
Increasing tariffs and tax changes impact the U.S. solar market: Dana Albella of LONGi explains how to adapt
Below, we present the full interview.
Review Energy (R.E.): What are the main factors driving the growth of the large-scale photovoltaic (PV) solar energy market in the U.S. in 2024?
Dana Albella (D.A.): The utility-scale solar photovoltaic (PV) market in the U.S. continues to experience rapid growth, driven by increased demand for renewable energy and decarbonization efforts. As of 2024, the U.S. solar market is projected to add significant capacity, thanks to large-scale solar projects. The expansion is driven by federal incentives, decreasing costs, and corporate demand for clean energy.
Key Trends:
- Capacity Expansion: In 2023, utility-scale solar reached over 120 GW of cumulative capacity. This figure is expected to grow significantly in 2024, with several large-scale projects in development across Texas, California, Florida, and other key states.
- Hybrid Projects: Many utility-scale projects now include storage solutions, particularly battery storage, to provide grid stability and make solar energy available after sunset.
- Corporate Offtake: Corporations are increasingly signing Power Purchase Agreements (PPAs) with solar developers, helping drive demand for utility-scale projects.
R.E.: How are import regulations, such as Section 201 tariffs and the Uyghur Forced Labor Prevention Act, affecting solar energy developers in the U.S.?
D.A: The importation of solar panels and other PV components is a critical factor for U.S. solar developers, as the majority of solar panels used in utility-scale projects are imported, particularly from Asia.
- The Uyghur Forced Labor Prevention Act (UFLPA) and Withhold Release Orders (WROs) both aim to prevent the importation of goods produced using forced labor, with a particular focus on China's Xinjiang region, where concerns over human rights abuses are prominent.
The UFLPA, enacted in 2021, directly bans the import of products, including solar materials like polysilicon, from Xinjiang. The law presumes that goods coming from this region are produced with forced labor, and barred from importation unless the importer can successfully rebut the presumption. This has impacted the U.S. solar industry by limiting the supply of key materials, contributing to delays and increased scrutiny at U.S. customs.
Between June 2022 and February 2024, 28% of all imported electronics were denied entry into the United States. CBP has doubled the number of detentions in the first four months of FY 2024 compared to the same period in FY 2023.
On the other hand, WROs are broader enforcement tools used by U.S. Customs and Border Protection (CBP) to block specific shipments of goods suspected of being produced with forced labor. WROs can target products from various regions or companies worldwide, including solar components. WROs on polysilicon from Xinjiang overlap with the UFLPA, reinforcing import restrictions but on a case-by-case basis.
In essence, while the UFLPA imposes a blanket ban with a focus on Xinjiang, WROs allow for more targeted actions across global supply chains, both working to uphold ethical trade standards in the U.S.
- Section 201 Tariffs: These tariffs were initially imposed in 2018 and apply to imported crystalline silicon photovoltaic (CSPV) cells and modules. As of 2024, the Section 201 tariff rate for cells and modules is 14.25%, with a yearly decrease of 0.25%, set to expire on February 6, 2026.
There is currently a tariff rate quota (TRQ) that exempts the cells from the 14.25% tariff. In August 2024, the U.S. raised the annual TRQ for cells from 5 GW to 12.5 GW, which is applied to cells imported after August 1, 2024.
A previous exemption that eliminated the tariff for bifacial panels (which are widely used in utility-scale projects) was removed in May 2024.
- Anti-Dumping and Countervailing Duties (AD/CVD):
o AD/CVD covering solar cells and modules from China and Taiwan were finalized in 2012 for China and in 2015 for Taiwan. These AD/CVD continue to this day.
o In 2022, the Department of Commerce expanded AD/CVDs to include other Southeast Asian countries (Cambodia, Malaysia, Thailand, and Vietnam), but only where the cell production in these countries used wafers and certain additional bill of materials produced in China. These countries are significant exporters of solar modules to the U.S.
o On October 1, 2024, the U.S. Department of Commerce made preliminary affirmative determinations on countervailing duty (CVD) investigations into crystalline photovoltaic cells imported from Cambodia, Malaysia, Thailand, and Vietnam. On December 4, 2012, the Department of Commerce made preliminary affirmative determinations on the antidumping (AD) investigations into crystalline photovoltaic cells imported from Cambodia, Malaysia, Thailand, and Vietnam. These rates vary, impacting import costs based on each company and country involved. Some companies from these countries face specific combined AD/CVD rates under 20 percent while some face rates as high as several hundred percent.
- Section 301 tariffs: The U.S. has imposed tariffs under Section 301 of the 1974 Trade Act on solar products from China since 2018. The tariffs on cells and modules were 25%. In September 2024, United States Trade Representative announced Section 301 tariff increases on a range of products from China including solar cells and modules. Starting September 27, 2024, the tariff was increased from 25% to 50%.
R.E.: How are tax credits like the ITC and PTC influencing the economic viability of large-scale solar projects in the U.S., considering the increased costs stemming from anti-dumping and countervailing duties?
