upIn a world of gloomy climate news, solar panels have been a ray of sunshine. Back in 2010, thousands of experts were asked how quickly the costs of solar photovoltaic (PV) systems would fall. Their average guess was 2.6% each year, with the most optimistic predicting 6%. In fact, over the last ten years panel prices dropped 15% annually, making today’s projects three times (or more) cheaper than they were. But as the solar farms have multiplied, so have concerns about their supply chains. America and Europe fumbled the race to manufacture solar technology at scale. Chinese firms now control more than 80% of the global solar supply chain, helped by state subsidies. Punitive tariffs by the US and EU pushed prices up in the West but did little to alter the manufacturing realities, as explained in this excellent summary of recent solar history by an analyst at the National Renewable Energy Laboratory.
So last year, the US doubled down. Biden’s sprawling Inflation Reduction Act (IRA) incentivizes domestic PV production to the tune of tens of billions of dollars. But is this a sensible climate policy? Should the US aim for local jobs and the greenest solar tech, or simply take advantage of historic low prices to deploy the most panels and replace fossil fuels?
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Think Global, Build Local
1. Domestic panels are greener. There’s little argument that US-made panels can be more sustainable. An in-depth analysis by researchers at Cornell found that “reshoring” solar panel manufacturing could result in 30% lower greenhouse gas emissions and 13% lower energy use compared to globalized sources. Moreover, Chinese manufacturers rely heavily on coal power and have faced credible accusations of using coerced labor to assemble PV devices. “If China didn’t have access to coal, then solar power wouldn’t be cheap now,” Robbie Andrew, a researcher at the Center for International Climate Research in Oslo, told the Wall Street Journal. “Is it OK that we’ve had this huge bulge of carbon emissions from China because it allowed them to develop all these technologies really cheaply?”
2. More jobs, less carbon. Following the passage of the IRA, Bloomberg New Energy Finance nearly doubled its projection for solar energy generation in 2035. The Solar Energy Industry Association estimates that the IRA will result in an extra $200 billion being invested in cleantech over the next decade —doubling the number of solar installations and creating 200,000 more jobs. It calculates those deployments will cut America’s carbon footprint by 747 million tons over the same period.
Source: Solar Energy Industry Association analysis based on data from Wood Mackenzie, IREC National Solar Jobs Census
Source: Solar Energy Industry Association analysis based on deployment forecast from Wood Mackenzie
3. We need energy security. Last June, Energy Secretary Jennifer Granholm said the US is in a “war for our energy security.” That may be political hyperbole, but a recent article by the American Energy Alliance wondered if Europe was simply trading its dependency on Russian gas for an equally risky dependency on Chinese solar panels. Having a robust domestic solar manufacturing industry, from raw materials and components to finished PV modules, could avoid catastrophic shortages if, say, China were to invade Taiwan. It might even help deter China from making such a move.
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More Panels, Less Carbon
1. Tariffs are a speed bump in the net zero race. Pricier panels mean fewer installations, which in turn mean fewer jobs. Planning, sales, installation, and maintenance now make up well over half the cost of typical residential and commercial solar systems. In fact, the Solar Energy Industry Association (SEIA) estimated that each new job created by the US solar tariffs resulted in 31 jobs that were lost or never materialized. All those missing installations also hurt our carbon goals. According to the SEIA again, tariffs from 2017 to 2021 resulted in 26 million additional tons of CO2, the equivalent of 5.5 million gas cars on the road.
Source: Solar Energy Industry Association Study: Solar Tariffs Cause Devastating Harm to U.S. Market, Economy and Jobs. 2019.
2. Protectionism stifles innovation. It’s an old adage that there are no winners in a trade war. Pia Andres at the London School of Economics analyzed decades of solar tariffs in the EU and found that as tariffs choked imports, EU firms became less innovative. Imports from China, on the other hand, introduced a healthy dose of competition into Europe’s solar PV market. And while Biden’s IRA incentives should help US companies in the short term, they could ultimately result in a less competitive global marketplace. Some Europeans fear their own cleantech industry will be wiped out by protectionist trade policies in China and the US.
3. The US isn’t building enough panels anyway. The most common type of solar panel requires silicon to be cast into an ingot, then sliced into a wafer, and ultimately made into a cell. But there are currently no US facilities currently producing ingots, wafers, or cells, reports Bloomberg Tax. Moreover, the process for manufacturing them is involved and expensive. “Demand already far outstrips supply for what is made domestically, and it’s only skyrocketing,” writes Erin Slowey. Higher demand means higher prices, which ultimately leads to fewer installs.
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What To Keep An Eye On
1. America’s tariff policy. US solar tariffs are still very much alive and could soon expand. The US Commerce Department found last year that Chinese manufacturers are skirting import tariffs by exporting solar panels from their factories in Cambodia, Malaysia, Thailand and Vietnam. In fact, solar products from those countries account for as much as 80% of US solar imports. A decision, due May 1, could slap all four countries with solar tariffs of between 35 and 200%, making PV panels in the US more expensive.
2. A recycling time-bomb. Solar panels last about 30 years. That means about 8 million tons of PV will expire by 2030—and ten times that amount by 2050, according to a recent report by the American Chemical Society. Less than 10% of old panels are currently recycled, releasing toxic lead into the environment and wasting precious metals that could have a second life. NREL says it cost about $15 to $45 to recycle a solar panel—or just $1 to send it to a landfill. Regulations (such as exist in the EU) could drastically increase recycling rates, and spur advanced recycling technologies to recover the most valuable elements.
3. New perovskite tech. Today’s solar panels are good, but tomorrow’s could be even better. A new family of materials, called perovskites, could make next generation PV panels more efficient and less polluting to manufacture. However, there are still challenges to overcome in making perovskite panels longer lasting and more resilient to bad weather.
Image: ©Anthropocene Magazine
