Many U.S. solar factories are lagging behind. Except those owned by China

By Nichola Groom

(Reuters) – Construction of U.S. solar power plants by Chinese companies is growing rapidly, putting China in a dominant position in the fledgling industry while other U.S. factories struggle to compete despite federal subsidies.

Chinese companies are expected to have annual solar panel production capacity in the U.S. of at least 20 gigawatts within the next year, enough to serve about half of the market in the country, according to a Reuters analysis of corporate statements, government documents and interviews with eight companies and researchers.

According to the analysis, the group consists of seven companies backed by Chinese companies, including Jinko Solar, Trina Solar, JA Solar, Longi, Hounen, Runergy and Boviet.

The projected rapid growth in U.S. solar panel production by Chinese companies has not been previously reported and is a worrying development for President Joe Biden’s climate agenda. While his administration is keen to see new investments that create clean energy jobs in the U.S., his government is also desperate to prevent overreliance on geopolitical rival China as the economy transitions from oil and gas to renewables.

Chinese-backed companies have distinct advantages over their U.S. competitors, such as heavily subsidized supply chains for raw polysilicon and unfinished solar modules, as well as cheap government financing. Like non-Chinese companies, they also draw on U.S. subsidies for clean energy production included in the Inflation Reduction Act of 2022, Biden’s signature climate law.

“You have a stacked deck here. It’s hard to imagine anyone, especially a greenfield manufacturer, can do this as quickly as a Chinese manufacturer,” said Paula Mints, founder of solar industry research firm SPV Market Research, referring to the new factories.

But she and another researcher added that the Chinese investment would help the country’s solar panel industry expand and also create new jobs.

“They have a lot more experience building factories and building supply chains,” said David Feldman, a solar researcher at the U.S. Department of Energy’s National Renewable Energy Laboratory.

Local and state governments in places where Chinese companies 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, meanwhile, are struggling to compete with a flood of cheap imports and are worried about China’s outsize presence. As much as half of the planned U.S. factories may not be built, Reuters reported last year.

The story continues

For example, the American company Convalt is struggling to launch 10 GW of production capacity at a factory it began construction in upstate New York in 2022.

“If we’re going to be successful, we need American manufacturers like Convalt to weather this onslaught of low prices, to build factories with the capacity to compete with the largest global companies, the Chinese who are the real beneficiaries,” Chief Executive Officer Hari Achuthan said in May in testimony before the U.S. International Trade Commission, a government agency that is considering a request by Korean company Hanwha Qcells and other American manufacturers to impose new tariffs on some solar imports.

The Convalta plant would have produced panels and the cells, wafers and bars that go with them, but progress stalled a year ago as global panel prices fell 50% to levels below Convalta’s production costs, he said.

“If we didn’t have such low prices, we could be up and running today,” Achuthan said.

The Energy Department told Reuters that building a domestic solar supply chain will take time and that the United States must rely on the expertise of foreign companies.

“OBLIGATE TO BE HERE”

Chinese companies, by far the largest suppliers of electric vehicle battery components and solar panels imported into the U.S., now account for one-fifth of the solar panel factories opened after the U.S. introduced new climate subsidies, according to research firm Wood Mackenzie.

The United States has tried to ease its dependence on Chinese solar imports with tariffs, and has also banned goods linked to China’s Xinjiang region over concerns about forced labor. It is now considering new tariffs on components made in other Asian countries where Chinese manufacturers have settled.

Chinese companies building factories in the US are currently investing mainly in module production, i.e. assembly of panels from solar cells imported from Asia.

For example, Longi, the world’s third-largest solar producer, makes panels in Pataskala, Ohio, through a joint venture with U.S. clean-energy developer Invenergy called Illuminate USA. The five-gigawatt plant is one of the largest announced since the IRA was passed, and the company is also exploring the possibility of building a cell plant.

“Illuminate USA is a U.S. company majority owned by Invenergy, which owns both the facility and the land where more than 1,000 Ohioans will produce more than nine million high-quality solar panels per year at full capacity by the end of this year,” Illuminate spokesman Eric Heis said in a statement.

Trina, the world’s fourth-largest manufacturer, plans to start a 5-GW panel factory in Texas this year. It also plans to build a cell plant.

“We are committed to this and are dedicating significant time and money to making our plans a reality,” said Mike Nelson, Trina’s North American legal director.

While Chinese manufacturers face opposition from some American factory owners, American project developers interested in cheap supplies are eager to welcome them.

The American Clean Power Association, a clean energy trade group, said the U.S. solar panel manufacturing sector is attracting global and domestic investment. It said U.S.-based companies account for the majority of operational and planned panel production.

The largest U.S. manufacturers, Hanwha Qcells and Arizona-based First Solar, are pushing the United States to impose new tariffs on imports of components and equipment from countries where their Chinese rivals have built factories to supply the U.S.

“We’re simply asking for legitimate U.S. manufacturers to have a chance to compete with these giant Chinese companies,” said Tim Brightbill, a lawyer for the American Alliance for Solar Manufacturing Trade Committee, a group fighting for the new tariffs.

The group’s rivals say imposing tariffs on imports of some cells is unfair and will limit construction of U.S. factories.

(Reporting by Nicola Groom; Editing by Richard Valdmanis and Rod Nickel)