US Solar Energy Sector: Being Late at the Party

June 28, 2024

The US solar energy strategy of recent years could be described in a few words: chasing the leader. Right now, there are seven different trade actions aimed at putting the brakes on China’s dominance in the solar component market. But here’s the kicker – it’s only now that trade policy is finally starting to line up with efforts to promote US manufacturing in order to at least catch Chinese production.

The purpose of all these dog fights is to get all of us the best solar deal. Check the best solar installers at SolarPowerSystems, a leading source for information about solar panel installation. You can also ask for a free solar quote from our industry experts. Just answer a few questions and you will be a step closer to saving money and helping our environment.

Let’s break it down. In early June 2024 the US International Trade Commission (ITC) voted to take a closer look at solar imports from Chinese companies that are operating in Southeast Asia. They’ve got a hunch that these imports might be seriously hurting US solar manufacturers. This investigation could throw a lifeline to American solar companies that have been struggling to keep their heads above water in a market flooded with cheap imports.

The Biden administration is scrambling to make up for lost time. Here’s the deal: two years ago, Biden put a hold on penalties for Chinese solar companies that were playing fast and loose with tariff rules. This delay wasn’t just a random decision – it was pushed hard by solar installers (not producers – keep that in mind)  who were hungry for cheap parts. But here’s the rub: this move ended up putting a serious dent in the growth of US solar manufacturing, which was supposed to be getting a boost from the Inflation Reduction Act. Talk about shooting yourself in the foot.

With the floodgates open and mostly duty-free access, US solar panel imports went through the roof in 2023, jumping up by a whopping 82%. At the same time, prices took a nosedive, dropping by half. And guess where most of these imports are coming from? You got it – four Southeast Asian countries that just happen to have factories built by Chinese companies.

Imports of the solar panels into the US

Imports of the solar panels into the US

China’s Solar Grip

It’s not just big – it’s massive. A new report just came out showing that 9 out of the top 12 solar module makers worldwide are Chinese. These companies are cranking out so much stuff that they could satisfy global demand twice over. That’s not just dominating the market – that’s owning it.

The tariff hold that was keeping things cushy for importers finally ended in June 2024.. Now we’ve got seven different policies, all trying to wrangle the solar import situation. Government bigwigs are starting to sound the alarm about the risks of China flooding the market with dirt-cheap solar goods. But here’s the million-dollar question: is it too little, too late to save US solar manufacturing?

When Did It Start?

Cast your mind back to the Obama years. The US poured a ton of cash into solar investments, but it all went down the drain because China started selling panels at rock-bottom prices – we’re talking below cost. Even now, Chinese parts are selling for about a third of what US-made ones go for. This is forcing American companies to sell at a loss just to stay in the game. It’s like trying to run a race with your shoelaces tied together.

Now, solar installers are all about those super-cheap parts. They’re wringing their hands about higher prices, but here’s the thing: components are actually a pretty small slice of a solar project’s total cost pie. Some folks are saying all this worry about price hikes is way overblown.

Here’s a wild fact for you: most solar panels getting slapped onto roofs and fields across the US have Chinese parts in them. This raises a whole can of worms. For one, there are serious concerns about using products that might be made with forced labor. Plus, do we really want to be relying on China for our clean energy needs? It’s like we’re trading one energy dependency for another.

Solar PV manufacturing capacity

Solar PV manufacturing capacity

Saving Private Solar

Surprisingly, there’s actually some agreement across the political aisle on this one. Both Democrats and Republicans are making noises about protecting US solar manufacturing. Some are arguing that trade laws need to be enforced across the board, no matter what industry we’re talking about.

The Inflation Reduction Act was supposed to be this big shot in the arm for US solar manufacturing. And sure, it has boosted investment, but here’s the reality check: it’s still peanuts compared to what China is pumping into the sector. There’s a real risk that Chinese dominance could end up wasting all that taxpayer money that was meant to give US production a leg up.

Some folks are saying we need to do more to level the playing field. They’re pushing for things like finalizing rules for domestic content bonuses – basically, extra incentives for using US-made parts in solar installations. They also want to slam the door on Chinese companies trying to sneak in and take advantage of US tax credits. 

Now, let’s talk about what the future might look like for US solar manufacturing. It’s a bit of a head-scratcher. We might end up with just a handful of big American companies dominating the market with all possible consequences of solar cartel deals or close-to-monopolized supply . But right now, most people are saying that’s a problem for another day. The main focus is on breaking China’s chokehold on the industry.

Backdoors of the American Solar Economy

Here’s another wrinkle in the story: some Chinese companies are getting creative. They’re trying to set up shop in special trade zones in the US, which would let them dodge tariffs. It’s like they’re finding a backdoor into the American market. The government is still figuring out how to handle this sneaky move.

All of this back-and-forth is having real impacts. Some Chinese manufacturers have already hit pause on their Southeast Asian operations, seeing the writing on the wall with the new crackdowns. And there are a few bright spots in the US solar scene. Companies like REC Silicon and Qcells are starting to rev up domestic production of key solar components. First Solar, probably the biggest name in US solar manufacturing, is also making moves, though they’re doing things a bit differently with their thin-film panels.

But let’s not kid ourselves – these American efforts are still just a drop in the bucket compared to the tidal wave of Chinese production. 

Will We Choose To Grow Up as Adults?

The big question on everyone’s mind is: can the US actually build up a robust solar manufacturing sector, or are we too far behind? Some industry watchers are saying we need to completely rethink how we approach trade and industrial policy if we want to have a shot.

“Self made man” statue created by American sculptor Bobbie Carlyle, Living Wheel Park, Parker, CO

“Self made man” statue created by American sculptor Bobbie Carlyle, Living Wheel Park, Parker, CO

Source: Parker Arts

Here’s the bottom line: the solar industry is at a crossroads. On one side, we’ve got the promise of cheap, abundant solar panels that could speed up the transition to clean energy. On the other, we’ve got concerns about job creation, energy security, and ethical manufacturing. Threading this needle isn’t going to be easy.

As things stand now, it feels like the US is always playing defense, always reacting to China’s moves instead of charting its own course. If America wants to be a real player in the solar game, it needs to start thinking several steps ahead. That means focusing not just on manufacturing but also on innovation, workforce development, and creating a stable policy environment that gives businesses the confidence to invest for the long haul.

In the end, this isn’t just about solar panels. It’s about setting the stage for who’s going to lead in the clean energy economy of the future. The US has been a technology leader in so many areas – can it pull off a comeback in solar? Only time will tell, but one thing’s for sure: the clock is ticking, and the world isn’t waiting around.

And your utility bills are not waiting either. Take a look at the best choice of solar installers at SolarPowerSystems and get solar quotes for free.

This review is inspired by the article of David Dayn from The American Prospect.



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Andriy Ryzhyy
Andriy Ryzhyy

Andriy Ryzhyy is a Research Expert and Copywriter at Solar Power Systems. Andriy’s experience in digital marketing automation and renewable energy sources, passion for applying mathematical principles to real-life tasks, and devotion to developing eco-friendly energy resources—a commitment shared with the rest of the team—are crucial in shaping the company’s strategy for presenting accurate and user-friendly information on solar technology.

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