China’s global dominance in the solar industry is a supply chain and national security risk, some industry watchers say, and one of the reasons the United States is trying to build capacity of national solar manufacture.
US President Joe Biden signed into law the sweeping Inflation Reduction Act on Tuesday, which includes tax incentives for the development of a more robust solar industry. The White House aims to triple national solar production by 2024.
The law responds to longstanding calls from some players in the solar industry for U.S. action to boost domestic manufacturing and level the playing field between the United States and China. Many US companies complain that China can make solar panels and other hardware cheaper than them.
China has expanded solar panel production and innovation, which has helped reduce global manufacturing costs, according to a July report by the International Energy Agency (IEA).
Another industry watcher, the National Renewable Energy Laboratory, said it saw prices fall sharply over a 10-year period starting in 2010.
However, the risks of a global reliance on China have emerged during the pandemic. The high cost of shipping from China has led to price increases. The price of polysilicon, the material used to make solar cells, quadrupled last year as oversupply caused manufacturers to slow production, which then led to a shortage when demand for the product increased. Forty percent of the world’s polysilicon manufacture comes from China’s Xinjiang region.
“This level of concentration in any the global supply chain would represent a considerable vulnerability; solar PV (photovoltaic) is no exception,” said the executive summary of the IEA report.
China dominates the manufacturing sector
China is involved in the manufacture of more than 80% of solar components, according to the IEA.
“If we don’t have a supply chain here in the United States, we consider it a national security issue,” said Mamun Rashid, chief executive of California-based Auxin Solar, one of the few U.S. manufacturers. of solar panels.
“If you have a renewable energy grid and it’s powered by solar power and the solar equipment is being rolled out and you don’t have the capacity to power it yourself at all moment, the tap can be turned off,” Rashid explained.
Beijing dismissed concerns and accused the United States of thinly veiled protectionism that will hurt Chinese businesses.
“China urges the United States to stop obstructing Chinese enterprises, renounce the wrong practice of disrupting the supply chain and industrial chain, and create favorable conditions for China-US cooperation on the clean energy and climate change,” Chinese Embassy spokesman Liu Pengyu told VOA.
This year, a succession of actions in Washington have directly or indirectly impacted the solar industry in China and the USA
In February, the United States extended tariffs on solar products containing crystalline silicon from China. Additionally, the Uyghur Forced Labor Prevention Law, banning products, including solar components, from China’s Xinjiang region came into effect in June.
China has been criticized for its treatment of its Uyghur Muslim minority and others in Xinjiang province by rights organizations and Western governments. The United States accuses Beijing of forced labor practices among its Uighur minority in the Xinjiang region, which China has denied, saying its employment programs have helped improve the financial situation of Uighurs.
China reacts to US action
China has challenged legislation relating to Uyghurs enacted by Washington.
“Having implemented the so-called ‘Uyghur Forced Labor Prevention Law’ under the guise of ‘forced labor’ in Xinjiang, the United States is illegally suppressing and unilaterally sanctioning the Chinese PV industry without justification,” Liu said. in an email response to VOA.
“This is seriously contrary to market law and WTO (World Trade Organization) rules and detrimental to the international trade order and the stability of global PV industrial and supply chains and climate response. world,” Liu from the Chinese Embassy told VOA, adding, “The United States must immediately stop spreading lies and stop enforcing this evil legislation.”
Commercial law investigation
Meanwhile, as the Inflation Reduction Act provides tax credits to further develop the US solar industry, Rashid is pushing for the US to enforce its trade laws.
“You are dealing with China. It is not a free market economy. You can never subsidize China, so it won’t be enough,” Rashid said.
Auxin Solar’s concerns about the prices of Chinese products prompted a U.S. Department of Commerce investigation earlier this year to determine whether some solar panels arriving in the United States from Cambodia, Malaysia, Thailand and Vietnam were in fact Chinese products and that Beijing was trying to dodge the anti-Americans. dumping tariffs.
Many US solar projects have been halted, fearing the impact of retroactive tariffs. In response, Biden announced a two-year tariff freeze on solar components from the four Southeast Asian countries.
“When you have a product that sells in the market for less than (what) your BOM costs, there is something wrong. The American worker didn’t even get a chance to enter the race and they lost the race,” Rashid said.
In a press release, U.S. trade officials said their findings would be applied at the end of the two-year period in 2024.
In the coming years, “based on current manufacturing capacity under construction”, the IEA predicts that China will account for around 95% of solar components manufactured for the global supply chain.
Steven Gute contributed to this report.