Chinese solar companies are poised to dominate U.S. domestic solar panel production, a scenario that exposes a critical flaw in the Biden-Harris Administration's clean energy agenda. Within the following year, Chinese-backed firms will establish enough solar manufacturing capacity on U.S. soil to serve nearly half of the domestic market. These companies benefit from an intricate web of Chinese government subsidies and low-cost coal energy, allowing them to produce solar panels at prices far lower than their U.S. competitors.
Ironically, many Chinese firms also take advantage of the same federal subsidies offered through the Inflation Reduction Act (IRA), a key piece of legislation meant to strengthen U.S. clean energy manufacturing. While the IRA aims to create American jobs and reduce dependence on foreign energy sources, Chinese firms are capitalizing on the act to entrench themselves further in the U.S. market.
The question arises: Is the U.S. fostering a clean energy transition that will ultimately remain dependent on its largest geopolitical competitor?
China’s dominance in solar energy is not a recent development but a decades-long strategy that has positioned the country as the world’s largest producer. Since 2011, China has poured over $50 billion into building its photovoltaic (PV) supply chain, creating more than 300,000 manufacturing jobs across its solar value chain. As a result, China now controls more than 80% of the global solar panel supply chain, from raw polysilicon to finished solar modules.
This massive investment, coupled with Chinese industrial policies designed to nurture solar energy as a strategic sector, has driven an over 80% reduction in solar PV costs. Today, Chinese companies dominate every key step of the production process: they produce the polysilicon, refine it into ingots, slice it into wafers, and finally assemble it into solar cells and modules. This scale and vertical integration allow Chinese firms to set global prices, which are often below the cost of production for U.S.-based firms.
Chinese solar manufacturers entering the U.S. are primarily focused on assembly rather than full-scale production. While these firms may establish solar panel factories on U.S. soil, the key components—solar cells, wafers, and polysilicon—are still imported from China or neighboring Asian countries like Vietnam and Malaysia, where Chinese companies have set up satellite operations.
For example, Longi, the world’s third-largest solar manufacturer, operates a five-gigawatt panel assembly facility in Ohio through a joint venture with U.S. solar developer Illuminate USA. Although this plant will employ over 1,000 Americans and produce nine million solar panels annually, the heart of the production process—manufacturing the solar cells and refining polysilicon—remains in China.
Similarly, Trina Solar is establishing a five-gigawatt solar panel factory in Texas. While Trina’s U.S. subsidiary sources some of its polysilicon from European and U.S. suppliers, much of the production relies on overseas components. U.S. solar project developers looking for low-cost supplies welcome these developments. Still, the reality remains that much of the U.S. solar manufacturing boom is merely the assembly of components made in China.
The Inflation Reduction Act was designed to inject $369 billion into clean energy initiatives, including tax credits and incentives for domestic solar manufacturing. Yet, instead of reducing reliance on Chinese imports, the IRA may have inadvertently subsidized Chinese firms to expand their influence in the U.S. market. Chinese companies are eligible for the same federal tax credits intended to bolster U.S. clean energy competitiveness, blurring the line between foreign and domestic solar production.
In response, U.S. firms like First Solar have called for stronger tariffs on imported solar components, arguing that the current trade policies favor Chinese competitors by allowing them to benefit from low-cost production abroad while still receiving U.S. subsidies for their domestic assembly operations.
American solar manufacturers are finding it increasingly difficult to compete with Chinese firms' sheer scale and low-cost production. U.S.-based Convalt Energy, for example, is struggling to bring a 10-gigawatt solar factory online in upstate New York. Despite initial hopes of creating a fully integrated supply chain within the U.S., Convalt’s progress has stalled due to plummeting global solar prices. These price drops—driven by oversupply from China—are often too low for U.S. manufacturers to match.
The Department of Energy acknowledges that building a competitive domestic solar industry will take time, but reliance on foreign expertise and materials could persist for years. The risk is that by the time U.S. manufacturing ramps up, Chinese firms may have already solidified their dominance, undermining the IRA's long-term goals.
China’s grip on the solar industry extends beyond economics; it is also a national security concern. By controlling the supply chains for critical energy infrastructure, China can potentially dictate the pace and cost of the U.S. clean energy transition. The U.S. may find itself beholden to Chinese interests at a time when geopolitical tensions are rising, particularly over trade and technology.
Moreover, China’s use of cheap, coal-fired energy to produce its solar products raises questions about the environmental impact of relying on Chinese-manufactured panels. While the U.S. pushes for a green transition, China remains the world’s largest consumer of coal, accounting for over half of global consumption. This reliance on coal undermines the international push for cleaner energy and creates a paradox where the drive for renewable energy in the U.S. depends on highly polluting practices abroad.
As the Biden-Harris Administration moves forward with its clean energy agenda, the growing influence of Chinese firms in U.S. solar manufacturing raises critical questions. Can the U.S. truly achieve energy independence when it remains so reliant on Chinese-controlled supply chains? While the IRA aims to promote U.S. manufacturing, its unintended consequences may be allowing China to strengthen its hold on the global solar industry at the expense of American competitiveness.
The U.S. faces a delicate balance between pursuing clean energy goals and ensuring that a foreign power does not control its energy future. The stakes are high, and without reevaluating policies and strategies, the U.S. may find itself caught in a solar paradox—pushing for renewable energy while deepening its dependence on China.
