The U.S. solar industry finds itself in a complex web of supply chain dynamics and international influence. Though solar technology was first pioneered in the U.S., China’s dominance over the solar manufacturing sector has raised concerns about the authenticity of “American-made” solar panels. The passage of the Inflation Reduction Act (IRA) in 2022 aimed to revive domestic solar manufacturing, but the question remains: Are these panels truly American, and how can we tell?
Solar Manufacturing Dominance Shifts to China
The development of solar technology may have begun in the U.S., but the last few decades have seen a significant shift. China has taken control of most of the world’s solar panel production, dominating the industry with low-cost manufacturing. While the IRA aimed to address this issue by offering tax incentives for domestic production, many new U.S.-based factories still have deep Chinese ties.
Chinese Companies in U.S. Solar Manufacturing
More than 60% of the new U.S. solar manufacturing facilities that have opened in response to IRA incentives are backed by Chinese investors. Companies such as Canadian Solar and LONGi are key players in this shift, both now operating large-scale solar panel assembly plants in Texas and Ohio, respectively.
Yet, this development has led to a difficult question: Can a product manufactured in the U.S. by a Chinese-owned company still be considered American? Some U.S. legislators argue that it cannot, pushing for stricter regulations that ensure taxpayer money goes only to companies with fully American supply chains.
The Political Push for Genuine Domestic Supply Chains
In response to the growing influence of Chinese companies on U.S. soil, U.S. lawmakers have proposed legislation aimed at ensuring that American tax incentives are used to support truly American companies. Senators Sherrod Brown (Ohio) and Jon Ossoff (Georgia) have championed the “American Tax Dollars for American Solar Manufacturing Act,” which seeks to deny IRA tax credits to companies with any ties to Chinese ownership.
The bill aims to support a domestic supply chain by preventing companies with links to foreign entities from receiving the 45X Advanced Manufacturing Tax Credit. However, critics of this approach argue that no U.S. company has a fully domestic supply chain—especially in silicon wafer production, a critical component of solar panels.
Challenges of Defining “American” Solar Panels
While the legislation attempts to bolster American manufacturing, it faces significant challenges. First Solar, one of the few American companies that doesn’t rely on silicon wafers, stands as a rare exception. Other companies like Qcells, backed by Korean interests, are working towards domestic wafer production, but they are still dependent on international supply chains.
Even more problematic is the global nature of solar panel manufacturing. Companies like Silfab and Heliene, based in Canada, and Meyer Burger from Switzerland, all have a role in the U.S. market. The question, then, becomes: How do we ensure that the solar panels manufactured in the U.S. benefit American workers without entirely cutting off international cooperation?
Navigating the Complexities of Domestic Manufacturing
The IRA’s intent was clear: reinvigorate U.S. manufacturing, create jobs, and reduce reliance on foreign solar technology. However, achieving these goals without international involvement has proven difficult. The U.S. solar manufacturing landscape is deeply tied to the global supply chain, and reshoring efforts are still in their infancy.
The Role of Perovskite Solar Technology
A potential solution to the reliance on international supply chains lies in the commercialization of perovskite solar cells. This new technology promises to revolutionize the solar industry, and if the U.S. can lead the way in developing perovskites, it could give American companies an edge over foreign competitors. However, perovskite technology is still in the early stages of development, and it remains to be seen whether it will become a viable alternative to silicon-based solar panels.
Addressing the Influence of Foreign Ownership
For some policymakers, the focus is not just on manufacturing jobs, but on preventing foreign-owned companies from profiting off U.S. government incentives. Senator Marco Rubio’s “Protecting Advanced American Manufacturing Act” is one such effort, proposing to deny tax credits to companies directly or indirectly controlled by foreign governments, particularly China.
Yet, the broad language of this legislation raises concerns about how far-reaching its effects could be. By restricting access to tax credits, the U.S. risks slowing down the growth of its solar industry. Many argue that international investment is essential to the success of American solar manufacturing, especially in the short term.
The Future of U.S. Solar Manufacturing
The future of American solar manufacturing hinges on finding a balance between promoting domestic production and embracing the realities of a globalized economy. The U.S. must continue to invest in reshoring efforts, but it must also acknowledge that certain components, such as manufacturing equipment, will still come from abroad—especially from China.
Building a Resilient U.S. Supply Chain
One strategy for long-term success is to build the infrastructure needed to manufacture solar panels from start to finish in the U.S. This involves not only assembling panels but also producing wafers, cells, and other critical components domestically. However, this will take time, and in the meantime, U.S. manufacturers will remain dependent on foreign suppliers.
The Path Forward
Legislative efforts like the “American Tax Dollars for American Solar Manufacturing Act” and “Protecting Advanced American Manufacturing Act” are likely to shape the future of the industry. Whether these initiatives succeed will depend on political will and the results of upcoming elections. What’s clear is that the U.S. solar manufacturing sector is at a critical crossroads. The decisions made today will determine whether the industry can thrive in a global market while maintaining its national identity.
As more U.S. factories begin to operate, and as technologies like perovskites advance, the dream of a fully domestic solar panel supply chain may one day become a reality. For now, though, the American solar panel remains a product of international collaboration—and competition.
Summary
The question of how American your solar panel truly is does not have a simple answer. The global nature of the solar supply chain means that even panels manufactured in the U.S. often rely on foreign components, especially from China. Efforts to reshape the industry are ongoing, but for now, American solar manufacturing is an evolving, multinational affair. Whether future legislation can successfully protect and promote a genuine domestic solar industry will be a pivotal factor in the coming years.
