Mark Wolfe is an energy economist and serves as executive director of the National Energy Assistance Directors’ Association (NEADA), representing the state directors of the Low Income Home Energy Assistance Program. He specializes in energy, climate, housing and related consumer finance issues. The views expressed in this comment are his own.
In March, the U.S. Department of Commerce opened an investigation to determine whether four countries supplying the U.S. with solar panels – Cambodia, Malaysia, Thailand, and Vietnam – have used components made in China that are expected to be subject to U.S. tariffs. If the Commerce Department believes that this is the case, solar panels sold by these four countries in the United States could be subject to retroactive tariffs, which in turn would cause prices to rise here in the United States.
The industry is already in a panic. A recent report from the Solar Energy Industries Association found that 83% of US companies surveyed that use or purchase solar panels expect cancellations or delays. And some CEOs fear the investigation could cause the industry to collapse, not entirely surprising given how much the US relies heavily on these countries for solar panel materials.
In fact, about 80% of all solar panels installed in the United States are imported from Cambodia, Malaysia, Thailand and Vietnam. This dependence on other countries leaves the United States vulnerable to continuing disruptions in the global supply of an essential product that can help accelerate the U.S. transition to a clean energy economy.
Solar power is the fastest growing energy source in the United States and perhaps the nation’s best hope for meeting its climate goals. By reducing the demand for fossil fuels, solar can help strengthen the economy by providing a stable source of energy from the sun rather than being subject to the limitations of drilling platforms, rapidly rising fossil fuel prices and imports from governments that do not. they share US values.
A recent report from the US Department of Energy found that solar energy has the potential to power up to 40% of the nation’s electricity by 2035. And according to Energy Secretary Jennifer M. Granholm, “. .. Solar, our cheapest and fastest growing source of clean energy, could produce enough electricity to power all homes in the United States by 2035 and employ up to 1.5 million people in the process. ” Access to solar power is especially important for low-income households who are less able to afford rising home energy prices and are less likely to have generators or other backup systems when the power goes out.
To meet the nation’s clean energy goals, the United States must develop a solid manufacturing capacity to produce solar-powered panels and components. It can do this by providing financial incentives to US producers to help offset higher domestic manufacturing costs, which are estimated to be 30% to 40% higher than imports.
Congress is already moving in this direction. For example, the House-approved Build Back Better bill would extend and broaden the investment tax credit and the production tax credit to encourage the production of solar panels. Tax credits are expected to reduce overall manufacturing costs, increase manufacturing efficiency, build manufacturing capacity, and provide ongoing manufacturing assistance.
These are important because they signal a long-term commitment to solar energy growth in the United States and American manufacturing. And they give solar investors the security they need to finance solar panel manufacturing facilities. Additionally, the Commerce Department is expected to move swiftly to complete its investigation to give the solar industry price certainty for imports until Congress agrees to a long-term solution.
Congress still has time to act, but it’s running out. Lawmakers should agree to pass tax credits before the session ends. The nation’s clean energy goals hang in the balance.