For then-Hillsboro mayor Tom Hughes and the other politicians gathered to cheer the opening of a US$440 million solar panel plant in the city just west of Portland, Oregon, it was a moment of glory.
The arrival of German manufacturer SolarWorld in 2008 promised to be a turning point for his hometown.
“Not just because of SolarWorld itself, but because of the other companies it would drag along with it to create this silicon-based and solar-based manufacturing cluster in Hillsboro,” Hughes said.
Illustration: Mountain People
At the time, solar was on the cusp of becoming one of the fastest-growing sources of energy in a world rattled by warnings of climate change.
From the White House to statehouses, US leaders promised that green jobs could not only replace those threatened in the US’ oil fields and coal mines, but guarantee safer and more stable employment.
Yet across the Pacific, a rapidly growing competitor had also set its sights on dominating solar manufacturing. China, eager to prove the supremacy of its socialist-market model, was mustering government investments that dwarfed the US’ effort and coupling them with national mandates that forced utilities to use renewable power.
It established an end-to-end supply chain — China now makes most of the world’s polysilicon, a key material in solar panels — and ignored pleas by environmentalists to close coal plants that supply the cheap electricity needed to make solar equipment. It also kept its labor costs lower than those in most industrial countries and has been willing to prop up unprofitable operations. The result: Chinese firms now supply three-0quarters of the world’s solar panels.
US companies, which 20 years ago made 22 percent of them, now produce just 1 percent on US soil, Bloomberg New Energy Finance head solar analyst Jenny Chase said.
At one point, there were 75 major solar parts factories in the US, a number that was expected to grow as the industry flourished. Most have since been shuttered.
The Hillsboro plant has just joined them, closing its doors after just 13 years.
The industry failed to take root in the US, despite billions of dollars in government incentives and nearly two decades of pledges from US presidents, starting with George W. Bush, that the nation would be a clean-energy superpower.
Even crushing tariffs imposed by former US presidents Barack Obama and Donald Trump succeeded mostly in pushing the work out of China and into other Asian countries.
Critics, such as US Senator Ron Wyden, say that China benefited from unfair trading practices and the use of forced labor in its supply chain — charges Beijing rejects and that analysts say is unlikely to have played a significant role in the success of its solar strategy. Rather, China’s dominance is a result of Beijing’s commitment to corner the market.
“They tried harder than us,” said Sarah Ladislaw, a senior adviser at the Center for Strategic and International Studies. “China had a plan, and they executed to the plan. They had policies to create supply, they had policies to create demand, and they executed on it.”
At the same time, the US dabbled with short-lived incentives and punishing trade barriers that spurred retaliation instead of a manufacturing renaissance.
The inconsistent, piecemeal policy of the US was no match for a China-styled “industrial strategy” to dominate solar manufacturing, Ladislaw said.
“You can’t take the sum of a bunch of half-hearted measures and hope that it equals a durable outcome,” she said.
For US President Joe Biden, who has made investment in renewable energy a centerpiece of his climate-change initiatives and multitrillion-dollar infrastructure plan, the failed strategies of his predecessors serve as a stark warning: Fulfilling his promise to make climate policy a jobs engine will not be easy.
While solar manufacturing never generated a hoped-for bonanza of jobs in the US, where employment peaked at about 30,000, the next clean energy contest with China might be more painful to lose.
Both nations believe that the future will be driven by electric vehicles, and Biden has vowed that the US will win the race to build them.
Yet while Detroit is planning an electric makeover, the US Congress is still bickering over tax credits and whether to pay for charging stations.
Meanwhile, China has installed some 800,000 public chargers — about eight times the number in the US — and has parlayed a combination of tax incentives, land grants, low-interest loans and other subsidies into becoming the world’s biggest producers of the vehicles for six years running.
Hundreds of companies are building electric vehicles in dozens of specialty manufacturing hubs set up around the country to take advantage of inexpensive semiconductors and batteries — two other industries Beijing has set out to dominate.
The comprehensive strategy, part of Chinese President Xi Jinping’s (習近平) blueprint to become a manufacturing superpower, echoes the one it used to conquer global solar panel manufacturing. China’s victory on solar panels was so thorough that even erstwhile supporters of the US renewable strategy say that it is time to give up the fight and make do with the installation jobs created by the low-cost Chinese equipment.
US INCENTIVES
It is a bitter pill for Hillsboro and its 106,000 residents. In the early days, Hughes saw the solar factory as a chance to diversify an area that was so dominated by computer chip manufacturing that it had been dubbed the “Silicon Forest.”
Job losses at a local Intel campus underscored the risks of the city’s reliance on the volatile technology sector.
