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Tariffs on solar modules extended
2022-12-20
In June 2021, President Joe Biden granted some reprieve from steep tariffs on solar modules imported from Southeast Asia for two years in response to a $5 million pressure campaign from groups such as the Solar Energy Industries Association (SEIA). This provided a window of opportunity for US companies to establish manufacturing supply chains and invest billions into solar module production. Among these were First Solar's $1.1 billion factory in Alabama, North American Heliene's expansion project at its Minnesota facility, and other new investments across the country.
The Inflation Reduction Act of 2022 was then signed into law this fall, providing much-needed policy certainty that allowed these projects to move forward with confidence. Nevertheless, SEIA estimates that the Unfair Foreign Labor Practices Act (UFLPA) will continue to limit solar deployment through 2023 and mute the impact of the IRA in the near term.
On top of this, credible evidence has emerged that certain ethnic Uyghurs living in China are being forced to work in extracting and refining raw materials used for solar cells and modules, leading to increased scrutiny on imports from the country by US Customs and Border Protection officials. As a result, supply constraints have caused a quarter-over-quarter decline in utility-scale, commercial, and community solar markets. However, residential solar installations rose by 43%, with 1.57 GW of new capacity added in Q3 2022 alone.
Wood Mackenzie forecasts that utility-scale solar will add 10.3 GW of new capacity in 2022, with continued growth averaging 21% through 2027 once the IRA is fully implemented. Solar accounted for 45% of all new electric generating capacity additions during Q3 2022, making it the leading source of electricity at this time.
Conclusion:
It is clear that while solar energy remains a promising option to address rising global greenhouse emission levels, progress towards scaling up solar deployment has been hindered by supply chain constraints and reports of forced labor in certain countries. However, policy changes such as the Inflation Reduction Act and increasing investments into US manufacturing are helping to move the industry forward - despite these obstacles. As expected, residential solar installations have seen positive growth during this time due to less direct impact from trade issues. Predictions from Wood Mackenzie show that utility-scale solar growth will remain muted until 2024, but should reach a healthy annual average of 21% in the years after. As things stand, solar is currently the leading source for new electric generating capacity additions in the US.
In June 2021, President Joe Biden granted some reprieve from steep tariffs on solar modules imported from Southeast Asia for two years in response to a $5 million pressure campaign from groups such as the Solar Energy Industries Association (SEIA). This provided a window of opportunity for US companies to establish manufacturing supply chains and invest billions into solar module production. Among these were First Solar's $1.1 billion factory in Alabama, North American Heliene's expansion project at its Minnesota facility, and other new investments across the country.
The Inflation Reduction Act of 2022 was then signed into law this fall, providing much-needed policy certainty that allowed these projects to move forward with confidence. Nevertheless, SEIA estimates that the Unfair Foreign Labor Practices Act (UFLPA) will continue to limit solar deployment through 2023 and mute the impact of the IRA in the near term.
On top of this, credible evidence has emerged that certain ethnic Uyghurs living in China are being forced to work in extracting and refining raw materials used for solar cells and modules, leading to increased scrutiny on imports from the country by US Customs and Border Protection officials. As a result, supply constraints have caused a quarter-over-quarter decline in utility-scale, commercial, and community solar markets. However, residential solar installations rose by 43%, with 1.57 GW of new capacity added in Q3 2022 alone.
Wood Mackenzie forecasts that utility-scale solar will add 10.3 GW of new capacity in 2022, with continued growth averaging 21% through 2027 once the IRA is fully implemented. Solar accounted for 45% of all new electric generating capacity additions during Q3 2022, making it the leading source of electricity at this time.
Conclusion:
It is clear that while solar energy remains a promising option to address rising global greenhouse emission levels, progress towards scaling up solar deployment has been hindered by supply chain constraints and reports of forced labor in certain countries. However, policy changes such as the Inflation Reduction Act and increasing investments into US manufacturing are helping to move the industry forward - despite these obstacles. As expected, residential solar installations have seen positive growth during this time due to less direct impact from trade issues. Predictions from Wood Mackenzie show that utility-scale solar growth will remain muted until 2024, but should reach a healthy annual average of 21% in the years after. As things stand, solar is currently the leading source for new electric generating capacity additions in the US.