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This story is part of our special series "Made in the USA: Ramping up clean energy manufacturing." Read more.

Can the US manufacture enough solar panels to meet its surging demand?

Probably not anytime soon, despite new federal incentives, the threat of tariffs against overseas competitors, and a huge ongoing buildout of manufacturing capacity.
By Eric Wesoff

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Blue rectangular solar panels move along an automated assembly line in a very large industrial facility
A solar-panel assembly line at Qcells' manufacturing facility in Georgia (Barbara Lantz/Canary Media)

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Canary Media thanks KORE Power for its support of our special series on clean energy manufacturing.

Flush with a fresh injection of generous federal incentives, the U.S. solar industry is betting billions on scaling up homegrown manufacturing and reversing its reliance on foreign suppliers.

Solar is the fastest-growing form of electricity generation in the U.S., but that pace of growth has only been possible with the help of tens of millions of imported solar panels. Most of these panels are manufactured (at least partially) in China, a country the U.S. is increasingly at odds with and which Democratic and Republican lawmakers alike want to reduce dependence on — especially when it comes to the rapidly unfolding energy transition.

A robust and vertically integrated domestic solar industry would allow the U.S. to have reliable suppliers that we can count on, where your supply isn’t going to be disrupted every two to three years in a major way,” said Justin Baca, VP of markets and research at the Solar Energy Industries Association. Today’s solar industry is intermittently immobilized by tariff-driven trade squabbles, Baca said, like last year’s back-and-forth over potential punitive tariffs affecting the Southeast Asian nations from which the U.S. sources most of its solar panels.

In a dramatic policy turn last year, the Biden administration put a two-year pause on imposing any new import tariffs on solar products, which would have stopped U.S. solar deployment in its tracks. Months later, the administration also provided the carrot of the Inflation Reduction Act’s billions in incentives for domestically manufactured solar hardware.

But there’s still a bipartisan appetite in Congress to impose tariffs on solar panels from Southeast Asia as soon as next year — a move that only makes sense for the energy transition if the U.S. is able to meet all of its own solar manufacturing needs by then.

So can homegrown solar production, turbocharged by the Inflation Reduction Act, supplant that imported hardware anytime soon? 

The solar supply gap

Here’s the problem: Right now, the U.S. cannot manufacture anything close to enough solar to meet its own installation needs.

In 2022, the U.S. produced a paltry 5 gigawatts of solar panels or modules, according to the National Renewable Energy Laboratory, while importing 29 gigawatts of modules from China, Malaysia, Vietnam, Cambodia and Thailand.

And with the pace of solar installations projected to surge, the challenge of scaling manufacturing to match that demand isn’t going to get any easier.

While 17 gigawatts of total solar capacity was installed in the U.S. last year, according to the Department of Energy, a whopping 358 gigawatts of new solar capacity is expected to be deployed between 2023 and 2030, driven by the incentives in the Inflation Reduction Act, according to the latest New Energy Outlook from BloombergNEF. Annual installations could balloon to more than 100 gigawatts per year by 2030, according to some projections.

Some help is on the way, thanks to the Inflation Reduction Act. Since the landmark law was enacted last August, 27 new solar manufacturing facilities have been announced in the U.S. But in the best-case scenario, these announcements still won’t close the gap between projected supply and demand for solar panels in the coming years — and the best-case scenario is rarely the one that unfolds.

Challenging Chinese solar dominance

Although America’s IRA-inspired solar manufacturing plans are ambitious, they’re absolutely put to shame by the scale of China’s solar manufacturing.

The U.S. was the first to commercialize solar panels, but over the last two decades, its solar-production expertise migrated to Japan, then Germany and ultimately to China, despite protectionist tariffs imposed during the Obama, Trump and Biden administrations. (This is a good case for the ineffectiveness of trade tariffs.)

Now, China is the dominant global solar supplier by far, and home to 70 to 98 percent of the world’s production capacity for the silicon-based materials and components in PV panels, according to S&P Global. Meanwhile, the U.S. currently has just over 2 percent of the world’s photovoltaic module production capacity — 11 gigawatts out of a global total of more than 500 gigawatts in 2023, according to energy consultancy Wood Mackenzie.

And while the heftiest solar-manufacturing additions in the U.S. are coming in 3-gigawatt chunks, new facilities in China are orders of magnitude larger, with numerous 20- and 30-gigawatt factories in the works from vendors such as Longi, Jinko and Trina.

