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November 20, 2017
U.S. Solar Manufacturing and Global Competition
In spring 2017, two U.S. solar equipment producers
U.S. Demand for Solar Equipment
petitioned the United States International Trade
Over 1.3 million PV systems (with 14.8 gigawatts of
Commission (ITC) to consider a global safeguard on solar
capacity) were installed in the United States in 2016, more
photovoltaic (PV) cells and modules, claiming that they
than four times the level of 2012. Several factors account
were being seriously injured by increasing imports. In
for the growing domestic demand for PV products,
September 2017, the ITC unanimously agreed that certain
including the following:
types of PV imports were a substantial cause of serious
injury to U.S. producers. In November 2017, the ITC sent
Falling cell and module prices. According to GTM
the President a report recommending a combination of
Research, in 2016 module and cell prices dropped 25%
actions on foreign-made solar equipment.
and 23%, respectively.
The President is to respond by January 12, 2018. He has
The solar investment tax credit. The credit was set to
complete discretion over the size, scope, and duration of
expire in 2016, but was extended through the
any trade remedy, or he may opt to take no action. The
Consolidated Appropriations Act of 2016 (P.L. 114-
President is to explain his actions and reasons to Congress
113). The credit is scheduled to be reduced from the
in writing.
current 30% of solar module costs to 10% for
Solar PV Manufacturing
commercial projects and to 0% for residential projects in
2022.
The ITC ruling concerns crystalline silicon photovoltaic
State renewable portfolio standards. Twenty-nine states
(CSPV) modules used to produce solar energy on the
mandate an increase in the production of electricity from
premises of many homes, businesses, and public buildings.
solar and other renewable resources.
Solar PV manufacturing does not require complex
Higher efficiency. Crystalline silicon PV modules
machinery and thousands of parts; most PV systems have
convert, on average, 12%-22% of incoming sunlight into
no moving parts at all. Solar cells, the basic building blocks
electricity. As efficiency has improved, PV installations
of a PV system, are assembled into modules, also known as
have become more cost-effective relative to some other
panels, and modules in turn are connected to one another in
sources of electric power.
arrays (see Figure 1).
Solar modules are often described as a commodity,
Global and Domestic PV Production
meaning they can be mass-manufactured. Large producers
Global Trends
have a cost advantage because of economies of scale.
Figure 1. Solar (PV) Cell, Module, and Array
PV cell and module manufacturing is highly competitive.
The United States accounted for 2% of global cell and
module production in 2015, according to the International
Energy Agency. By comparison, China accounted for more
than two-thirds of the 63 gigawatts of worldwide module
production in 2015, followed by Malaysia, South Korea,
Japan, and Germany.
According to one estimate, imports of solar cells and
modules are expected to supply 88% of U.S. domestic
demand in 2017. PV modules represented more than 90%
of global PV production in 2016; the remainder involves
thin-film technologies, which have a different production
Source: Adapted by CRS from SamlexSolar.
process.
Still, large multimillion-dollar capital investments are
Domestic Trends
needed to build or upgrade a PV manufacturing facility. PV
Domestic PV manufacturing has expanded in recent years.
production is highly automated. Domestic module
An August 2017 ITC report found that between 2012 and
manufacturers have told the ITC that labor costs accounted
2016, production capacity of U.S. PV module
for about 7% of production costs in 2016. Domestic
manufacturers rose 34%, and domestic production
transportation costs for finished modules produced in the
expanded by 24.2%. About 38,100 workers were employed
United States are in the range of 2%-3% of value. The costs
in solar manufacturing in November 2016, 28% more than
of materials, capital equipment, and research and
in 2012, according to the Solar Energy Industries
development account for much of the rest.
Association (SEIA), an industry trade group (see Figure 2).
https://crsreports.congress.gov
U.S. Solar Manufacturing and Global Competition
Figure 2. U.S. Solar Energy Industry Employment
Section 201 Petitioners
Suniva, a privately held CSPV producer currently in
bankruptcy, petitioned for the safeguard investigation in
April 2017. Suniva, now majority-owned by a Chinese
firm, operates a solar PV manufacturing plant in Georgia,
and it recently shuttered its factory in Michigan.
SolarWorld Americas joined the petition in May 2017.
Until recently, its parent company had been SolarWorld, a
German-headquartered company, which filed for
insolvency in 2017. SolarWorld Americas operates the
largest solar cell and module plant in the United States. In
2016, SolarWorld Americas employed about 740 people in
the United States.
