The climate and tax bill President Biden signed in August to increase the use of green energy and electric cars while expanding domestic manufacturing appears to be yielding some results.
A Korean solar company, Hanwha Qcells, announced on Wednesday that it would spend $2.5 billion to build a large manufacturing complex in Georgia. The plant will produce critical components for solar panels and build complete panels. If realized, the company’s plans could bring some of the supply chain for solar energy, which is largely based in China, to the United States.
Qcells, which has its headquarters in Seoul, said it was making the investment to take advantage of tax credits and other benefits in the Inflation Reduction Act, the law Mr. Biden signed last summer. The manufacturing facility is expected to create 2,500 jobs in Cartersville, Ga., roughly 50 miles northwest of Atlanta. Production is expected to start in 2024.
The company opened its first solar panel manufacturing plant in Georgia in 2019, quickly becoming one of the largest U.S. producers — by the end of last year, it was cranking out 12,000 panels a day. The company said its new facility would increase its capacity to 60,000 panels a day.
Senator Jon Ossoff, Democrat of Georgia, and the state’s Republican governor, Brian Kemp, have aggressively courted renewable energy, battery and automotive companies to the state. Several of those investments have come from South Korea, including a planned electric vehicle plant by Hyundai.
In 2021, Mr. Ossoff introduced a bill, the Solar Energy Manufacturing for America Act, that would have provided tax incentives to solar manufacturers. The bill was later incorporated into the Inflation Reduction Act.
The Rise of Electric Vehicles
Under the legislation, businesses receive a tax credit at every stage of the supply chain. The act includes an estimated $30 billion in production tax credits to accelerate manufacturing of solar panels, wind turbines, batteries and for the processing of critical minerals. The law also offers an investment tax credit to companies that build factories that produce electric vehicles, wind turbines and solar panels.
Those and other provisions are intended to reduce reliance on China, which dominates the supply chain for crucial raw materials and components for batteries and solar panels. In addition to the fear that the United States was losing ground in important technologies, lawmakers have also been concerned that some Chinese producers are using forced labor.
“I wrote and passed into law legislation precisely intended to attract this type of manufacturing,” Mr. Ossoff said in an interview. “It’s the largest solar manufacturing in U.S. history coming to Georgia. This economic and geostrategic competition will continue but my law has brought the United States back into the fight to secure our energy independence.”
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Lawmakers and administrations from both parties have long sought to boost a domestic solar manufacturing industry, including by imposing tariffs and other restrictions on imported solar panels. But such efforts have, so far, achieved only modest results. Most of the solar panels installed in the United States are imported.
The Qcells project and others could reduce U.S. reliance on imports, but not quickly. China and other Asian countries have a huge head start in assembling panels and producing the parts that go into them. Governments there have also used subsidies, energy policy, trade agreements and other tactics to help domestic producers.
While the Inflation Reduction Act has spurred new investment, it has also raised tensions between the Biden administration and allies like France and South Korea.
For example, the law offers tax credits of up to $7,500 for the purchase of electric cars but it is only available on vehicles made in the United States, Canada and Mexico. Consumers seeking to buy models made by Hyundai and its subsidiary Kia would not be eligible for at least two years until the company’s new Georgia plant begins production in 2025.
Still, energy and auto executives have said that on the whole, the legislation should benefit their businesses, which struggled to get important parts when the pandemic and Russia’s war in Ukraine wrecked global supply chains.
Mike Carr, executive director of the Solar Energy Manufacturers for America Coalition, said he expected more companies to announce plans for new solar equipment factories in the United States in the first six months of the year. His group estimates that between 2030 and 2040, U.S. plants will be able to meet all of the country’s demand for solar panels.
“We see this in the medium to longer term as a very, very large contributor to lower prices in the United States,” Mr. Carr said referring to the cost of panels.
Several other solar companies have announced new U.S. manufacturing plants in recent months, including CubicPV, a start-up backed by Bill Gates that plans to begin production of solar panel components in 2025.
Another company, First Solar, said in August that it would build its fourth panel manufacturing plant in the United States. First Solar plans to invest $1.2 billion to expand its operations and add 1,000 jobs. Qcells said it planned to supply parts to First Solar from its new Georgia plant.