D.A.: Federal tax credits and incentives are critical to the economics of utility-scale solar projects in the U.S. In 2024, the following credits are the most significant:
- Investment Tax Credit (ITC): allows solar project developers to deduct a portion of the cost of installation from their taxes, remains a key incentive for solar deployment. Under the Inflation Reduction Act (IRA) passed in 2022, the ITC was extended at 30% until 2032. It also introduced bonus credits for projects that meet specific domestic content requirements or are located in energy communities (areas with significant fossil fuel infrastructure).
The ITC provides a one-time tax credit based on a percentage of the total project cost, which reduces the initial capital investment required, making it a popular choice for those looking to lower upfront expenses
- Production Tax Credit (PTC): Historically applied to wind projects, the IRA expanded the PTC to include solar projects. Developers can now opt for the PTC, which provides a credit based on the amount of electricity generated by the project over its first 10 years of operation, making it an attractive option for large-scale solar farms.
These two Commercial Solar Tax Credits offer distinct financial advantages, making it essential for companies to carefully choose between them based on their project goals. The decision between the ITC and PTC will greatly influence both upfront costs and long-term returns.
Key factors such as the project’s capacity factor, capital expenditure, and eligibility for bonus programs will play a significant role in determining which option is more beneficial. Both credits, however, are strong incentives for solar adoption, offering substantial financial benefits that can help developers maximize returns on their solar projects. Understanding these differences is critical for choosing the best fit for a project's financial goals.
- Direct Pay Option: The IRA introduced this significant mechanism, allowing non-taxable entities—like utilities, tribal governments, and non-profit organizations—to receive the value of the ITC or PTC as a direct cash payment, rather than just a tax credit. This new option has been pivotal in broadening participation in clean energy projects by ensuring that even entities without a tax liability can benefit financially from these credits. It is designed to support a variety of clean energy initiatives, including solar, wind, and battery storage projects.
R.E.: What role do federal and state policies play in the expansion of solar energy in the U.S., and what are the most common regulatory challenges for developers, especially with the new trade tariffs impacting the market?
D.A.: The U.S. federal government and individual states continue to support solar deployment through various policies, although challenges remain in certain regions.
- Federal Policy Support: In addition to tax credits, the current administration has set ambitious clean energy goals, including achieving 100% carbon pollution-free electricity by 2035. This federal backing is crucial for maintaining momentum in the solar sector.
- State-Level Policies: States such as California, Texas, and New York remain leaders in solar energy adoption, with Renewable Portfolio Standards (RPS) driving demand for utility-scale solar. However, challenges such as interconnection delays and permitting issues can slow project deployment.
R.E.: What are the main challenges currently facing the large-scale solar energy market in the U.S., and how could they impact its future growth, considering the decisions already mentioned and set to be definitive by 2025?
D.A.: While the U.S. utility-scale solar market is poised for continued growth in 2024, several challenges could impact the sector’s expansion.
- Supply Chain Issues: Ongoing trade tensions and enforcement of the UFLPA are expected to impact the availability of solar modules, potentially increasing costs and delaying projects.
- Grid Infrastructure: As more utility-scale solar is added to the grid, challenges around grid congestion, curtailment, and the need for transmission upgrades become more pressing.
- Financing: Rising interest rates could impact project financing costs, though federal tax credits like the ITC and PTC help mitigate some financial risks.
In conclusion, the U.S. utility-scale solar PV market in 2024 is on a strong growth trajectory, supported by federal incentives and increasing corporate demand. However, challenges related to import regulations, tariffs, and supply chain constraints could influence the pace of new project development. Nonetheless, the overall outlook remains positive, with solar energy playing a crucial role in the U.S. transition to a cleaner energy future.
The U.S. PV market is poised for strong growth in the coming years, driven by favorable policies, increasing demand for renewable energy, and technological advancements. Projections indicate that U.S. solar power generation will grow by 75% from 2023 to 2025. This growth is supported by the expansion of utility-scale solar projects, with over 45 GW expected to be added in 2024 and reaching 53 GW by 2025, and more than 186 GW of new capacity expected by 2029.
This makes the U.S. PV market an attractive and rapidly growing space for solar developers in the coming years.
R.E.: How is LONGi adapting its production, distribution, and partnership strategies to remain competitive in the U.S. market?
D.A.: LONGi has implemented several key strategies to solidify its presence in the U.S. market, which is crucial for the company’s global expansion:
- Joint Venture with Invenergy: LONGi partnered with Invenergy to launch Illuminate USA, a 5GW solar module factory in Ohio. This facility ensures a diversified and resilient solar supply chain for the U.S. market, reducing dependence on foreign imports, and increasing local manufacturing capacity.
- Strategic Sourcing of Raw Materials: LONGi secured a long-term agreement with Ferroglobe to source quartzite and metallurgical-grade silicon (MGS) from non-China sources. This allows LONGi to combine high-quality raw materials with its low-cost polysilicon production from China, ensuring compliance with U.S. import regulations and maintaining a strong supply chain.
- CBP Approval: LONGi has implemented rigorous compliance measure that have successfully demonstrated to U.S. regulators that its supply chains satisfy U.S. standards. For instance, LONGi’s raw materials and polysilicon from China been pre-approved by U.S. Customs and Border Protection (CBP) for fast-track processing, which avoids delays in importation and proves our alignment with U.S. trade regulations.
These initiatives reflect LONGi's commitment to expand its footprint in the U.S. solar market while addressing supply chain risks and regulatory compliance.
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