Many US solar factories are lagging. Except those China owns
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[July 17, 2024] By
Nichola Groom
(Reuters) - Construction of U.S. 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 U.S. soil within the next year, enough to
serve about half the U.S. market, according to a Reuters 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, according to
the analysis.
The projected rapid increase in U.S. solar panel production by
Chinese-owned companies has not previously been reported, and represents
a worrying result for President Joe Biden's climate agenda. While his
administration is keen for new investment that creates U.S. jobs in
clean energy, his government is also desperate to prevent 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 U.S., such as heavily subsidized supply chains for raw polysilicon
and unfinished solar modules, as well as low-cost government financing.
Like non-Chinese companies, they also collect U.S. 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
U.S. 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.
'WE NEED AMERICAN MANUFACTURERS'
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 U.S.
factories may not materialize, Reuters reported last year.
U.S.-based Convalt, for example, is struggling to bring online 10 GW of
U.S. capacity at a factory it started building in upstate New York in
2022.
"If we are to succeed, we need American manufacturers like Convalt to
survive this onslaught of low prices, to build factories with capacities
that allow us to compete against the largest global firms, with Chinese
beneficial ownership," CEO Hari Achuthan said in May in testimony to the
U.S. International Trade Commission, a government agency that is
considering a request by Korea's Hanwha Qcells and other U.S.
manufacturers to impose new tariffs on some solar imports.
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Illuminate USA solar panel plant is seen in Pataskala, Ohio, U.S.,
July 15, 2024. REUTERS/Megan Jelinger
Convalt's plant would make panels plus the cells, wafers and ingots
that go into them, but progress stalled a year ago as global panel
prices plunged 50% to levels below Convalt's cost of production, he
said.
"Had we not had these low prices we should be up and running today,"
Achuthan said.
The Department of Energy told Reuters that developing a domestic
solar supply chain would take time and that the U.S. must rely on
foreign businesses for their expertise.
'COMMITTED TO BE HERE'
Chinese companies, by far the top suppliers of solar and
electric-vehicle battery components imported to the U.S., now
account for one-fifth of the solar factories announced since the
U.S. 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 labor. 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 U.S. so far are mainly
investing in module production, in which solar cells imported from
Asia are assembled into panels.
Longi, the world's third-biggest solar producer, for example, is
pumping out panels in Pataskala, Ohio through a joint venture with
U.S. 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 No. 4 global manufacturer, plans to start a five-GW panel
factory in Texas this year, and is also planning a cell facility.
"We are committed to be here and we are spending a lot of time and
money to make that a reality," said Mike Nelson, head of legal for
Trina's North American business.
While Chinese producers face opposition from U.S. manufacturers,
panel-buying U.S. 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 U.S. producers, Hanwha Qcells and Arizona-based First Solar, are
pushing for the U.S. to impose new tariffs on component and
equipment imports from countries where their Chinese rivals have
built factories to supply the U.S.
"We're just asking for legitimate U.S. 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.
(Reporting by Nichola Groom; Editing by Richard Valdmanis and Rod
Nickel)
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