Although the Biden administration has restricted the import of Chinese photovoltaic modules in the past two years by raising tariffs and heavily subsidizing local photovoltaic manufacturing, these measures seem to have failed to stop the pace of Chinese companies. On the contrary, they have stimulated Chinese photovoltaic companies to adopt a new strategy of setting up factories in the United States.
According to a recent report by Reuters, as Chinese photovoltaic companies flood into the US market, new manufacturing plants are emerging like mushrooms after rain, indicating that these companies will soon occupy a significant position in the US photovoltaic market. Despite receiving government subsidies, domestic manufacturers in the United States still face enormous competitive pressure.
The report further predicts that by 2025, the annual solar module production capacity of Chinese companies in the United States will reach at least 20GW, which is enough to meet about half of the demand in the US market.
Taking Longi Green Energy as an example, the company has partnered with American clean energy developer Invenergy to establish a 5GW photovoltaic module factory and plans to add a photovoltaic cell production plant in the United States. Similarly, Trina Solar also plans to build a 5GW photovoltaic module factory in Texas and prepare for battery production facilities.
Some research institutions in the United States have expressed amazement at the rapid expansion capabilities of Chinese companies, believing that this will have a huge impact on the domestic manufacturing industry in the United States. In fact, many American photovoltaic manufacturers have expressed strong concerns and opposition to the arrival of Chinese companies.
Companies such as Hanwha Qcells and First Solar are pressuring the US government to take measures to curb the trend of Chinese companies setting up factories in the US, including proposing to impose taxes on production components of imported modules. At the same time, some American manufacturers also demanded this week that the Biden administration strengthen its review of tax credit policies for developers, claiming that some local project developers are using imported Chinese photovoltaic modules in their projects to apply for tax exemptions under the guise of local manufacturing.
However, there are also many voices supporting Chinese companies setting up factories in the United States. Local project developers believe that the photovoltaic modules produced by these companies are affordable and that using these modules complies with tax credit policies. Meanwhile, several state governments including Texas, Arizona, Ohio, and North Carolina have also welcomed investment from Chinese companies, believing that it will help promote the maturity of local photovoltaic manufacturing, create employment opportunities, and bring more tax revenue to state governments.
According to research firm Wood Mackenzie, Chinese companies are currently the largest suppliers of solar and electric vehicle battery modules imported to the United States. Under the trend of Chinese companies entering the US market, their main investment is focused on the production of photovoltaic modules, by importing photovoltaic cells from Asia and assembling them in the United States.
Faced with the demand from American manufacturers to impose taxes on imported photovoltaic components, domestic developers in the United States have expressed strong opposition, fearing that domestic supply may not meet demand. In addition, the Inflation Reduction Act stipulates that the use of domestic photovoltaic products can receive a 10% tax deduction, and the definition of domestic photovoltaic products in the bill is that 40% of the production cost must be manufactured domestically in the United States. Considering that the labor and logistics costs of producing components in the United States are higher than those in China, it is highly likely that products produced by Chinese companies setting up factories in the United States will meet this requirement.