Source: SEIA, National Solar Job Census, 2016.
Presidential Options
Nonetheless, falling prices have made it difficult for
Because the ITC affirmatively determined the U.S. CSPV
domestic PV manufacturers to operate profitably. From
industry has been seriously injured, the President, if he
January 1, 2012, to July 2017, more than two dozen
decides to take action, has several choices under Section
domestic PV producers were in bankruptcy or shuttered
201: a higher duty rate; a quantitative restriction or quota;
their U.S. operations. Approximately 20 solar PV
trade adjustment assistance for workers and firms;
manufacturing facilities were in operation domestically as
international negotiations; or some other steps to limit
of July 2017, according to the ITC.
imports of certain types of solar equipment for up to four
Imports of Solar Cells and Modules
years. The temporary safeguard action, if approved, could
be renewed, up to a maximum of eight years.
Figures from the U.S. government show the value of
imported solar cells and modules rose 60% from 2012 to
Safeguard measures are not country-specific; thus, there
2016, from roughly $5 billion to $8.3 billion. Since 2012,
could be a ban on all imports of CSPV cells and modules. A
imports of solar equipment have risen every year, except for
presidential order instituting such a ban could exclude some
a sharp decline in 2013. That decline may have been related
U.S. free-trade agreement partners, such as Canada, whose
to the imposition of U.S. antidumping and countervailing
exports have not been found to injure U.S. manufacturers,
duties on Chinese-manufactured solar cells in 2012, which
while covering others, such as South Korea and Mexico,
resulted in double- and triple-digit tariffs on imports of PV
because the ITC found substantial injury from South
products from China. In 2015, the United States imposed
Korean and Mexican imports.
additional duties on PV producers from China and Taiwan.
Effects on the U.S. Solar Energy Industry
After the United States applied these duties on solar cells
Proponents claim the provisional safeguard would stabilize
and modules made in China and Taiwan, solar PV imports
solar PV equipment prices, ensure market share for
from other countries increased. In particular, PV cell and
domestic manufacturers, increase U.S. production of solar
module shipments from South Korea to the United States
cells and modules, and potentially add as many as 45,500
rose to a record high of $1.3 billion in 2016, compared to
solar manufacturing jobs, depending on the Section 201
$140 million in 2012. PV imports from Mexico jumped
remedy. Another reason for the safeguard, supporters assert,
71% from 2012 to 2016, totaling about $822 million in
is that foreign dominance in PV manufacturing poses a
2016. Taken together, South Korea and Mexico supplied a
national security threat, which could make U.S. access to
quarter of total U.S. PV imports last year, compared to
this energy source less secure. SolarWorld Americas and
12.5% in 2012.
Suniva have also suggested an executive order requiring
Global PV Safeguard Investigation
federal agencies to use only U.S.-produced modules.
The ITC investigation was conducted under a section of the
Opponents, including SEIA, point out that most of domestic
U.S. Trade Act of 1974 (19 U.S.C. §2251) known as
employment in the PV solar industry is in the design, sales,
Section 201—Global Safeguards. Section 201 allows
and installation of solar systems, not in manufacturing.
domestic industries that claim to have been seriously
Critics argue that restrictions on imports of PV cells and
injured or threatened with severe injury from rising imports
modules under Section 201 would raise the cost of solar
to petition the ITC for temporary import relief. Under the
installations, adversely affecting employment and harming
law, plant closings, significant unemployment, or falling
consumers. According to SEIA, solar system installation,
market share may offer evidence of serious injury. Section
sales and distribution, project development, and finance
201 investigations are rare; the last one was in 2001, when
employed more than 220,000 workers in 2016, far more
the George W. Bush Administration sought to protect the
than were employed in manufacturing. SEIA claims the
domestic steel industry.
domestic solar industry could lose 88,000 jobs if the
President imposes a trade remedy.
The investigation’s scope excludes some types of PV
products, such as so-called thin-film modules. The world’s
largest maker of thin-film modules, First Solar, is based in
Michaela D. Platzer, Specialist in Industrial Organization
the United States and has manufacturing facilities in the
and Business
United States and Malaysia.
https://crsreports.congress.gov
U.S. Solar Manufacturing and Global Competition
IF10781
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https://crsreports.congress.gov | IF10781 · VERSION 2 · NEW