On Monday, the Biden administration announced a suite of policy changes intended to boost the use of solar power within the US. While each individual policy change is relatively minor, combined, the changes address everything from manufacturing and importing to installation and integration with the power grid. While the administration is continuing to try to negotiate a deal that expands renewable energy via legislation, none of the initiatives announced today requires anything beyond executive action.
Who makes the panels?
At present, China dominates the manufacturing of solar cells and panels. But the Trump administration included solar hardware in its tariff war with the country. The Biden administration chose to eliminate the tariffs on the solar cells most often used in utility-scale installations but maintained them on other classes of cells. Complicating matters further, the US Commerce Department recently started an investigation into whether other countries in Asia were being used as conduits to ship panels around the tariffs.
Combined, these issues raised worries that tariffs would limit the growth of solar in the US, which is a problem given that it’s the cheapest way to generate power in many areas of the country and is central to the government’s plans to limit carbon emissions.
Monday’s announcement was accompanied by the decision to give these Asian countries a two-year suspension of tariffs on solar panels. But that decision was only mentioned briefly; instead, the focus of the formal announcement was largely on domestic production and use.
The announcement started by highlighting a bit of good news: At present, the US’s domestic solar manufacturing is on track to triple in capacity over the next two years and reach over 22 gigawatts by the end of Biden’s first term in office. This is impressive growth but also woefully insufficient, given that the US Energy Information Agency expects that solar installs will need all of those gigawatts in 2022 for utility-scale systems—and that’s not counting rooftop and commercial installs. (For comparison, the Chinese manufacturing capacity appears to be in the neighborhood of 25 times larger.)
The programs announced Monday include efforts to boost domestic manufacturing beyond its expected growth and to expand the integration of solar power into the grid.
Getting defensive
One of the tools Biden is using is the Defense Production Act. Originally designed to enable the country to produce military equipment, the act has most recently been in the news when it was used to enhance the national defenses against the COVID pandemic. Here, Biden is invoking it as a defense against energy shortages by directing the Department of Energy to expand the domestic production of photovoltaic modules and other necessary components of solar panels.
Accompanying that, he’ll work on establishing preferred supplier preferences for panels produced in the US, which will streamline the ability of the federal government to buy them. This is expected to create an annual demand for about a gigawatt of capacity.
More critically, the administration will work to get state and local governments to approve similar measures. This may sound like a minor gesture, but there are more than 400 municipal electric utilities (meaning they are owned and operated by a local government) in the US. As a result, the administration estimates that this could add as much as 10 gigawatts of demand for domestic solar.
Beyond the panels themselves, the Defense Production Act will be used for a lot of technologies that are renewable-adjacent. These include critical power-grid infrastructure to expand the distribution of renewable power, as well as ways of putting any excesses of power to use to create fuel. These include electrolyzers to split water and produce hydrogen and the fuel cells that can extract energy back from that hydrogen. Also included: efficient technology such as building insulation and heat pumps.
The need for domestic sources of solar panels is somewhat debatable, although Europe’s current experience with Russian energy supplies indicates it can be valuable for foreign policy reasons. But the remainder of the initiatives outlined here should provide a solid stimulus for the production of solar power, along with the ability to use it efficiently even in cases where it produces in excess of present demand. A key factor that will likely determine overall success will be the degree to which local governments get on board with the program.
