U.S. solar manufacturers seek to match rhetoric with reality

Solar manufacturing in the United States is currently supporting 75,400 jobs across 90 facilities, $5.9 billion in earnings and $11.5 billion in GDP, according to a recent report by the American Clean Power Association. However, it wasn’t always that way. An effort to on-shore U.S. solar manufacturing industry began in 2018 during the first Trump administration with the Section 201 trade tariffs.

Those tariffs encouraged the buildout of solar manufacturing in the United States, with First Solar and Qcells adding to its module manufacturing capacity, and others, like Talon PV, entering the market to make solar cells, filling a critical gap in the domestic supply chain.

Qcells has embraced the challenge of building out almost the entire solar supply chain on U.S. soil. In a recent press conference, Scott Moskowitz, vice president of market strategy and industrial affairs at Qcells said that the company is building the only factory in North America that will build “all the key inputs for solar panels, namely ingots, wafers and cells.” The company has invested over $3 billion into onshoring the supply chain, he said, discussing the irony of the Senate Finance Committee’s version of the One Big Beautiful Bill that “directly undercuts the administration’s aims to re-industrialize the American economy.”

Moskowitz said “if [the Senate doesn’t] get it right, it’s going to be a massive blow to domestic solar manufacturing and potentially forfeit the sector right back to China.”

Until the solar tariffs were put in place, China was the main supplier of the full solar supply chain, but the tide has begun to turn. Michael Carr, executive director, Solar Manufacturers For America (SEMA) Coalition, noted that China has no advantage in manufacturing solar panels “except for its government unwavering commitment to dominate manufacturing in that space.”

SEMA started working in 2020 with members of Congress and members of the solar industry, which led to the domestic content bonus attached to the manufacturing tax credit and production tax credit. “These have been wildly successful, incentivizing billions in investments and thousands of jobs,” he said.

It takes time to set up manufacturing facilities and even longer to ramp up to full production. Many of the manufacturing investments that have been made over the last several years are just now coming online or coming online within the next year, Moskowitz said. “Many of those are supplying projects that we’re assuming would get tax incentives that are now at risk,” he added.

Talon PV is building a manufacturing facility in Houston, Texas where it plans to produce 4 GW of cells. Solar cells are a critical and much-needed leg of the domestic supply chain, as the U.S. currently has 35 operational module facilities and only three cell plants that are up and running.

Adam Tesanovich CEO and co-founder of Talon PV stressed the importance of tax credits to support the continued build out of these plants. “A lot of work has been done and we’re on the precipice to having a truly domestic supply chain,” he said.

Talon is outfitting its manufacturing facility with non-Chinese equipment, Tesanovich said, and plans to employ more than 1,000 people in the Houston area.

The Inflation Reduction Act (IRA) has created tremendous demand for domestic content, but he said “this 48E cliff puts our demand in jeopardy.” He added that it “basically gives back that demand to the Chinese exporters.”

The original iteration of the 48E Investment Tax Credit for solar and wind energy projects in the IRA covers 30% of installed system costs. In the Senate Finance Committee proposal, the credit is reduced to 60% of its value by the end of 2026, 20% of its value by the end of 2027, and all projects beginning construction by 2028 are ineligible for the credit. A reduction in credit would put installations at risk and would slow growth not only in clean energy production but in domestic manufacturing as well.

“Clean energy manufacturing has accounted for nearly all of the United States’ manufacturing growth over the last five years.” Moskowitz said. “This bill would stall that growth. Solar is the leading form of energy added every year, and not because it’s clean and renewable but because it’s cheap and reliable.”

Why subsidies?

Solar has taken its place as an important part of the energy mix in the United States, but it’s not yet a mature market like gas, coal and oil. Yet the fossil fuel markets received subsidies, which Carr said “for understandable reasons.” He said he’s sure there are legislators who would say that in order to compete in the international arena, “we need to make sure our fundamental energy sources remain cheap and that helps our manufacturing competitiveness and the like.”

The 48E tax credit with the domestic content bonus, achieves that, Carr said. “ At a fundamental level, what the 48E tax credit with the domestic content bonus is doing is holding down energy costs for consumers.” He said that what these credits do is to level the playing field so domestic manufacturers can “get back in this game and to pay off the factories that they, again, invested in in good faith against these credits.”

Ultimately what solar manufacturers are looking for is not a long-term extension of the tax credits, but to lessen the severity of the cuts. “This is not a question of new score, it’s what the House bill proposes to take away. And now the Senate bill proposes to not give us back what we had all been counting on.”

What’s changed in the past ten years, Moskowitz said, is a push to lessen our dependency on imported products to meet the growing demand. “Over the next decade with the AI revolution going on, we need to add as much clean energy to the grid as we can as quickly as possible.” Solar offers the great benefit that it’s fast to deploy in comparison to other energy sources. Moskowitz said it takes about a decade to add nuclear or natural gas, whereas residential or commercial solar can be deployed in a few months; utility scale a year or two.

We’re on the “precipice” of a solar manufacturing revolution on a scale that can support all of the domestic demand, Tesanovich noted. He cautioned that the Senate Finance Committee’s proposed bill would hand this manufacturing back to China. Instead the industry needs time, but “we’re not asking forever,” he said. It takes about a year and a half to set up a module factory, about 3 years for cell and a little more for ingot and wafer, he said. With millions invested in these plants, he said “we need fair policy.”

The proposed language changes the rules in the middle of the game after much has been invested, according to Carr. He said they’re looking for the “bottom line” of what’s absolutely necessary to keep those factories open. Passage of the Senate Finance Committee’s proposed changes would lead to contraction in the burgeoning industry because, as Carr said, “people have made substantial investments against the assumption of these credits being around,” and he said that some won’t survive and “there will be communities that are deeply impacted.”

“We’re trying to match up the rhetoric with the reality,” Carr concluded.

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