LOS ANGELES: Construction of US solar-manufacturing plants by Chinese companies is surging, putting China in position to dominate the nascent industry, as other American factories struggle to compete despite federal subsidies.

Chinese companies will have at least 20 gigawatts’ worth of annual solar panel production capacity on US soil within the next year, enough to serve about half the US market, according to a Reuters analysis of corporate statements, government documents, and interviews with eight companies and researchers.

The group includes seven companies backed by Chinese firms including Jinko Solar, Trina Solar, JA Solar, Longi, Hounen, Runergy and Boviet, according to the analysis.

The projected rapid increase in US solar panel production by Chinese-owned companies has not previously been reported, and represents a worrying result for President Joe Biden’s climate agenda.

While his administration is keen for new investment that creates US jobs in clean energy, his government is also desperate to prevent over-reliance on geopolitical rival China as the economy transitions from oil and gas to renewables.

Chinese-backed companies have distinct advantages over competitors in the United States, such as heavily subsidised supply chains for raw polysilicon and unfinished solar modules, as well as low-cost government financing.

Like non-Chinese companies, they also collect US subsidies for clean energy manufacturing embedded in the 2022 Inflation Reduction Act, Biden’s signature climate law.

“You have a stacked deck here. It’s hard to imagine that anyone, particularly a greenfield manufacturer, can do it as quickly as a Chinese manufacturer,” said Paula Mints, founder of solar industry research firm SPV Market Research, referring to new factories.

She and one other researcher added, however, that the Chinese investment would help the domestic solar manufacturing industry mature while creating jobs.

“They have a lot more experience building factories and setting up supply chains,” said David Feldman, a solar market researcher with the US Department of Energy’s National Renewable Energy Laboratory.

Local and state officials in places where Chinese firms are setting up factories, including Texas, Arizona, Ohio and North Carolina, have welcomed the investments.

Non-Chinese manufacturers in the United States, by contrast, have found it hard to compete against a flood of cheap imports and are worried by China’s outsized presence.

As many as half of the announced US factories may not materialize, Reuters reported last year.

US-based Convalt, for example, is struggling to bring online 10 gigawatt of US capacity at a factory it started building in upstate New York in 2022.

“If we are to succeed, we need American manufacturers like Convalt to survive this onslaught of low prices, to build factories with capacities that allow us to compete against the largest global firms, with Chinese beneficial ownership,” CEO Hari Achuthan said in May in testimony to the US International Trade Commission, a government agency that is considering a request by Korea’s Hanwha Qcells and other US manufacturers to impose new tariffs on some solar imports.

Convalt’s plant would make panels plus the cells, wafers and ingots that go into them, but progress stalled a year ago as global panel prices plunged 50% to levels below Convalt’s cost of production, he said.

“Had we not had these low prices we should be up and running today,” Achuthan said.

The Department of Energy told Reuters that developing a domestic solar supply chain would take time and that the US must rely on foreign businesses for their expertise.

Chinese companies, by far the top suppliers of solar and electric-vehicle battery components imported to the US, now account for one-fifth of the solar factories announced since the US adopted new climate subsidies, according to research firm Wood Mackenzie.

 - Reuters