The challenges and prospects of establishing a domestic green energy industry in the U.S. – the example of First Solar
Source：The New York Times, The White House, First Solar
From：Taiwan Trade Center, New York
Two year ago, on August 16, 2022, President Biden enacted the Inflation Reduction Act, marking the most significant commitment to clean energy and climate action in history. This transformative law is pivotal in the U.S.’s efforts to achieve climate objectives and bolster energy security, by channeling investments into the nation to foster well-compensated employment, diminish family energy and healthcare expenses, and enhance tax code fairness.
According to a public statement made by the White House on August 16, 2023, here are the results just one year after the Inflation Reduction Act was signed into law:
- The private sector has announced over $110 billion in new investments in clean energy manufacturing, with more than $70 billion allocated to the electric vehicle (EV) supply chain and over $10 billion for solar manufacturing. Since the President's election, the private sector has declared approximately $240 billion in new investments in clean energy manufacturing.
- Investments in clean energy and climate initiatives, following the enactment of the Inflation Reduction Act, have led to the creation of more than 170,000 jobs. Estimates from external organizations suggest that this law is on track to generate an additional 1.5 million jobs over the next decade.
- Combined public and private sector investments driven by the Inflation Reduction Act and the Bipartisan Infrastructure Law are anticipated to reduce greenhouse gas emissions by roughly 1 billion tons by 2030.
- The Administration has already disbursed over a billion dollars to assist communities in enhancing resilience and safeguarding against climate change's severe effects, encompassing drought, heatwaves, and extreme weather.
- American households are expected to save between $27 billion and $38 billion on their electricity bills from 2022 to 2030, relative to a scenario without the Inflation Reduction Act, based on new data released by the Department of Energy.
Thanks to the government’s incentives to boost domestic clean energy manufacturing, many companies, including First Solar, have announced the construction of dozens of factories around the country. However, according to The New York Times article – Can the U.S. Make Solar Panels?, concerns remain about the durability of these investments, especially in an industry where China dominates due to lower labor costs, economies of scale, and government incentives.
First Solar, one of the world’s ten largest solar manufacturers, has managed to sustain solar panel manufacturing in the United States. How did the company survive the shift of most manufacturing to China? Founded in 1999, First Solar stands out as the only major solar manufacturer headquartered in the U.S. that does not produce its panels in China. First Solar specializes in advanced thin film photovoltaic (PV) modules, offering a competitive, high-performance, and lower-carbon alternative to traditional crystalline silicon (c-Si) PV panels. In addition to its three plants in Ohio, the company is currently building two new factories in Alabama and Louisiana. Beyond the U.S., First Solar has factories in Vietnam and Malaysia and is in the process of establishing one in India.
Although the Inflation Reduction Act has set the stage for a growing domestic solar manufacturing industry, some analysts argue that it may not be economically viable. Even in the best of times, the industry generates limited profits and doesn’t employ many people. However, even though importing panels from low-cost producers would ensure a quicker transition to renewable energy – as claimed by Jenny Chase, a solar analyst at Bloomberg New Energy Finance –, many policymakers and industry leaders still think that it is strategically important for the U.S. to produce solar panels to reduce dependence on China, especially given supply chain disruptions and growing tensions between the two countries.
The Inflation Reduction Act may benefit Taiwanese businesses by increasing export opportunities for renewable energy components, diversifying supply chains, fostering technology transfer and collaboration, attracting investment and partnerships, and encouraging global competition in the clean energy market. The extent of these benefits depends on the act's provisions and U.S.-Taiwan cooperation in the clean energy and technology sectors.
To learn more about the Inflation Reduction Act provisions related to renewable energy: Summary of Inflation Reduction Act provisions related to renewable energy | US EPA
To learn more about First Solar: Leading global provider of comprehensive PV solar solutions | First Solar.