Photovoltaic Nation – U.S. Policy Moving Forward

Geopolitical messages have become increasingly evident in U.S. rhetoric supporting photovoltaics (PV). Across from rising industrial and technological powers in Asia, PV in the U.S. has been portrayed as a commodity, consumer product, cutting-edge technology and the key driver for the next generation in innovative, globally competitive U.S. manufacturing. The spotlight on PV and the renewable energy sector as a whole has shone all the brighter as reverberations from Libya and the Middle East hit U.S. gas pumps.

Overseas PV development and manufacturing has far from impeded progress in the domestic PV market, but has become increasingly at odds with the goals of U.S. policymakers and their identification of renewable energy technology with national industriousness and self-sufficiency. High-profile U.S. industry developments – including the outsourcing of PV manufacturing jobs from Massachusetts to Wuhan, China and a U.S. company’s opening of the world’s largest private solar research facility in Xi’an, China – will direct future federal policy decisions intended to increase renewable energy sector job creation and further secure domestic technological and manufacturing leadership.

Aimed at promoting domestic manufacturing, recent protectionist provisions for federal PV purchasing have revealed the complexities of the global PV supply chain. The U.S. is a net exporter of solar energy products due largely to its leading position as a polysilicon producer. However, the U.S.’s trade position is significantly weaker in terms of PV cells and modules and is likely to become more imbalanced as the U.S. PV market grows. Protectionist policy has become increasingly irrelevant and unviable in the global economy and is unlikely to find consistent support from U.S. politicians and international trade organizations.

Federal policy has also worked to affect domestic PV industry development through R&D programs, headed by the DOE’s SunShot initiative and Advanced Research Projects Agency (ARPA-e). The SunShot initiative will indirectly benefit the domestic PV industry through moving the technology closer to grid parity. ARPA-e will provide the means of attracting venture capital to some PV start-ups. However, neither program secures domestic manufacturing when VC-backed companies can pursue global opportunities and installed PV cost reductions broadly benefit all U.S. market participants (including manufacturers with previous advantages in labor and overhead costs).

The PV Supply Chain and Cross-Cutting Technologies project under SunShot represents an alternative policy choice to protectionist policy targeting the middle of the supply chain (PV cells and modules) and other R&D programs that target long-term PV market and industry potential within the U.S. The DOE project seeks to attract additional investment and R&D involvement from equipment vendors active in the semiconductor, flat panel display, and LED industries, as well as other areas with production processes applicable to PV manufacturing.

Through policy efforts similar to the DOE’s PV Supply Chain and Cross-Cutting Technologies project, the U.S. could develop a comparable industry providing strong export-oriented business, job creation linked to growth in developing thin film and alternative c-Si PV cell manufacturing, and a reinforced industry-led platform for leadership in commercial PV manufacturing. In its current form, the project has received roughly $20 million in annual funding representing less than 10% of the total DOE budget for the Solar Energy Technologies Program. As a channel for attracting investment from leading U.S. technology manufacturers, this cross-industry collaboration program represents a viable and effective area for implementing further federal policy and deserves greater attention.

Emil Salazar is a market analyst for SBI Energy.

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