By Ana Swanson and Jim Tankersley
Six years ago, an executive from Suniva, a bankrupt solar panel manufacturer, warned a packed hearing room in Washington that competition from companies in China and Southeast Asia was causing a “bloodbath” in his industry. More than 30 U.S.-based solar companies had been forced to shut down in the previous five years alone, he said, and others would soon follow unless the government supported them.
Suniva’s pleas helped spur the Trump administration to impose tariffs in 2018 on foreign-made solar panels, but that did not reverse the flow of jobs in the industry from going overseas. Suniva’s U.S. factories remained shuttered, with dim prospects for reopening.
That is, until now. Last month, Suniva announced plans to reopen a Georgia plant, buoyed by tariffs, protective regulations and, crucially, lavish new tax breaks for made-in-America solar manufacturing that President Joe Biden’s signature climate law, the Inflation Reduction Act, created.
Solar companies have long been the beneficiaries of government subsidies and trade protections, but in the United States, they have never been the object of so many simultaneous efforts to support the industry — and so much money from the government to back them up.
The combination of billions of dollars of tax credits for new facilities and tougher restrictions on foreign products appears to be driving a wave of so-called reshoring of solar jobs. Those efforts are succeeding where more modest approaches did not, although critics argue that the gains come at a high cost to taxpayers and may not hold up in the long run.
In the year since the climate law was passed, companies have announced nearly $8 billion in new investments in solar factories across the United States, according to data from the Massachusetts Institute of Technology and the Rhodium Group, a nonpartisan research firm. That is more than triple the amount of total investment announced from 2018 through the middle of 2022.
Suniva plans to reopen and expand a factory to make solar cells in Norcross, Georgia, by spring. REC Silicon will restart this month a polysilicon plant in Moses Lake, Washington, that it shut down in 2019. Maxeon, a Singapore-based producer of solar cells and modules, will start work next year on a $1 billion site in New Mexico.
In each of those cases, executives cited the incentives in the climate law as a driving factor in their investment decisions.
“It was kind of exactly what we had in mind in terms of what would be needed, to pull these kinds of manufacturing initiatives forward,” said Peter Aschenbrenner, Maxeon’s chief strategy officer.
China has loomed large over the industry for more than a decade. American demand for solar power has grown sharply since 2010 — by about 24% each year in that time, according to the Solar Energy Industries Association, a trade group. But much of that spending went to cheaper foreign solar panels, often made by Chinese companies or with Chinese parts. That raised concerns of American overreliance on China, which is restricting supplies of other key products and whose solar production has been troubled by human rights concerns.
U.S. solar manufacturing employment peaked in 2016, with just more than 38,000 workers. By 2020, nearly one-fifth of those jobs were gone.
Factory solar jobs have begun to grow again.
E2, an environmental nonprofit organization, estimated that new investments announced in the first year of the climate law would create 35,000 temporary construction jobs and 12,000 permanent jobs across the entire solar industry in the years to come. Thousands of those permanent jobs are related to manufacturing, including an expected 2,000 at Maxeon’s planned plant in New Mexico.
Economists and executives said that surge was largely due to public subsidies that flipped the economics of the solar industry in favor of domestic production.
Aschenbrenner said Maxeon’s cost of domestic solar manufacturing would fall roughly 10%, just through a new manufacturing tax credit in the climate law that targets the production of both solar cells and solar modules. That is enough to offset the higher wage and construction costs of American factories, he said.
The law also includes credits for customers, such as homeowners and utilities, who install solar panels and begin generating electricity from them. If the customer buys panels that are sourced from the United States, like the ones Maxeon is planning, the value of that credit grows 10%.
Those incentives could be enough to build an American industry that, within a matter of years, could be large and efficient enough to compete with China even without subsidies, Aschenbrenner said.
Others are more skeptical. Analysts at Wood Mackenzie, an energy consultancy, estimate that nearly half the solar module capacity announced by 2026 will not materialize, given that some manufacturers announce long-term plans to gauge feasibility and interest.
The recent embrace of subsidies and tariffs by politicians of both parties also irks some economists, who say that while such programs can save or create jobs, they do so at an extremely high cost.
A 2021 study by the Peterson Institute of International Economics of past industrial policy programs found that the Obama administration’s 2009 investment in Solyndra, a solar company that ultimately went bankrupt, cost taxpayers about $216,000 for each job created, more than four times prevailing industry wages. Other programs were even more expensive.
“With certain kinds of technology, you can subsidize and protect your way to having factories,” said Scott Lincicome, who studies trade policy at the Cato Institute, a libertarian think tank. “The question is always about at what cost?”
In addition to the costs incurred to taxpayers, protections for the U.S. industry are making solar products more expensive in the United States than in other countries, Lincicome said. That slows the adoption of solar technology, in contrast to climate goals.