The U.S. solar industry is facing headwinds as global solar panel prices plummet due to a surge in Asian production capacity, Reuters news report said.
This price drop in solar panel is causing concerns in the U.S. solar sector, with many proposed solar panel factories possibly becoming economically unviable. Industry experts and solar companies, in interviews with Reuters, have suggested that as much as half of these proposed factories may be delayed or even canceled.
Despite a recent surge in solar panel factory announcements in the United States, the changing market dynamics are raising doubts about the feasibility of these projects. Solar panel prices have declined by 26 percent globally this year, with U.S. prices also showing signs of decreasing.
The influx of solar panel imports is partly attributed to the temporary waiver of tariffs on certain countries, which is set to expire in June 2024. Increased imports from nations unaffected by these tariffs are further contributing to the situation.
The Inflation Reduction Act, passed in August 2022, provided significant tax incentives and subsidies to encourage solar manufacturing in the United States. However, the oversupply of inexpensive panels, coupled with concerns about rising labor and material costs, is challenging the profitability of these new factories.
While the Act offers incentives, including a 10 percent bonus credit for using American-made components, it’s noted that a large portion of the industry cannot access this perk due to the limited availability of domestically produced components.
The uncertainty in the U.S. solar industry poses a challenge to President Biden’s climate agenda and efforts to create jobs through clean energy initiatives. Many in the industry are calling for increased government support at both the federal and state levels to ensure the realization of these projects and reduce dependence on Chinese-made components.
The future of U.S. solar manufacturing hinges on finding a balance between incentives and market dynamics. Industry stakeholders are advocating for the right tax and trade policies that can enable U.S. solar manufacturers to compete effectively on a global scale. Government support, in terms of regulations and incentives, will be crucial in ensuring the growth and sustainability of the domestic solar manufacturing sector.