Renewable energy sources like solar are crucial to the clean energy transition. But today, just one country dominates the global solar industry: China. In the 1970s and 80s, the United States pioneered solar technologies, leading the world in research, development, and manufacturing of solar panels. Because of inconsistent federal support for renewables, the United States ceded market dominance to China, and the country surged to dominate market. Last year alone, China installed more solar panels than the US has in its entire history, cut panel prices nearly in half, and saw exports of solar components skyrocket.
Left unchecked, China’s success will leave the US entirely dependent on its industries. By investing in our domestic solar supply chain, the US can make itself less vulnerable to the whims of the Chinese government and claim a larger share of the global solar market, valued at up to $4.5 trillion between now and 2050.
The US may have ceded ground to foreign competitors in the past, but we have the expertise, workforce, and policies needed to compete in the global solar industry and retake market share. We cannot be deterred by China’s lead—we must boost our manufacturing capabilities and strengthen our domestic supply chain.
This memo spotlights key federal policies that are helping the US rebuild its edge in the evolving solar energy industry and showcases milestones that prove America is slowly reclaiming its leadership position in global markets.
How Federal Investments are Boosting America’s Solar Industry
Landmark provisions across the Bipartisan Infrastructure Law (BIL), CHIPS and Science Act, the Inflation Reduction Act (IRA) are playing a pivotal role in establishing a domestic solar energy supply chain. These federal incentives are a game-changer, providing the certainty and confidence investors and private firms need to dive into early-stage projects and plan for the long term.
These incentives and programs, which are designed to be distributed over several years, provide long-term stability, strengthen America’s supply chain dominance, and help the US re-establish itself as a valuable player in the global solar industry. Some of the most impactful federal incentives include:
- Over $60 billion in Production Tax Credits to incentivize electricity generation through clean sources like solar energy;1
- Over $64 billion in Investment Tax Credits to support clean electricity generated from qualifying sources like solar energy;2
- Over $40 billion in Manufacturing Tax Credits to help re-equip, expand, or establish manufacturing facilities to produce equipment and components for solar and other technologies;3
- $22 billion in tax credits to help Americans install residential solar technology to produce electricity at home;4 and
- And $19 billion in grant funding to support facilities producing solar technologies, accelerate solar research, development, and deployment programs, and expand solar projects that support local economic development and public school facilities.5
These federal investments will pay dividends over the next the decade. And based on our analysis of Rhodium Group and MIT CEEPR’s Clean Investment Monitor, it’s clear that these policies are already working. Public and private investment in energy storage technologies in just the past three years has exceeded $103 billion.6
Road to Victory: Building on US Leadership in Solar Technologies
Navigating global solar energy markets will not be easy, especially when facing formidable competitors like China. Decades of government investment into solar panel producers, hefty subsidies, and access to government bank credit have propelled China to the forefront of the solar industry. While we must be realistic—acknowledging that we won’t dominate the market overnight—we can make bold moves to capture key segments of the value chain that bring us closer to the finish line.
The US is well-positioned to regain a competitive edge in this evolving global market. By harnessing our existing strengthens, we can build on our advantages and catch up with our competitors. Third Way’s landmark analysis, in partnership with Breakthrough Energy and Boston Consulting Group, found that there are three segments of the solar value chain where the US should make the most effort to build or maintain its advantage. These segments were identified based on their market size and the potential for American leadership—and we’re already seeing significant progress in these key areas. Let’s break this down:
Raw Materials
Polysilicon production is a critical component of the solar supply chain and a key determinant for achieving economies of scale in solar panel manufacturing. Currently, China dominates the market, producing 80% of the global polysilicon supply. However, given the abundant availability of silicon—and rising demand for domestically—produced polysilicon given new domestic content requirements for solar wafers and cells—the US has a significant opportunity to establish a competitive advantage. Mothballed US-based polysilicon plants can be restarted and expanded, and new facilities can be built to support the growing demand. To remain competitive, US producers can leverage advanced, low-energy, cost-effective process technologies, such as Fluidized Bed Reactor (FBR) technology, which is more efficient than the traditional processes.7 Innovation can help reduce costs and enable US firms to compete effectively with Chinese manufacturers. Doing so will allow US firms to capture a portion of a global market valued at $200 billion and create nearly 5,000 jobs every year through 2050. Here’s how we’re already beginning to build our competitive muscles:
- Onshoring Critical Supply Chains: Korean-based PV cell manufacturer, QCells, committed $2.5 billion to build a complete solar supply chain in the US, including a new facility in Bartow County, Georgia. Their facility will manufacture 3.3 gigawatts of solar ingots, wafers, cells, and finished panels, respectively. This investment strengthens the US solar manufacturing ecosystem and reduces dependency on foreign supply chains.
- Scaling Up Silicon Production: Hemlock Semiconductor Operations, one of the longest-operating manufacturers of polysilicon in the world and the largest producer of high-purity polysilicon in the United States, has invested $375 million to expand operations in Michigan. This expansion will help meet the increasing demand for semiconductors in the growing American solar industry.
- Revitalizing Industries: REC Silicon, a leading global player in the production of high-purity silicon materials, has entered a 10-year agreement to provide high-purity FBR granular polysilicon to two panel manufacturers. To meet this demand, REC will restart their Moses Lake facility in Washington, bolstering US polysilicon production capacity.
- Expanding Capacity: Wacker Chemie is investing $200 million to expand their already $2.5 billion polysilicon facility in Tennessee. This expansion represents the company’s single largest investment ever and will produce polysilicon needed for solar cells, creating local jobs and reinforcing the US position in the global solar market.