On September 14, the China Photovoltaic Industry Association issued a document stating that photovoltaics are an important product to promote energy structure adjustment and industrial green transformation. At present, the United States, on the one hand, has built a high protectionist wall, adopted multiple trade restrictions, and set up photovoltaic tariff barriers layer by layer; on the other hand, it has passed bills such as the Inflation Reduction Act and the Infrastructure Investment and Employment Act to implement exclusive and discriminatory industrial policies, providing large-scale subsidies to its domestic photovoltaic industry that are suspected of violating multilateral rules, seriously distorting the market-oriented operation of the global photovoltaic industry chain and supply chain, and undermining international cooperation in areas such as global joint response to climate change.
The details are as follows:
1. The U.S. Inflation Reduction Act provides huge subsidies for photovoltaic manufacturing and installation
The Inflation Reduction Act introduced by the United States in 2022 provides subsidies of up to US$369 billion to support investment and production in the clean energy industry, including domestic photovoltaic products, in an attempt to reconstruct the photovoltaic industry chain and supply chain.
1. In the field of photovoltaic product manufacturing,The U.S. federal government provides tax credit subsidies to photovoltaic companies based on the investment amount or the specifications of the output products. The total amount of investment tax credits is as high as $10 billion, covering photovoltaic and other clean energy manufacturing projects, and the credit ratio can be up to 30% of the project investment amount. Production tax credits cover photovoltaic raw materials, cells, components and related supporting products. The specific credit standards are shown in Table 1:
Thanks to the huge subsidies from the US government for the photovoltaic manufacturing industry, local companies can even continue to expand their domestic manufacturing business in the United States while losing revenue. Take First Solar, for example. According to its 2023 financial report, the company achieved a net profit of US$831 million for the whole year, of which about US$659.7 million came from subsidies (Government grants receivable), accounting for 79.39%, while there was no such income in 2021 and 2022. In the first quarter of 2024, the company’s financial report achieved a net profit of US$236.7 million, of which US$282 million came from government subsidies. That is, after deducting government subsidies, First Solar suffered a net loss of US$45.27 million in the first quarter of 2024. This huge change from loss to profit is entirely due to the huge subsidies and tax credits supported by the US government for the photovoltaic industry. At the same time, the company announced plans to expand its photovoltaic module factory in Ohio and build a new photovoltaic module factory in Alabama and Louisiana, with a total investment of US$2.4 billion, and plans to expand the existing production capacity by more than four times.
In addition to component companies, U.S. PV raw materials and accessories companies have also received a large amount of subsidies. According to information recently released by the U.S. Department of Energy, the U.S. Internal Revenue Service has allocated about $4 billion in tax credits for more than 100 projects developed in 35 states. Among the disclosed PV projects are: Highland Materials received $255.6 million to produce solar-grade polysilicon in Tennessee; Solar Cycle received $64 million to produce solar glass in Georgia.
In addition, in order to cooperate with the implementation of the production tax credit policy of the Inflation Reduction Act, the U.S. Department of Energy’s Loan Program Office provided a $1.45 billion loan guarantee to Qcells, a local crystalline silicon photovoltaic manufacturer, to support its photovoltaic industry chain project in Cartersville, Georgia. After completion, the project will produce silicon ingots, silicon wafers, solar cells and finished photovoltaic cell modules, and will become the largest silicon ingot and silicon wafer factory in the history of the United States, filling the key gap in the domestic photovoltaic industry chain in the United States.
(II) In terms of photovoltaic power generation projects,The U.S. Inflation Reduction Act provides four main tax credit policies for domestic photovoltaic power generation projects, as shown in Table 2. It is worth noting that among these four types of subsidy policies, if the project meets the “domestic content” requirements, it will receive additional tax credits. “Domestic content” means that the project uses a certain proportion of steel, iron or manufactured products mined, produced or manufactured in the United States, which is suspected of violating the “national treatment” obligations under WTO rules.
(III) Household photovoltaic applications:On June 28, 2023, the Biden administration announced the “Solar for All” plan, which is an important part of the $27 billion “Greenhouse Gas Reduction Fund” in the Inflation Reduction Act. The plan aims to provide $7 billion in grants to subsidize residential rooftop and community distributed solar projects to reduce the cost of installing and using solar energy.
