The climate and tax bill that President Biden signed into law in August to increase the use of green energy and electric cars while expanding domestic manufacturing appears to be yielding some results.
A Korean solar company, Hanwha Qcells, announced on Wednesday that it would spend $2.5 billion to build a large manufacturing complex in Georgia. The plant will produce critical components for solar panels and build complete panels. If realized, the company’s plans could move a portion of its solar power supply chain, largely based in China, to the United States.
Qcells, which is headquartered in Seoul, said it was making the investment to take advantage of tax credits and other benefits under the Inflation Reduction Act, which Mr. Biden signed into law last summer. The manufacturing facility is expected to create 2,500 jobs in Cartersville, Georgia, about 50 miles northwest of Atlanta. Production is scheduled to begin in 2024.
The company opened its first solar panel manufacturing facility in Georgia in 2019 and quickly became one of the largest U.S. manufacturers — producing 12,000 panels a day late last year. The company said its new facility would increase its capacity to 60,000 panels per day.
Senator Jon Ossoff, Democrat of Georgia, and the state’s Republican Gov. Brian Kemp have aggressively wooed the state for manufacturers of renewable energy, batteries and automobiles. Several of these investments have come from South Korea, including a proposed Hyundai electric vehicle factory.
In 2021, Mr. Ossoff introduced a bill, the Solar Energy Manufacturing for America Act, that would have provided tax incentives for solar manufacturers. The bill was later incorporated into the Anti-Inflation Act.
The rise of electric vehicles
According to the legislation, companies receive a tax credit at every stage of the supply chain. The law includes an estimated $30 billion in production tax credits to speed up manufacturing of solar panels, wind turbines, batteries and critical minerals used in processing. The law also offers an investment tax credit to companies that build factories to manufacture electric vehicles, wind turbines and solar panels.
These and other provisions aim to reduce dependence on China, which dominates the supply chain for key raw materials and components for batteries and solar panels. Along with fears that the United States was losing ground in key technologies, lawmakers were also concerned that some Chinese manufacturers were using forced labor.
“I’ve written and passed legislation aimed precisely at attracting this type of manufacturing,” Mr. Ossoff said in an interview. “It’s the largest solar plant in US history coming to Georgia. This economic and geostrategic competition will continue, but my law has put the United States back in the fight to secure our energy independence.”
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Legislators and administrations from both parties have long sought to boost a domestic solar industry, including by imposing tariffs and other restrictions on imported solar panels. But such efforts have so far yielded only modest results. Most of the solar panels installed in the United States are imported.
The Qcells project and others could reduce US dependency on imports, but not quickly. China and other Asian countries have a huge lead in assembling panels and manufacturing the parts inside. Governments there have also used subsidies, energy policies, trade deals, and other tactics to help domestic producers.
While the Anti-Inflation Act has spurred new investment, it has also heightened tensions between the Biden administration and allies like France and South Korea.
For example, the law provides tax credits of up to $7,500 for electric car purchases, but these only apply to vehicles manufactured in the United States, Canada and Mexico. Consumers wanting to buy models from Hyundai and its subsidiary Kia would not be eligible for at least two years until the company’s new Georgia plant begins production in 2025.
Still, energy and auto executives have said the legislation should broadly benefit their companies, which struggled to get essential parts as the pandemic and Russia’s war in Ukraine shattered global supply chains.
Mike Carr, executive director of the Solar Energy Manufacturers for America Coalition, said he expects more companies to announce plans for new solar array factories in the United States in the first six months of the year. His group estimates that between 2030 and 2040, US installations will be able to meet all of the country’s demand for solar panels.
“We see this as a very, very large contributor to lower prices in the United States in the medium to long term,” said Mr. Carr, referring to the cost of the panels.
Several other solar companies have announced new U.S. manufacturing facilities in recent months, including CubicPV, a Bill Gates-backed startup that plans to begin producing solar panel components in 2025.
Another company, First Solar, said in August it would build its fourth panel manufacturing plant in the United States. First Solar plans to invest $1.2 billion to expand its operations and create 1,000 jobs. Qcells said it plans to supply First Solar with parts from its new Georgia facility.