The country’s dominance poses a significant problem for the U.S. energy transition as politicians on both sides of the aisle step up anti-China rhetoric, both in general and specifically about the solar supply chain.

Senator Sherrod Brown (D), whose state of Ohio is home to U.S. solar manufacturing heavyweight First Solar, has a particularly strong opinion on the matter. The Chinese government will do anything to undermine American manufacturing, and would like nothing more than to kill the American solar manufacturing industry before it takes off,” he said. “[T]he Inflation Reduction Act…allows us to fight back.”

The solar coaster

Now here’s a promising development for homegrown solar: There has been approximately 70 gigawatts’ worth of U.S. solar panel factory announcements since the passage of the IRA last August, according to SEIA’s Justin Baca.

There’s a good reason for that: The IRA provides generous tax credits for the domestic production of solar cells, modules and components. Manufacturers will be eligible for a credit of 11 to 18 cents per watt for a solar module manufactured in a U.S.-based, vertically integrated plant, meaning all components are sourced in the U.S. Subsidies will apply across the solar value chain of polysilicon feedstock, thin-film or crystalline PV cells, wafers and modules, and will cover about half the cost of manufacturing a solar module.

Thanks to these newly announced facilities, SEIA projects that the U.S. will produce 42 gigawatts of silicon-based, vertically integrated solar panels per year by 2027, up from exactly zero today.

And even though it’s not projecting imminent self-sufficiency, the forecast is still bold — as it’s challenged by supply-chain requirements in the IRA that will require manufacturers to secure key inputs that meet a domestic-content threshold in order to qualify for more generous tax credits. The new IRS guidance on those tax credits is still being analyzed, but the 40 percent domestic-content requirement pretty much dictates that a developer must procure modules made with U.S.-produced solar cells.

That’s going to pose a challenge.

While billions of dollars are being poured into expanding solar module assembly in the U.S., a comparatively small amount of investment is being made to beef up the country’s cell manufacturing capacity. At the current pace of deployment, we won’t be able to make enough solar cells to meet domestic demand. In fact, it’s the cells, not the modules, that has made Wood Mackenzie skeptical about how quickly the domestic manufacturing sector might deliver on the government’s ambitions, according to a recent analysis by the energy research firm.

Until cell manufacturing capacity matches module assembly capacity, imported cells will remain a key part of the panel assembly supply chain. Absent these cells it will be extremely difficult for developers to achieve domestic content thresholds. We assess it will take at least 23 years to build facilities and ramp up production, longer still before solar projects qualifying for the [domestic content requirement] tax credit adder come online.

Beyond the looming domestic-content issue, some of the new post-IRA facility announcements aren’t exactly guaranteed to pan out. Several factories in the works, like CubicPV’s plan for 10 gigawatts of capacity, are banking on unproven technologies such as hybrid silicon and perovskite photovoltaic materials that come with their own set of reliability and execution risks.

Still, a number of established solar players including Qcells, First Solar and Enel have already selected sites and in some cases broken ground for promising new factories or expansions of existing manufacturing facilities. Qcells predicts that its total production in Georgia will hit 8 gigawatts in 2024 across all the links of the supply chain — from polysilicon to wafers, cells and modules. By 2025, First Solar says it will be making 10 gigawatts of vertically integrated solar panels a year.

These facilities represent real progress toward the vision of a bustling U.S. solar manufacturing sector, but even all of these efforts combined are not enough for the U.S. to reach solar self-sufficiency anytime soon. Certainly not by 2024, which would be necessary to offset the burden imposed if new tariffs are enacted next year, and likely not even by the end of this decade — even SEIA’s optimistic estimates have the U.S. importing 20 gigawatts of panels in 2030.

Sooner rather than later, the U.S. is going to be forced to choose between two options: accept imported panels for the next few years as the cost of a rapid transition away from fossil fuels — or accept a delayed energy transition as the cost of protecting U.S. industry.

Headquartered in Coeur d’Alene, Idaho with clients on every continent, KORE Power provides functional solutions to meet the growing demand for green economic expansion and a decarbonized future. As a fully integrated provider of battery cells and clean energy technology and solutions, KORE drives the energy transition through direct access to superior tech, clean energy manufacturing, and unmatched support for clean energy jobs and resilient, sustainable communities worldwide. KORE Power’s robust portfolio provides the commercial, industrial, utility and defense markets with next-generation battery cells, advanced energy storage systems that scale to grid+, intuitive asset management, and EV power and charging infrastructure support.

Eric Wesoff is editorial director at Canary Media.