The Washington Post

Manchin’s shift could revive U.S. solar trade

- BY EVAN HALPER

dalton, ga. — The gamble by a company here churning out large volumes of solar panels was starting to look risky.

Its plan to be a launchpad for a solar manufactur­ing resurgence was already audacious in an industry so dominated by China, whose cheap products drove the closure of many American solar plants. Government investment championed by the White House was supposed to position domestic firms to compete, but a paralyzed Congress was refusing to write the check.

But the wager in Dalton by Qcells North America may have paid off with an ambitious climate package now on a path to President Biden’s desk. The bill, negotiated in part by Sen. Joe Manchin III (D-W.VA.), would deliver billions of dollars in tax and other incentives to U.S. solar manufactur­ers, equipping them with government support on a scale China used to corner the market.

“This is a historic climate bill, but it’s also one of — if not the —

most significan­t industrial policy bills of this era,” said Harry Godfrey, who oversees domestic manufactur­ing policy for Advanced Energy Economy, a trade group that represents clean tech companies eager to ramp up U.S. production.

The boost to the industry comes at a time of solar power reckoning for America.

Bringing back domestic production is no longer a nostalgic aspiration. It is a national security issue. Solar panels produce some of the cheapest electricit­y, a significan­t asset at a time of skyrocketi­ng energy prices and aggressive climate targets. China’s domination over the solar supply chain also poses an evergrowin­g threat to America’s energy independen­ce and financial health.

“This is a globally competitiv­e market the U.S. has fallen behind in,” said Scott Moskowitz, who heads marketing strategy at Qcells North America, a subsidiary of Korean industrial giant Hanwha. “This country never had policies that created the environmen­t possible to compete. This legislatio­n changes things a lot. It will make companies want to invest in new manufactur­ing in Georgia and around the country.”

Qcells establishe­d a manufactur­ing beachhead in Dalton in 2018 at the urging of local officials. Its panels are assembled using wafers and cells from abroad, but the company aims to help reseed a domestic supply chain so that every component of a solar panel can be made in America.

“There is no shortage of demand,” said Moskowitz, standing on the floor of the sprawling Dalton factory. “It is just a question of whether factories like this can exist in this country and be profitable.”

The energy security risks created by the collapse of the U.S. solar manufactur­ing industry over the past decade have come into sharp focus amid power shortages gripping the globe, propelled by Russia’s control over key energy sources and supply chains. But the current state of play in solar production leaves America’s energy transition vulnerable to the whims of another rival superpower.

“Project developers here were willing to rely on China for panels and never thought through the long game and how overly dependent we would become,” said Mark Widmar, chief executive of First Solar, one of the only solar manufactur­ing giants still operating in the United States. “We are at a vulnerable inflection point. If we can’t figure this out now, I’m not sure we will be at a place where we can have a domestic industry.”

Widmar said on an earnings call Thursday that if the climate package passes, his company will look to expand more aggressive­ly in the United States.

China controls more than 80 percent of solar panel production. That includes commanding 95 percent of the production of certain elements that are essential to making a panel, including polysilico­n and wafers. Much of the polysilico­n supply for the world’s solar panels is processed in China’s Xinjiang region, where companies are accused of using forced labor.

The Internatio­nal Energy Agency warns in a new report that the lack of diverse supply chains leaves the United States and other nations on a shaky energy foundation.

China’s strategy of investing more than $50 billion to dominate the solar supply chain is paying enormous dividends for that country. As American companies struggle to bring new plants online that can supply enough panels for a few gigawatts of energy, a single facility being built in China will churn out 20 gigawatts of solar capacity — accounting for 1 in 7 panels produced worldwide.

It’s a harsh reality for the United States, where the modern solar cell was invented and which not long ago was positioned to lead the industry. Seven factories have closed here since 2018 alone.

The challenges facing the industry are underscore­d by an ongoing fight between the companies that make panels and the U.S. developers that buy and install them. The meager U.S. production has strained alliances in the solar world. Domestic manufactur­ers want the Biden administra­tion to enforce trade laws that would restrict the flow of Chinese panels into the United States. Developers and installers protested a Commerce Department investigat­ion into potential tariff-dodging, warning there are so few American-made panels that it would trigger shortages, soaring prices and the cancellati­on of big projects.

The investigat­ion threatened to choke off the flow of solar panels into the United States, jeopardizi­ng Biden’s clean energy goals. In June, the White House moved to avoid a shortage by exempting American purchasers of potentiall­y illegally imported panels from penalties for two years.

The move landed like a gut punch to manufactur­ers. They were unimpresse­d by the accompanyi­ng measures Biden unveiled at the time to boost American manufactur­ing plants, which included engaging the Defense Production Act.

But the outlook brightened dramatical­ly for American manufactur­ers with the revival of the climate bill, emerging Thursday night after a turnabout by Manchin. The senator’s earlier opposition had appeared to doom the legislatio­n.

Biden administra­tion officials say the incentives give the American manufactur­ing industry motivation to ramp up production during the stretch in which tariff enforcemen­t has been relaxed, showing that it can meet the intense demand for panels. At that point, under the White House road map, the federal government would resume aggressive enforcemen­t of trade laws, further boosting the industry.

Big U.S. purchasers of solar panels say they remain ready to step up and buy American. One group of solar project developers has pledged to spend $6 billion on American made panels over the next four years. The group says it wants to send a market signal that if the industry scales up domestical­ly, there are ready and willing buyers.

“We are trying to jump-start this domestic supply chain,” said Leo Moreno, president of AES Clean Energy. “It is a very large commitment from leading players.”

The plan hinges on the approval of the tax and other incentives in the climate package. “For this to be successful over the long term, suppliers need to scale up,” Moreno said. “If the subsidies end up not passing, they will not be able to.”

One company already scaling is First Solar, a firm that built its business plan around Biden’s climate agenda. It is building its third plant in Ohio and uses a different technology than others in the industry, making thin film modules that can be manufactur­ed without the imported cells and wafers used in 95 percent of solar panel production.

Back in Dalton, the same community that sent anti-solar crusader Rep. Marjorie Taylor Greene (R) to Congress is rooting for the subsidies.

Dalton has long been known as the “flooring capital of the world,” a nod to the many textile manufactur­ing operations there that make carpet and other materials used in home-building. Yet it is eager to diversify, looking to lure industries that are less vulnerable to the fluctuatio­ns of the housing market.

“We want them to be able to make solar panels here and be just as competitiv­e as anywhere else,” said Carl Campbell, executive director of the regional developmen­t authority, which lobbied Qcells to locate in Dalton. “We’ve had a lot of people call and say, ‘Hey, how can I get involved? I want to help build something that is going to make a difference.’ . . . Regardless of where you fall politicall­y, I think everybody can support good jobs with good benefits to do something that might help our world.”

“This country never had policies that created the environmen­t possible to compete. This [bill] changes things a lot.”

Scott Moskowitz, head of marketing strategy for Qcells north america

 ?? ?? TOP: Land is cleared for an expansion of the Qcells facility where solar panels are manufactur­ed in Dalton, Ga. ABOVE: Solar cells on a conveyor belt at Qcells. The company aims to help reseed a domestic supply chain so panels can be made in the United States.
TOP: Land is cleared for an expansion of the Qcells facility where solar panels are manufactur­ed in Dalton, Ga. ABOVE: Solar cells on a conveyor belt at Qcells. The company aims to help reseed a domestic supply chain so panels can be made in the United States.
 ?? PHOTOS BY Dustin Chambers for THE Washington POST ??
PHOTOS BY Dustin Chambers for THE Washington POST

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