Could Biden’s clean energy push be a casualty of its success?

Dalton, Georgia, was once known as the carpet capital of the country. Economic diversification meant an expansion from wall-to-wall to hardwood floors. Now at Qcells, a solar panel company, robots patrol hectares of factory floors where vulnerable solar cells are packaged, laminated and packaged into advanced panels – 6,000 per day – in a highly automated production line.

The company built a massive factory in Georgia – one of the most crucial states in the 2024 presidential election – and has another in the works. Both plants will employ thousands of people, supported by President Biden’s signature clean energy initiative, the Inflation Reduction Act.

“When you walk in here, you feel like this is the future,” said Wayne Lock, 32, a Qcells quality engineer, as he walked along the production line, which has been busy since Mr. Biden signed the law in August 2022. making progress again and keeping up with the world.”

But instead of bragging, Qcells executives are sounding the alarm. The Biden clean energy initiative is bringing plants like theirs online at breakneck speed. And the pace of production – at home and abroad – has created the prospect of an oversaturated market that threatens to drive down the price of solar panels as supply exceeds demand.

Mr. Biden’s political advantage in the clean energy economy could turn into a crippling liability bordering on a nightmare: shutdowns and canceled construction plans rippling across the country, including in key 2024 states like Georgia, Arizona and Colorado.

“We should be very concerned,” said Mike Carr, executive director of the Solar Energy Manufacturers for America Coalition, a trade association. “We are very concerned.”

Even Biden administration officials described conditions when the clean energy law was passed last year as “much rosier” than now.

The 2011 bankruptcy of another solar company, Solyndra, which cost federal taxpayers hundreds of millions, haunted the Obama administration the last time a Democratic president tried to boost clean energy to tackle climate change. Republicans turned it into a scandal, and even supporters of the solar industry said it was a black eye — for former President Barack Obama politically and for solar energy economically.

Biden administration officials are at pains to note that the tax incentives in the Inflation Reduction Act this time are intended to attract private investors and that the incentives only cost the government if solar panels are sold and installed.

Mr. Biden has a lot of capital riding on the solar boom: jobs with political appeal, clean energy development that could attract climate-conscious young voters who are souring on the president on other issues, and a general sense that the Biden White House is a transformative power. , and no steadfast caretaker government.

At first glance, Qcells’ activities appear to be a complete success. In the heart of the House district of Rep. Marjorie Taylor Greene, a Republican who has spent more time trying to unseat Mr. Biden than supporting his clean energy program, Qcells, a subsidiary of a South Korean conglomerate, Hanwhahas invested $208 million and more than doubled solar panel production.

The 800 workers who built panels in Dalton before Biden’s legislation have been boosted by another thousand since the law was introduced. A $2.3 billion plant in Cartersville, three times the size of Dalton’s and covering 175 acres of Georgia red clay, will come online in January, making not only finished panels but also components of the panels: glass blocks, polysilicon wafers and solar cells – which are now almost entirely made in East Asia.

The Redeemer Plant in Cartersville, totaling 2.4 million square feet, will be the largest solar manufacturing facility in the country, and once both plants are fully operational, Qcells in Georgia will produce 45,000 solar panels per day produce.

That “wouldn’t have happened without the IRA,” said Qcells spokeswoman Marta Stoepker, referring to the Inflation Reduction Act.

Although the legislation offers sustainable energy such as solar and wind energy, it also offers opportunities an additional tax break for developers who install American-made solar panels, with additional incentives for using American-made components, such as the high-purity silicon that another Qcells affiliate in Washington state refines and the wafers, cells and panel packaging that the company will make in Cartersville. Qcells earns a $41.30 tax credit for each 590-watt panel made in Georgia.

But there’s a dark cloud hanging over the solar industry’s rapid expansion, and it comes from China. Wood Mackenzie, an independent energy research firm, recently wrote that the $130 billion China has invested to maintain control over solar panel components has created enough capacity to meet annual global demand until 2032, with production costs 65 percent cheaper than it is in the United States.

Solar energy analysts once thought the industry could compete with natural gas if it could produce a watt of electricity for a dollar. The global price has fallen to 14 cents per watt, a drop of 37 percent since January. Prices in the US are at 30 cents thanks to trade barriers, but that is still remarkably low.

Not everyone finds this problematic. Companies like Maxeon Solar Technologies, in Colorado and New Mexicoand Suniva in Norcross, Georgia, which focus on final assembly and deployment of solar panels, are happy to buy cheaper components from Asia and don’t want to rush headlong toward protectionism. JA Solar, a Chinese company, is building a solar power plant in Phoenix, creating more than 600 jobs without raising alarm bells about Beijing.

Others in the solar industry want help quickly. They have called for stricter enforcement of trade sanctions against factories in Southeast Asia that are nominally free of Chinese influence, but in fact only put the finishing touches on Chinese-made components, and tax breaks for US-made components, up to the very fine silicon being produced. formed into glass in solar cells.

The United States imported a record number of foreign-made solar panels in July, August and September, S&P global market information said this month, an increase of 55 percent from a year earlier and 30 percent from the three months before, the previous record.

The call for protection has bipartisan support in Congress. Senators Sherrod Brown, Democrat of Ohio, and Todd Young, Republican of Indiana, have new legislation to combat China’s efforts evade trade enforcement by avoiding tariffs. Senator Jon Ossoff, Democrat of Georgia and author of the solar energy provisions in the Inflation Reduction Act, also expresses concerns.

“The United States must prevent this flood of cheap Chinese imports from killing domestic production again,” said Senator Ossoff. “This is a national security issue.”

Officially, the Solar Energy Industries Association has a rosier picture. By 2030, the trade association says, Mr. Biden’s legislation will have expanded the solar manufacturing workforce to 115,000 Americans, and to more than 507,000 if transportation, installation and other industries are included. Solar energy production and storage should represent 30 percent of total domestic electricity generation by 2030.

But Wood Mackenzie sees problems. “Oversupply and intense competition will characterize the solar supply chain going forward, and are already forcing the cancellation of some expansion plans,” the company wrote this month.

And while residential consumer demand has been strong, the biggest consumer – developers of solar farms connected to electric utilities – has run into bottlenecks with transmission lines, transformers and land acquisition at a time of rising interest rates.

Whether solar panels and their components are made in the United States or China, their deployment in the national energy grid fulfills a central promise of Mr. Biden: tackling climate change. Renewable energy sources such as wind and solar energy now make up 80 percent of new electricity generation capacity. Greenhouse gas emissions are declining even as the U.S. economy and population grow.

For now, the Treasury Department believes it has struck the right regulatory balance between promoting American-made solar products and facilitating the deployment of cheap, clean solar energy.

But Biden’s reelection may depend more on rallying voters around economic progress than convincing them to care about his climate successes. Administration officials said more data is needed in coming months to determine whether the overcapacity caused by the Inflation Reduction Act needs a policy response, but they did not quickly rule out new trade protections.

Mr. Carr, of the solar energy association, says Republicans are eager to repeal tax breaks in the Inflation Reduction Act, which would strangle the industry. If they can successfully argue that these incentives mainly help China, the repeal effort could succeed, hurting domestic manufacturers and efforts to combat climate change.

“It’s a real crisis point, and I think it’s a real political problem.”