By Nicola Noivo
(Reuters) – Construction of U.S. solar power plants by Chinese companies is surging, putting China in a position to dominate the nascent industry as other U.S. factories struggle to compete despite federal subsidies.
Chinese companies will have at least 20 gigawatts of annual solar panel production capacity on U.S. soil 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 predicted rapid increase in U.S. solar panel production by Chinese companies has not been previously reported and represents a worrying outcome for President Joe Biden’s climate agenda. While his administration is interested in new investments that create U.S. jobs in clean energy, his government is also desperate to avoid overdependence on geopolitical rival China as the economy transitions from oil and gas to renewable energy.
Chinese-backed companies have distinct advantages over U.S. competitors, 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 US subsidies for clean energy production, incorporated into the Inflation Reduction Act of 2022, Biden’s signature climate law.
“There’s a complicated situation here. It’s hard to imagine that anyone, especially a novice manufacturer, can do this as quickly as a Chinese manufacturer,” said Paula Mints, founder of solar industry research firm SPV Market Research, referring to new factories.
She and another researcher added, however, that Chinese investment would help the national solar production industry mature, while also creating jobs.
“They have a lot more experience building factories and creating supply chains,” said David Feldman, a solar market researcher at the U.S. Department of Energy’s National Renewable Energy Laboratory.
Local and state officials 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, by contrast, have had difficulty competing against a flood of cheap imports and are concerned about China’s outsized presence. Up to half of announced U.S. factories may not come to fruition, Reuters reported last year.
US-based Convalt, for example, is scrambling to bring online 10 GW of US capacity at a factory it began 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 capabilities that allow us to compete against the largest global companies, with Chinese beneficial ownership,” CEO Hari Achuthan said in May at testimony to the U.S. International Trade Commission, a government agency that is considering a request from Hanwha Qcells of Korea and other U.S. manufacturers to impose new tariffs on some solar energy imports.
The Convalt factory would produce panels, as well as the cells, wafers and ingots that comprise them, but progress stalled a year ago when global panel prices plummeted 50% to levels below Convalt’s production cost, he said.
“If we didn’t have these low prices, we would be running today,” Achuthan said.
The Energy Department told Reuters that developing a domestic solar supply chain would take time and that the U.S. must rely on the expertise of foreign companies.
‘COMMITTED TO BEING HERE’
Chinese companies, by far the leading suppliers of solar and electric battery components for vehicles imported into the US, now account for a fifth of solar factories announced since the US adopted new climate subsidies, according to research firm Wood Mackenzie.
The United States has tried to alleviate its addiction to importing Chinese solar products with tariffs and has also banned products linked to China’s Xinjiang region due to concerns about forced labor. It is now considering new taxes on components manufactured in other Asian countries where Chinese manufacturers have set up shop.
Chinese companies building factories in the US so far are investing mainly in the production of modules, in which solar cells imported from Asia are assembled into panels.
Longi, the world’s third-largest solar energy producer, for example, is producing panels in Pataskala, Ohio, through a joint venture with Invenergy, an American clean energy development company called Illuminate USA. The five-gigawatt plant is among the largest announced since the IRA’s approval, and the company is also exploring the possibility of building a cellular facility.
Trina, the No. 4 global manufacturer, plans to start a five-GW panel plant in Texas this year and is also planning a cell facility.
“We are committed to being here and we are spending a lot of time and money to make this a reality,” said Mike Nelson, head of legal for Trina’s North American business.
Although Chinese producers face opposition from North American manufacturers, North American project developers who buy panels and are interested in low-cost supply welcome them.
The American Clean Power Association, a clean energy trade group, said the U.S. solar manufacturing sector is attracting global investment and noted that factories 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 imports of components and equipment from countries where their Chinese rivals have built factories to supply the US.
“We’re just asking that legitimate U.S. manufacturers be given a chance to compete with these giant 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)
