China's Solar Titans Clean Up On U.S. Green-Energy Cash

"For years, the U.S. erected higher and higher barriers to Chinese solar panels, arguing that was the best way to protect domestic suppliers.

Now China's solar giants are building factories in 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 from Ohio to Texas -- part of a rush to build in the U.S. since the Inflation Reduction Act introduced generous subsidies in 2022.

China-based companies are behind nearly a quarter of the roughly 80 gigawatts in new solar-panel capacity announced since that legislation, according to an analysis by The Wall Street Journal. That positions them to be big beneficiaries of U.S. subsidies -- as much as $1.4 billion a year collectively if the 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 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., struggling to build a domestic solar supply chain.

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 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, which has a joint venture in Ohio with Chicago-based renewables developer Invenergy that expects to start making panels in the next few weeks.

China's Trina Solar, which supply-chain tracker Clean Energy Associates says is the world's biggest solar-panel maker, said 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.

"We definitely don't want to miss the wave," says Steven Zhu, president of Trina's U.S. unit.

Some homegrown U.S. manufacturers accept 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 sidestep 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 U.S. energy security.

Rep. Carol Miller (R., W.Va.) and Sen. Marco Rubio (R., Fla.) introduced a bill in December to effectively prevent Chinese companies from getting such subsidies.

The Biden administration is in a bind because it is simultaneously trying to fight climate change, expand domestic production and recapture solar-technology leadership -- three goals that call for different approaches to China's manufacturers, says Timothy Brightbill, a trade lawyer for Wiley Rein.

The Inflation Reduction Act is building up a U.S. solar supply chain and reversing the trend of Chinese control of production, an administration official says, adding that the U.S. has procedures to ensure foreign investments don't trigger national-security concerns.

Manufacturing jobs outsourced to China during previous administrations are "coming to America," says White House spokesman Michael Kikukawa.

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. It decided the cost of production was too high.

Instead, Trina and other manufacturers moved factories out of China and adjusted supply chains to keep selling to the U.S. as regulations changed.

In 2022, the U.S. started enforcing a law against forced labor that effectively halted the import of solar panels that used high-grade silicon from China's Xinjiang region. Trina started buying from U.S. and European suppliers. Last year Trina started producing silicon wafers in Vietnam to meet tightened standards.

After the Inflation Reduction Act was passed, Trina decided to finally make the move to the U.S. The cost of production is higher even with incentives, Zhu says, but Trina didn't want to lose footing in an important market, he says.

Trina, like other Chinese solar giants here, is working to show good intentions. It is trying to bring suppliers to the U.S., and Zhu says he is "pretty sure" Trina will build a U.S. factory that makes solar cells, panels' building blocks.

Zhu knows there is pushback from U.S. politicians. But, he says "we're not politicians. We just do the business."" [1]

1. China's Solar Titans Clean Up On U.S. Green-Energy Cash. Dvorak, Phred.  Wall Street Journal, Eastern edition; New York, N.Y.. 06 Feb 2024: B.1.