Thanks to the Inflation Act of 2022, US renewable energy manufacturing and production could be poised to grow by leaps and bounds. There are challenges, but the industry is in a much better position currently than it was in January.
Building a Domestic Supply Chain
The COVID-19 pandemic exposed America’s supply chain as vulnerable in just about every capacity, including the nation’s solar energy supply chain. As part of the consequences of those shortcomings, America’s fight against anthropogenic climate change faced monumental obstacles to achieving its goal of 100% clean electricity by 2035.
The USA would have to grow its solar power utilization by 4% to 40% to attain that goal. In response, President Joe Biden signed an Executive Order in February of 2022 aimed at aiding in the fight against anthropogenic climate change by addressing the solar panel growth needs and supply chain challenges.
A looming question remains: How much and how can the US solar supply chain be responsibly expanded without sacrificing product quality?
International Challenges
Currently, and for a very long time, America has relied on China and Southeast Asia for most of its solar panel components. China has a problematic reputation primarily because of its massive reliance on coal-powered electricity and its long history of human rights abuses.
Those two realities make working with the manufacturing behemoth difficult, given the USA’s energy and human rights goals and ideals.
Added to the China-as-producer mix is Russia’s invasion of Ukraine. Because many nations rely on Russia for fuel, relying on them to maintain a healthy supply chain puts US manufacturers and consumers at the mercy of whatever fuel policy Russia is currently enforcing.
A Shift to USA Made
International upheaval, pandemic lessons learned, and shortages of solar energy components have led manufacturers to look and push for USA-made:
- Hanwha Solutions is increasing its “Made in the USA” polysilicon products
- Q-Cells and JinkSolar are establishing operations in the USA
- The steel used in rack construction is more and more processed in the USA to save transportation costs
There are multiple reasons for this shift, but the two most significant are international upheaval and trying to shorten supply chains while cutting transportation costs.
Inflation Reduction Act of 2022
The Inflation Reduction Act has over $350 billion in renewable energy investment, which many think will spur domestic manufacturing of solar components. The investments aim to achieve manufacturing independence while embracing clean energy security. Most of the spending is geared towards spending in the USA.
This investment has led to a potential surge in US manufacturing, from raw materials to final products.
The Act contains:
- $30 billion in domestic manufacturing of solar panels tax credits
- $10 billion to help manufacturing facilities switch to clean technology
- $2 billion to retool auto manufacturing facilities to manufacture clean vehicles
- $20 billion in lending for clean vehicle manufacturing
- $2 billion in energy research
Bottom Line
While all of the funding and changes in international manufacturing will help, there is still a long way to go. That said, a desire to shift to domestic manufacturing and tax and spending incentives will help the USA further build its domestic solar energy market.
