June 24, 2024

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US Solar Factories Are In for ‘Rude Awakening,’ Report Warns

(Bloomberg) — Many planned US solar factories probably won’t be built as cheap imports from Chinese companies push global cell and panel prices so low that even federal subsidies can’t sustain domestic plants, a report warns. 

President Joe Biden has made bringing clean energy manufacturing back to the US a top priority, both to create jobs and fight climate change. The 2022 Inflation Reduction Act contained a subsidy of 7 cents per watt for domestic solar panel factories that use imported cells, triggering a wave of US plant announcements.

The subsidies, however, will not guarantee US factories make a profit because global prices for panels are expected to plunge — from about 23 cents per watt this year to 16 cents per watt by the end of 2025, according to a report from BloombergNEF.    

Read More: Sinking Solar Prices Seen as Threat to US Manufacturing

“Global price pressures, and especially cheaper and cheaper imports, will result in many US factories facing a pretty rude awakening,” said BNEF analyst Pol Lezcano. “And it will probably lead to a lot of factory cancellations.”

In addition, the plants that open will likely use cells made with Chinese polysilicon because the material costs twice as much when sourced elsewhere, according to the report. The US has been keen to revive domestic solar manufacturing in part to shift its supply chain from China.

©2024 Bloomberg L.P.