Brian McCowan, Zondits staff, 1/26/2023
The recently enacted Inflation Reduction Act (IRA) is helping to expand the production of photovoltaic (PV) panels in the U.S. and ease the tariff-related tensions regarding the growth of solar electric energy worldwide. The South Korean PV manufacturer Qcells has announced a $2.5 billion expansion of their facility in Georgia and construct a second factory in the region. They credit the IRA legislation for providing the economic stimulus to move the projects forward.
According to the Energy Information Administration (EIA), the worldwide deployment of PV systems continued to expand dramatically during 2022, while growth in the U.S. slowed to a somewhat stagnant rate. The blame for this, by most accounts, has been the confusion over tariffs charged for PV panels exported to the U.S. from China.
For the last several years, the PV installation industry in the U.S. has relied predominantly on PV panels produced in China and Southeast Asia. For the last decade, PV exports from China have been subject to a substantial tariff (up to 35% in some cases). Early last year, the Biden administration announced that they would expand the tariffs to include panels imported from some Southeast Asian countries, following an investigation that concluded that some Chinese manufacturers were avoiding the tariffs by shipping panels to the U.S. through other countries.
The decision sent shockwaves through the U.S. solar industry causing many large-scale projects to be put on indefinite hold as installers worked to secure supply chains. U.S. solar industry groups publicly objected to the decision, and environmental groups expressed concern that the decision would slow progress on climate change.
The Biden administration has responded with a two-pronged approach. They have announced a two-year delay in the expansion of the tariffs and have made the U.S. manufacture of PV panels a funding priority of the IRA.
With manufacturing already established in the U.S., Qcells is positioned to expand its manufacturing here and help meet expanding demand. Although there are currently no large-scale U.S. based manufacturers of PVs, U.S. based firms such as GAF Energy, First Solar, and Nextracker are ramping up production and plan to access the IRA funding.
Zondits expects that this announcement is only the beginning, and additional PV manufacturers will seek to utilize IRA funds for the construction of facilities in the U.S.
The following articles provide further information on the Qcell announcement and the PV tariffs:
- HuffPost.com article: Democrats’ Climate Law Is About To Give A Big Boost To U.S. Solar Manufacturing
- VOAnews.com article: Biden Drops Tariffs on Southeast Asian Solar Panels for 2 years
- Zondits.com article: Solar Project Delays Threaten Climate Goals