SolarWorld, in turn, was wooed by the promise of trained silicon workers and a state tax credit that offset 35 percent of project costs. Local colleges launched programs to train workers in solar manufacturing.
Flush with the potential, Hughes began recruiting other manufacturers, even traveling to trade shows in Germany and Spain to pitch solar suppliers on the promise of the US’ Pacific northwest.
At least a dozen companies drifted through town, “some of whom looked pretty seriously at sites,” Hughes said.
However, “right about the time they would have been following through on funding, the whole thing fell apart,” he added.
SolarWorld’s US-made panels could not compete with better and cheaper subsidized options from China. Even the Oregon Convention Center just 30km away opted for Chinese imports.
SolarWorld filed for bankruptcy protection in 2017 and a year later sold the Hillsboro factory to a competitor, SunPower, which is now shutting the plant.
It was not supposed to be this way.
Obama won the 2008 US presidential election on a promise to create 5 million green jobs — and a surge of solar projects in the sun-drenched southwestern US promised to deliver many of them.
When businesses and homes go solar, every panel is “pounded into place by a worker whose job can’t be outsourced,” Obama said.
The work was spurred along by a 2005 tax credit that allowed developers to deduct 30 percent of solar project costs. Although that tax break did not require the use of US-made parts, the Obama administration tried to cultivate a domestic panelmaking industry by paring tax bills for clean energy manufacturers, too.
A 2009 stimulus package, the American Recovery and Reinvestment Act, created a separate 30 percent tax credit to steer US$2.3 billion toward more than 180 advanced energy manufacturers, although only eight recipients made solar panels and the incentive program ran out of money after just one year.
The Obama administration also funneled seed money to solar companies through a loan guarantee program created under his predecessor to nurture advanced energy technologies.
The spending looked like it would bear fruit when Obama in 2010 stopped by a solar start-up’s new factory in Fremont, California, to extol the industry’s potential.
“Before the Recovery Act, we could build just 5 percent of the world’s solar panels,” Obama said at the facility operated by Solyndra. “In the next few years, we’re going to double our share to more than 10 percent.”
However, Solyndra defaulted on its US$535 million loan guarantee after almost all of it had been paid out, causing a scandal and casting an enduring pall over the program. The US government largely stopped offering loan guarantees through the program by late 2011. The US also did not hit Obama’s 10 percent benchmark.
China was using every tool at its disposal to develop its own solar industry. Local governments offered cheap land and state-backed banks provided friendly financing terms. Beijing also created demand for the products with generous subsidies that helped make the country the world’s largest purchaser of panels.
Chinese factories also worked to improve efficiency and reduce costs. For example, they used new tools to slice thinner polysilicon wafers with less waste, producing more solar cells from the same amount of raw material. That innovation helped lower costs by 80 percent, making solar as cheap as coal in many parts of the world.
The surge of cheap panels from China dealt a crushing blow to US manufacturers — and Solyndra was not the only casualty. After three other US solar manufacturers sought bankruptcy protection, Obama in 2012 slapped duties as high as 249 percent on solar equipment imports from China.
Manufacturers responded by moving operations out of the country, but they did not head to the US. Instead, large manufacturers skirted the US tariffs by building facilities to assemble solar cells and modules across Southeast Asia.
RETALIATORY DUTIES
Making matters worse, China retaliated by imposing its own duties of up to 57 percent on imports of US-made polysilicon — tariffs that crippled US producers of the conductive material used in solar panels.
“It was a disaster for the US brands,” Bloomberg solar analyst Wang Xiaoting (王瀟婷) said.
Before the Chinese tariffs, US-made polysilicon had been shipped to the country and used to produce ingots, the next stage of solar cell manufacturing, but the tariffs made US polysilicon too expensive, Wang said.
As a result, the US went from making 50 percent of the world’s polysilicon in 2007 to less than 5 percent today, he added.
Half the world’s supply of polysilicon now comes from China’s Xinjiang region, where an estimated 1 million ethnic minorities, including Muslim Uighurs, have over the past few years been detained in internment facilities, a panel of UN experts said.
The US, UK, EU and Canada have imposed sanctions against Chinese officials over alleged human rights abuses of Uighurs, including accusations that forced labor is being used in Chinese factories. The Biden administration is weighing a ban on the import of some solar products containing polysilicon from the region, too.
Beijing denies the human rights charges and has accused foreign governments of using forced labor claims as a way to help their own companies compete against China’s.
When the EU earlier this year imposed sanctions, the Chinese Ministry of Foreign Affairs said that they were “based on nothing but lies and disinformation.”
Even the deployment of solar power in the US — which was aided by cheap imported parts — suffered from uncertainty, as the investment tax credit was haltingly extended at least four times and came close to expiring twice.