2. The United States provides a large amount of funding subsidies for photovoltaic technology research and development
The U.S. Department of Energy’s Solar Energy Technologies Office (SETO) sets up a funding program every year to provide direct funding for photovoltaic research and development and demonstration projects, with funding from the Department of Energy and the Infrastructure Investment and Jobs Act. On May 16, 2024, the U.S. Department of Energy announced an investment of $71 million, including $16 million from the Infrastructure Investment and Jobs Act, to fund the “Crystalline Silicon Photovoltaic Manufacturing and Dual-Use Photovoltaic Technology Incubator Funding Program” ($27 million) and the “Advancing American Thin-Film Solar Photovoltaic Technology Funding Program” ($44 million) to address the gap in domestic photovoltaic supply chain manufacturing capabilities.
1. Funding for photovoltaic R&D and demonstration projects
According to information released by the Solar Energy Technologies Office of the U.S. Department of Energy, the agency has implemented 19 photovoltaic R&D and demonstration project funding programs since 2022, totaling US$615.6 million. See Table 3 for details:
2. Crystalline Silicon Photovoltaic Manufacturing and Dual-Use Photovoltaic Technology Incubator Funding Program
The Crystalline Silicon Photovoltaic Manufacturing and Dual-Use Photovoltaic Technology Incubator Funding Program (Item 3 in Table 3) is worth $27 million to support projects that develop next-generation solar technologies. On May 16, 2024, the U.S. Department of Energy’s Solar Energy Technologies Office announced 10 selected projects. See Table 4 for details:
3. Promoting the US Thin Film Solar Photovoltaic Power Generation Funding Program
Promote the US Thin Film Solar Photovoltaic Technology Funding Program (Table 3, Item 4), and allocate US$44 million for research, development and demonstration projects of domestic thin film photovoltaic technology. The Solar Energy Technology Office of the US Department of Energy announced the funding results on May 16, 2024. See Table 5 for details:
3. The United States has many types of local subsidy measures for the photovoltaic industry.
The US states and local governments have also introduced numerous subsidy measures to support the development of the photovoltaic industry. The DSIRE database contains a total of 419 fiscal incentives for the photovoltaic industry and its technology development at the state level in the US, including: rebate programs (87), preferential loans (76), property tax incentives (72), clean energy financing programs (35), sales tax incentives (34) and grant programs (29). Among the states, Colorado has the most fiscal incentive policies, with 26, Texas has 25, and California has 18.
Take Colorado as an example. The rebate program in Aspen, Colorado, provides incentives for commercial and residential photovoltaic power generation, with a subsidy of $200/kW for the first 6 kW and $100/kW thereafter, with a cap of $3,400 or 25 kW. The Colorado Energy Smart Efficiency Rebate Program also provides a subsidy of 25% (up to $2,500) of the project cost for solar photovoltaic systems.
In terms of preferential financing, Colorado has developed a statewide PACE (Property Assessed Clean Energy) program that allows commercial owners to apply for 100% financing for the upfront costs of energy-saving and renewable energy projects, with a maximum financing period of 20 years. The Colorado Clean Energy Fund’s Residential Energy Upgrade Loan Program provides residential solar photovoltaic facilities with no down payment, low interest rates, and up to $75,000 in loans for up to 20 years.
In terms of property tax incentives, Colorado has exempted the state sales and use tax on the sale, storage and use of all components used to generate electricity from renewable energy since July 1, 2006. For residential properties, renewable energy personal property owned by residential owners and producing energy for use on residential property is exempt from Colorado property tax.
In terms of direct grants, the city of Boulder, Colorado, offers $1 per watt of system capacity through its solar grant program, up to a maximum of $8,000 or 50% of the total cost.
