On June 6, 2022, U.S. President Joe Biden invoked the defence act to increase solar panel manufacturing. Our call for action, earlier this year has been answered, read our article here.The defence act has rarely been used in the modern era and the last time was during Donald Trump’s presidency to produce more masks and protective equipment to fight COVID. The defence act mandates that all available resources are used to stimulate emergency production. How this looks for solar PV panels may shape up to be a contrast when compared to protective medical equipment, but similarities still exist. If you are ready to install your solar PV system, be sure to check out our recent article, how to find a solar installer.
Commonalities between the last two times the defence act was used
Only a crisis can spur on an emergency presidential order. In the case of both COVID and extreme weather events, blackouts and reliance on non-renewable energy can push a government to take drastic action. The order, which will mandate all available resources be put towards solar panel manufacturing, is akin to wartimes and just as Americans saw during the last emergency order, a huge impact will be felt.
Supply and raw material shortages hindered medical protective equipment manufacturing in 2020 and this same problem may very well be seen this year. The precious metals, microprocessors, chemicals and silica based materials needed to make solar cells and the panels themselves are already in limited supply. Global shortages of all these items due to the pandemic, Ukraine invasion and hoarding of materials by countries all contribute to worry for solar companies.
Thankfully, many companies such as SunPower (Malaysia), First Solar (Vietnam) and Canadian Solar (Thailand) have diversified their operations to include factories in South East Asia. These established factories have been around for years with entrenched supply chains (which may or may not have Chinese origins) that will not see the same interruptions as in the West. As such, the many solar PV component factories in the United States currently experiencing supply shortages will need to rely on their SE Asian factories to keep up with demand and the Biden government knows this very well.
How does the U.S. Government plan to meet solar PV demand?
Reliance on production alone in the United States would be a fools game until supply levels stabilize and as such importing panels is the only way for rapid, widespread installation of solar PV systems. To facilitate this, import duties on solar panels from four countries, Thailand, Malaysia, Vietnam and Cambodia, have all been removed for the next twenty-four months or two years. This move is massive to curtail solar PV panel shortages that have blocked installs going back to the start of the pandemic.
It’s also suspected that exploration and mining for precious metals and raw materials, laboratories for chemical compounds needed and pre-fabrication of essential components in separate facilities will also surface in short order to reduce reliance on foreign sources. Well, at least on sources that could be considered enemies of the state. Mexico and South American counties, all rich in resources, will definitely be asked for partnership in exporting raw materials to tamper down any shortages.
What will happen to solar factories in SE Asia?
As a result of the emergency order, many of them will see an overnight boom in production, hiring and valuation. If they can keep their costs low, they may even see continued orders after the twenty-four-month period that all tariffs are lifted. The key is all in the supply and who can keep a steady stream. The other perspective is anti-globalization, with solar PV equipment solely being manufactured in the United States, the factories close once the tariffs return, though unlikely it’s a possibility if production can finally outpace demand.
Final thoughts on this monumental step by Biden's government
The clean energy industry celebrated this move, and it is certain to spur on growth in all segments. As a clean energy training provider, we at Ecotech Training applaud president Biden’s answer to the climate crisis and many other troublesome points that limit renewable energy implementation.