“It’s been a stop-start policy — one or two incentives, you build capacity, and then that was it,” said John Smirnow, vice president of market strategy at the Solar Energy Industries Association. “In a very competitive global environment for US manufacturers to succeed, especially new companies, you need the same broad-based federal investment that other governments are providing their industries.”
US solar panel manufacturing was already dwindling when Trump in 2017 took office with vows to crack down on China and put “America first.”
Even though he was no champion of renewable energy, Trump extended his protectionist policies to the solar industry, too, imposing import limits and tariffs as high as 30 percent on foreign solar cells and photovoltaic (PV) panels in 2018.
Trump’s tariffs had the potential to help a handful of panelmakers stay afloat, but came at the expense of wide swaths of the domestic solar power industry.
While manufacturers SolarWorld, Suniva and First Solar cheered on the tariffs, they were fiercely opposed by renewable power developers and installers who feared that climbing panel prices would put them out of business.
The tariffs briefly boosted some US manufacturers, as SunPower and First Solar increased production.
However, the US’ hunger for solar power meant that imports from Asia climbed anyway, as domestic developers exploited a loophole to buy foreign-made double-sided panels not subject to the duties.
Moreover, the tariffs were not enough to save two of the US’ biggest champions, now-bankrupt Suniva and SolarWorld.
Although there are some 231,474 solar jobs in the US, only 14 percent of them are involved in manufacturing, with most of those workers building mounting systems, inverters and other components instead of the photovoltaic panels.
The US is far from alone. Other early solar adopters, including Germany, have seen their panelmaking plummet.
“Germany’s once-thriving PV wafer, cell and module manufacturers are now largely gone,” Ladislaw and other authors said in a February paper. “All have been out-competed and driven into bankruptcy by the rapid cost reductions achieved by foreign firms.”
Undaunted, Biden is promising that his climate policies will cultivate US jobs, but it is not clear whether they would come in the field of solar-panel manufacturing.
Even some beneficiaries of Trump’s tariffs are not pushing Biden to renew the levies when they expire in February next year.
First Solar, for instance, has advocated a broader industrial strategy to spur domestic panelmaking.
Biden is trying to encourage renewable manufacturing with an infrastructure package and a plan to revive the lapsed 2005 tax credit worth nearly one-third of the cost of factories making solar panels.
Mandates to buy US-made equipment could also be imposed for federally funded solar projects, an idea advanced by several US senators.
However, a few new US panel plants would do little to loosen China’s stranglehold on the rest of the solar supply chain, which extends beyond panels to the polysilicon that is used to make them. China produces more than 80 percent of the polysilicon and about 98 percent of two other key components — wafers and ingots — that are used in panels worldwide, even those manufactured and assembled in other countries.
Even as he touts climate action as a job creator, Biden seems focused on the potential of other fields.
“There’s no reason the blades for wind turbines can’t be built in Pittsburgh instead of Beijing, no reason why American workers can’t lead the world in the production of electric vehicles and batteries,” Biden told a joint session of Congress earlier this year.
NEW OPPORTUNITY
The US still has a shot at innovating the next generation of solar technology, said Julio Friedmann, a senior researcher in Columbia University’s Center on Global Energy Policy.
“We’re starting to plateau on existing solar technologies, and we need the next generation,” Friedmann said. “That is another opportunity for America to excel, because we have a great innovation system. We have an opportunity to leapfrog to the next generation.”
To avoid the mistakes of the past, solar supporters say that future efforts must be big and long-lasting.
“There is a real opportunity to make lasting change to strengthen the industry here at home and create new jobs,” said Wyden, who was at the Hillsboro plant’s opening. “It will take coordinated effort across the government — on everything from R&D [research and development], tougher enforcement of trade laws and reforms to the tax code — to better incentivize domestic manufacturing, to level the playing field and get the US back in the solar manufacturing game.”
Still, it is too late for solar workers in Hillsboro, a former farming community whose fortunes were once tied to the price of strawberries and had by 2008 become tethered to the volatile chipmaking industry.
The region’s economy has managed to diversify despite the loss of the solar plant, although Intel remains one of Oregon’s biggest corporate employers and continues to give the city an occasional scare. Last year, for example, Intel spooked local residents when it reportedly considered outsourcing some advanced manufacturing to Asia.
“The thing about being a company town is that when Intel sneezes, everybody gets a cold,” Hughes said, adding that he does not regret the city’s experience with the solar factory and would even open the city gates to another manufacturing upstart.
However, he might not try to build an entire strategy around the solar industry, Hughes said.
“I suspect I probably wouldn’t do that again,” he said. “Although it was fun going to all the solar trade shows.”
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