4. The US photovoltaic subsidy policy fully reflects the “double standard” and will lead to “overcapacity”
Recently, the United States has frequently accused China of providing a large amount of subsidies to its new energy industry. At the same time, it has been expanding its own production capacity by implementing exclusive and discriminatory subsidy policies. This is a typical “double standard” behavior, and will lead to “overcapacity” in the U.S. photovoltaic industry, impacting the healthy development of the global photovoltaic industry. After the implementation of the “Inflation Reduction Act”, the photovoltaic production capacity planned to be built in the United States has increased significantly. According to statistics from the Solar Energy Industries Association (SEIA), as of October 2023, there are 25 component production lines and 2 polysilicon suppliers, 9 inverter suppliers, 2 photovoltaic glass suppliers, and 1 backplane supplier in the United States; there are 13GW of component production capacity in operation and 40,000 tons of polysilicon; there are 19.4GW of component production capacity and 3.3GW of battery, silicon wafer, and ingot production capacity under construction; there are also 45GW of battery production capacity, 80GW of component production capacity, 14GW of ingot production capacity, and 27GW of silicon wafer production capacity that have announced plans to set up factories. According to statistics from US consulting firm Wood Mackenzie, based on currently announced plans, the US photovoltaic module production capacity will exceed 120GW in 2026, which is three times the domestic photovoltaic installed capacity demand by then.
The US photovoltaic subsidy policy, represented by the Inflation Reduction Act, disregards multilateral economic and trade rules and uses US domestic goods rather than imported goods as a condition for obtaining subsidies. It is a blatant discriminatory policy that violates the obligation of “national treatment”. On March 26, 2024, China brought the relevant subsidy policies in the US Inflation Reduction Act to the World Trade Organization. After consultations with the United States failed, China applied to the WTO on July 15 to establish an expert group to hear the case. No matter how it is packaged and beautified, it cannot change the discriminatory, illegal and protectionist nature of the US photovoltaic subsidy policy.
(Source: Shanghai Securities News)
Source: Shanghai Securities News
Original title: Photovoltaic Industry Association, long article hits back
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How do U.S. subsidies for the photovoltaic industry impact global competition in renewable energy markets?
US Photovoltaic Industry Subsidies: A Threat to Global Competition and International Cooperation
On September 14, the China Photovoltaic Industry Association issued a document stating that photovoltaics are an essential product to promote energy structure adjustment and industrial green transformation. However, the United States has been implementing protectionist policies, including the Inflation Reduction Act and the Infrastructure Investment and Employment Act, which provide large-scale subsidies to its domestic photovoltaic industry. These measures are suspected of violating multilateral rules, distorting the market-oriented operation of the global photovoltaic industry chain and supply chain, and undermining international cooperation in areas such as global joint response to climate change.
Huge Subsidies for Photovoltaic Manufacturing and Installation
The Inflation Reduction Act introduced by the United States in 2022 provides subsidies of up to $369 billion to support investment and production in the clean energy industry, including domestic photovoltaic products, in an attempt to reconstruct the photovoltaic industry chain and supply chain. The U.S. federal government provides tax credit subsidies to photovoltaic companies based on the investment amount or the specifications of the output products. The total amount of investment tax credits is as high as $10 billion, covering photovoltaic and other clean energy manufacturing projects, and the credit ratio can be up to 30% of the project investment amount.
For example, First Solar, a U.S.-based company, has received significant subsidies from the U.S. government. In 2023, the company achieved a net profit of $831 million, of which about $659.7 million came from subsidies, accounting for 79.39%. In the first quarter of 2024, the company’s financial report achieved a net profit of $236.7 million, of which $282 million came from government subsidies. This huge change from loss to profit is entirely due to the large subsidies and tax credits supported by the U.S. government for the photovoltaic industry.
Subsidies for Photovoltaic Technology Research and Development
The U.S. Department of Energy’s Solar Energy Technologies Office (SETO) sets up a funding program every year to provide direct funding for photovoltaic research and development and demonstration projects, with funding from the Department of Energy and the Infrastructure Investment and Jobs Act. On May 16, 2024, the U.S. Department of Energy announced an investment of $71 million, including $16 million from the Infrastructure Investment and Jobs Act, to fund the “Crystalline Silicon Photovoltaic Manufacturing and Recycling” project.
Impact on Global Competition and International Cooperation
The U.S. government’s large-scale subsidies for its domestic photovoltaic industry are suspected of violating multilateral rules, distorting the market-oriented operation of the global photovoltaic industry chain and supply chain, and undermining international cooperation in areas such as global joint response to climate change. The exclusive and discriminatory industrial policies adopted by the United States are not conducive to promoting global cooperation
