U.S. Subsizes Foreign Solar Panel Manufacturers

Solar energy advocates tout that solar energy costs are competitive with other energy production costs, but, it is only because of the many government subsidies provided to solar.

For instance, Congress passed the $787 billion American Recovery and Reinvestment Act of 2009, which, among other things, gave a generous tax credit to clean-energy companies.

These were supposed to be American companies using American-made components. While that’s mostly what happened, a few companies found a loophole. International Business Times reported on it last week.

To earn the tax credits, projects had to be based in the U.S., and a “Buy America” clause was included to boost domestic manufacturing. But the clause had a loophole: It would be waived if “the relevant manufactured goods are not produced in the United States in sufficient and reasonably available quantities.” Because of the relatively small solar manufacturing capacity in the U.S., domestic solar installation companies receiving stimulus money would be allowed to purchase panels from overseas, undercutting U.S. manufacturers.

But that’s not all — while roughly 70 percent of the grant recipients were American companies, there were at least 17 foreign-based companies receiving 48C tax credits that had already arranged for solar or wind manufacturing operations in low-wage nations, according to a 2010 report from a project of the BlueGreen Alliance Foundation, an environmental nonprofit. Six U.S. companies that were awarded tax credits, including First Solar and Sun Power, already had manufacturing operations in low-wage, East Asian countries such as China, Malaysia and the Philippines.

So instead of boosting US solar manufacturing, the government essentially paid companies to import them from abroad. 

The Asian countries making solar panels for US customers are not particularly “green.” They burn a lot of coal to make the electricity that powers the solar-panel factories.

Solar panels are bulky and heavy, and those made in Asia come to the US on diesel-burning cargo ships. Portions of these panels even cross the Pacific twice.

Asian manufacturers import polysilicon, an important raw material, from mines in the United States. Then the same polysilicon comes back to the US in completed panels. 

It is estimated that it takes nearly nine years for a panel manufactured in Asia and installed on a U.S. roof to make up for the greenhouse gas emissions involved in its production and transportation.

The Federal, State and local governments all need to stop picking winners and losers by subsidizing select energy companies. Let the free market decide the winners and losers.