy of up to $1.4 billion.
Many of these new plants are gigantic by U.S. standards and are being built at a rapid pace. At least four new factories backed by large Chinese manufacturers are scheduled to come online this year, creating enough capacity to cover more than half of last year’s record 33 gigawatts of solar panel installations in the United States.
For the United States, which has struggled to build a domestic solar supply chain essentially from scratch, this wave of investment by Chinese companies has both advantages and disadvantages.
Industry trackers estimate that more than 80% of global solar production takes place in China, with much of the rest in Southeast Asia funded or contracted by large Chinese manufacturers.
These manufacturers have the technical experience, suppliers and deep pockets needed to quickly build factories in the United States, which is a boon to the local economy and the country’s ambitious clean energy deployment goals. However, the original intention of U.S. subsidies is also to reduce the United States’ dependence on China in clean energy.
Longi Green Energy Technology, headquartered in Xi’an, is one of the well-known manufacturers currently building factories in the United States. The company has formed a joint venture in Ohio with Chicago-based renewable energy developer Invenergy and expects to begin producing solar panels in the coming weeks.
Steven Zhu, president of the U.S. subsidiary of Trina Solar, said that of course he does not want to miss this wave of enthusiasm. Trina Solar, the world’s largest solar panel manufacturer, is headquartered northwest of Shanghai, according to supply chain tracker Clean Energy Associates.
Trina Solar announced in September last year that it would invest US$200 million to build a factory near Dallas that can produce 5 gigawatts of solar panels per year. The first batch of solar panels is expected to roll off the production line by the middle of this year, Zhu said.
Last December, Trina Solar personnel participated in a Christmas tree lighting ceremony with local officials, which included a real reindeer and two plastic snowmen blowing fake snow.
Some U.S. manufacturers welcome the move. Chinese competitors are very nimble and their panels are much cheaper, and resisting them with tariffs alone will not achieve lasting success.
“I have no problem competing with other domestic manufacturers as long as they follow the rules,” said Mamun Rashid, chief executive of Auxin Solar. Rashid has said for years that Chinese manufacturers have an unfair advantage and are circumventing tariffs.
But opposition is growing among China hawks, who say allowing Chinese solar and battery manufacturers to receive government subsidies could undermine efforts to build domestic supply chains and threaten U.S. energy security.
“The Inflation Reduction Act has been misconstrued to benefit Chinese companies and allow our adversaries to collect billions of dollars in U.S. tax dollars,” said House Congresswoman Carol Miller, R-Fla. Congressman Marco Rubio introduced a bill in December that would effectively prevent Chinese companies from receiving such subsidies for clean energy production.
Timothy Brightbill, a trade lawyer at Wiley Rein, said the Biden administration is in a dilemma as it tries to pursue several goals at once, including combating climate change, expanding domestic manufacturing and regaining leadership in solar technology, but all of which require sanctions on China. of large manufacturers take a different approach.
A Biden administration official said the Inflation Reduction Act is successfully building up the U.S. solar supply chain and reversing the trend of China controlling production. She said the United States has procedures to ensure foreign investments do not raise national security concerns.
White House spokesman Michael Kikukawa said that under Biden, manufacturing jobs that were outsourced to China during previous administrations are “coming back to the United States.”
Zhu, who has lived in the United States for 30 years and is a naturalized American, said Trina Solar first considered producing in the United States a few years ago after the U.S. imposed more tariffs on Chinese-made solar panels. At the time, Trina Solar decided that the cost of manufacturing in the United States was too high.
Instead, Trina Solar and other large Chinese manufacturers have moved factories out of mainland China, mainly to Southeast Asia, and adapted their supply chains to continue selling solar panels to the United States in response to regulatory changes.
In 2022, the United States began enforcing a tough anti-forced labor law that effectively blocked the import of solar panels using high-grade silicon, a key raw material produced in China’s Xinjiang region. Trina Solar then began purchasing the material from U.S. and European suppliers.
Last year, Trina Solar began producing silicon wafers, another key ingredient, in Vietnam to meet tightened standards from the U.S. Commerce Department.
After the “Inflation Reduction Act” was passed, Trina Solar finally decided to build a factory in the United States. Zhu said that even with incentives, the cost of production in the United States is still higher, but Trina Solar does not want to lose its foothold in an important market.
On January 26, a number of senators from both parties jointly sent a letter to Biden urging him to increase tariffs on Chinese solar modules, believing that they threaten the economic and energy security of the United States.
Like some other Chinese solar giants, Trina Solar is trying to show goodwill. Zhu said that more than 80 employees of Trina Solar’s U.S. subsidiary are U.S. citizens. The company intends to reinvest most of the money it makes in the U.S. into the U.S. market rather than repatriate it to China. Trina Solar is trying to bring its suppliers to the United States, and Zhu said he is very confident that the company will also decide to build a factory to produce solar cells in the United States. Solar cells are an integral part of solar panels.
Zhu said the U.S. market needs Chinese solar manufacturers’ technical expertise, ability to attract suppliers from China, capital and willingness to invest.
Zhu knows that U.S. politicians are resistant to Chinese manufacturers. But he said, we are not politicians, we are just doing business.
2024-02-06 07:00:00
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