US solar power grows despite Chinese competition

The US is seeing record growth in solar capacity each year due to higher public and private investment in the sector. The already fast-growing solar industry saw an expansion following the introduction of the Inflation Relief Act (IRA) and other favorable policies. This growth is expected to continue, with more large-scale solar farms under development over the next decade, supported by the deployment of utility-scale battery storage across the country. The solar boom has fueled the growth of the US manufacturing sector and led to the creation of thousands of jobs. However, competition from China and tariffs on renewable energy equipment have cast a shadow over the US solar industry at a time when it should be untouchable.

In the first quarter of 2024, solar installations grew 21 percent year over yearbringing cumulative US solar capacity to over 100 GW. About 3,379 MW of utility-scale solar was deployed in the first quarter and about 11.8 GW of new capacity was deployed in total. More than 56 GW of solar power capacity is expected to come online in 2024, as well as 11 GW of wind generation. This is leading experts to suggest that wind and solar power could soon overtake coal generation for the first time in US history.

Solar Energy Industries Association (SEIA) rEPORTS that there are approximately 5 million solar projects currently in the US, including distributed and utility-scale solar installations. In the next six years, this figure is expected to increase to 10 million projects. The number of U.S. solar installations is expected to triple between now and 2034, and by 2050 it could be the largest source of U.S. grid generating capacity.

About 97% of US solar installations are located on residential rooftops, with about 7% of homes now having solar power. By 2030, it is estimated that 15% of homes will have solar power. There is currently enough installed solar capacity to power 32.5 million US households, and by 2034 it could reach 100 million homes. The solar energy sector now contributes to the reduction of approximately 198 million metric tons of carbon dioxide each year, which is approximately the equivalent of CO2.2 produced at 53 coal-fired power plants.

The US solar industry has grown significantly in the post-pandemic period due to the wider availability of panels and other equipment. Favorable federal and state policies have supported this expansion and helped ensure projects can connect to the grid. “Not only has the global solar supply chain expanded, but module imports into the US have increased significantly over the past year.” according to a report published by Wood Mackenzie and the Solar Energy Industries Association in June of this year. Between June 2023 and March 2024, the US imported 49 GW of solar modules. In addition, domestic solar panel production capacity increased to 26.6 GW in the first quarter of this year from 15.6 gigawatts in the previous quarter.

In September, US domestic generation capacity was reported to have topped 31 GW – a fourfold increase since the introduction of the IRA in the summer of 2022. Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association (SEIA), he stated“The solar and storage industry is turning federal clean energy policies into action, rapidly creating jobs and spurring economic growth in all 50 states, especially in battleground states like Arizona, Nevada and Georgia.”

The solar energy industry supports directly around 280,000 jobswith the number of jobs in the sector growing by about 6% in 2023, according to the National Solar Jobs Census. The growing number of solar jobs reflects President Biden’s commitment to creating millions of jobs through the green transition.

However, while the US solar industry is going from strength to strength, there is a shadow cast over the sector. The US is in a trade war with China, which exports to the US artificially cheap solar panels with a large carbon footprint. Since the introduction of the IRA – and in line with Made in America goals – the Biden administration supported the development of a domestic solar panel manufacturing industry. However, due to the heavy government subsidies provided in China, it simply cannot compete with the Asian giant on price.

The price of solar panels has dropped by about 50 percent over the past year, largely due to China’s overproduction of solar equipment. Chinese companies have moved their operations to cheaper manufacturing countries such as those in Southeast Asia, further driving down prices. They have also been very successful in circumventing US tariffs. One of the main problems with relying on China for solar panels is the lack of labor and environmental laws the Chinese government has in place to control manufacturing processes.

China now produces more than 80% of the world’s solar panels. Mike Carr, executive director of the Solar Energy Manufacturers for America coalition, explicitly“China has dominated the solar manufacturing sector for a decade … using a playbook familiar to those of us who have watched what the OPEC cartel has done to the oil markets.” Carr added: “OPEC has shown time and time again that you can either join them or get hit… Now China is doing the same in solar to stifle our production revival before it has a chance to take off “.

With stiff competition from China, many U.S. solar companies have gone bankrupt over the past two decades as they have been forced out of the market. And unless the White House imposes strict tariffs on solar component imports from China, it will be difficult to establish a strong U.S. solar manufacturing industry. However, it’s important to consider that introducing tariffs will drive up solar panel prices, which could slow the pace at which new solar capacity is deployed and ultimately slow the U.S. green transition .

By Felicity Bradstock for Oilprice.com

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