America Wanted a Homegrown Solar Industry. China Is Building a Lot of It.
China’s biggest solar companies are expanding in the U.S., where they will reap generous government aid
For years, the U.S. erected higher and higher barriers to the import of Chinese solar panels, arguing that was the best way to protect domestic suppliers.
Now, China’s solar giants are building their factories inside the U.S.
During the past year, the world’s biggest solar companies, all of which do the bulk of their manufacturing in China, have quietly launched plans to set up or expand panel factories in locations from Ohio to Texas—part of a rush to build in the U.S. following the introduction of generous production subsidies with the Inflation Reduction Act in 2022.
China-based companies are behind nearly a quarter of the roughly 80 gigawatts in new solar-panel capacity that has been announced since that legislation, according to an analysis by The Wall Street Journal. That positions them to be big beneficiaries of government subsidies as well—as much as $1.4 billion a year collectively if the panel factories announced so far are built, according to Journal calculations.
Many of those plants are huge by U.S. standards, and they are going up fast. At least four new factories backed by giant Chinese manufacturers are slated to come online this year, with enough capacity when complete to supply more than half of the record 33 gigawatts of panels the U.S. is estimated to have installed last year.
The rush of Chinese interest is a mixed blessing for the U.S., which is struggling to build a domestic solar supply chain largely from scratch.
Industry trackers estimate that more than 80% of global solar production takes place inside China, while much of the rest is in Southeast Asia and funded or contracted by large China-based makers.
Such manufacturers have the know-how, suppliers and deep pockets needed to set up plants in the U.S. quickly—a boon for local economies and the U.S.’s ambitious clean-energy deployment goals. But the U.S. subsidies were also supposed to lessen the country’s dependence on China in clean energy.
Among the big-name manufacturers setting up now is Xi’an-based Longi Green Energy Technology 601012 7.87%increase; green up pointing triangle, which has a joint venture in Ohio with Chicago-based renewables developer Invenergy that expects to start making panels in the next few weeks.
“We definitely don’t want to miss the wave,” says Steven Zhu, president of the U.S. unit of Trina Solar 688599 5.65%increase; green up pointing triangle, a company based northwest of Shanghai that is the biggest maker of solar panels in the world, according to data from supply-chain tracker Clean Energy Associates.
Trina announced in September that it is investing $200 million in a factory near Dallas that will be able to produce five gigawatts of solar panels a year. The first panels are expected to come off the lines midyear, says Zhu.
In December, Trina staffers joined local officials in a Christmas-tree lighting ceremony featuring a real reindeer and two plastic snowmen blasting fake snow.
Some homegrown U.S. manufacturers welcome the development. Chinese rivals have been so nimble and their panels so much cheaper that trying to fend them off with tariffs alone hasn’t had lasting success.
“As long as they’re playing by the rules, I have no problems with competing with other domestic manufacturers,” says Mamun Rashid, chief executive of Auxin Solar, who for years has said Chinese manufacturers have unfair advantages and are sidestepping duties.
But an increasingly vocal group of China hawks say that letting Chinese solar and battery manufacturers take government subsidies could undermine efforts to build a domestic supply chain and threaten the U.S.’s energy security.
“The Inflation Reduction Act is being misinterpreted to benefit Chinese companies and give billions of American tax dollars to our adversaries,” says Congresswoman Carol Miller (R., W.Va.). Miller and Sen. Marco Rubio (R., Fla.) in December introduced a bill that would effectively prevent Chinese companies from getting such clean-energy manufacturing subsidies.
The Biden administration is in a bind because it is simultaneously trying to fight climate change, expand domestic manufacturing and recapture the leadership in solar technologies—all of which call for different approaches to China’s giant manufacturers, says Timothy Brightbill, a trade lawyer for Wiley Rein.
The Inflation Reduction Act is successfully building up a U.S. solar supply chain and reversing the trend of China controlling production, says a Biden administration official. The U.S. has procedures to ensure foreign investments don’t trigger national-security concerns, she says.
Under President Biden, manufacturing jobs that had been outsourced to China during previous administrations are “coming to America,” says Michael Kikukawa, a White House spokesman.
Trina first looked into manufacturing in the U.S. several years ago, after the U.S. slapped more duties on panels made in China, says Zhu, a naturalized U.S. citizen who has lived in the U.S. for 30 years. At the time, Trina decided the cost of producing in the U.S. was too high.
Instead, Trina and other big Chinese manufacturers moved factories out of the mainland—mostly to Southeast Asia—and adjusted supply chains to keep selling panels to the U.S. as regulations changed.
In 2022, the U.S. started enforcing a tough anti-forced-labor law that effectively halted the import of solar panels that used a key ingredient—high-grade silicon—made in the Xinjiang region in western China. Subsequently, Trina instead started buying the material from U.S. and European suppliers.
Last year, Trina started producing another important component, silicon wafers, in Vietnam, to meet tightened Commerce Department standards.
After the Inflation Reduction Act was passed, Trina decided to finally make the move to the U.S. The cost of production is still higher in the U.S., even with incentives, Zhu says, but Trina didn’t want to lose footing in an important market, he says.
On Jan. 26, a bipartisan group of senators sent a letter to Biden, urging him to increase tariffs on solar components from China because they “threaten U.S. economic and energy security.”
Trina, like other Chinese solar giants here, is working to show it has good intentions. All of the U.S. unit’s 80-odd employees are U.S. citizens, Zhu says. The company plans to reinvest much of the money it makes into the U.S. market rather than send it back to China. Trina is trying to bring its suppliers to the U.S., and Zhu says he is “pretty sure” the company will decide to build a factory that makes solar cells—the building blocks of panels—here, too.
The U.S. market needs Chinese solar manufacturers for their technological know-how, ability to bring suppliers from China, capital and appetite for investment, Zhu says.
Zhu knows there is pushback from U.S. politicians on Chinese manufacturers. But, he says “we’re not politicians. We just do the business.”