Can the U.S. Reshore Solar Manufacturing?

According to the most recent Renewable Energy Report from the International Energy Agency, solar capacity is expected to more than double in the United States by 2030. This expansion has both economic and geopolitical implications.

The United States actually began developing solar technology in the 1950s when Bell Labs developed the first viable silicon solar cell with an efficiency rate of approximately 6%. Thirty years later, panel arrays began appearing on rural homes, telecommunication satellites and other systems, but adoption only meaningfully accelerated when the Energy Policy Act of 2005 began offering tax credits for solar and commercial solar installations.

Despite the obvious benefits of installing solar energy, the United States does not have a robust domestic manufacturing base to speak of. Instead, it remains heavily reliant on imports (particularly from China) for solar panels and the materials needed to make them. This is a notable geopolitical challenge in today's climate.

Can this ever change? Will this ever change?

 

The Challenge: Rebuilding Domestic Solar Supply Chains

China currently produces more than 80% of the world’s solar panels. It also controls over 95% of the global supply chain for key components like wafers, and dominates the market for polysilicon (central to photovoltaic cell production) thanks to large-scale production facilities in various provinces across the country. It is also home to most of the rare earth materials required for panel production. Meanwhile, the U.S. solar industry continues to struggle with higher labor costs (a phenomenon not exclusive to the domestic solar industry), comparatively limited raw material deposits and processing capacity, and an overall lack of vertical integration across the industry.

The result: over 80% of U.S. solar installations still rely on imported panels, most of them sourced from Asia.

New Ideas: The Push for Domestic Solar Innovation

As global demand for clean energy accelerates and geopolitical tensions rise, there is a renewed push to rebuild domestic solar manufacturing. Re-shoring could enhance energy independence, create tens of thousands of new jobs, and insulate the U.S. from supply chain shocks. But the road to re-shoring is far from easy.

Competing with China won’t be a matter of simply building more factories. It requires a significant amount of funding, and the Inflation Reduction Act of 2022 provided some of that.

Despite the repeal/curbing of many of its provisions by the OBBB, billions in tax credits for clean energy manufacturing and supply chain development have been deployed to level the playing field by subsidizing U.S. solar panel production and encouraging investment in domestic capacity. Next-generation technologies have also started to reshape the competitive landscape. Thin-film panels, which rely on cadmium telluride instead of silicon, are less dependent on countries like China and are already being manufactured at scale by American firms. Meanwhile, national labs and startups backed by the Department of Energy, are developing additional breakthroughs, including tandem cells and advanced manufacturing processes.

And then there’s supply chain diversification.

Ongoing efforts between the American government, the business community and allied countries, are working to secure critical minerals and reduce reliance on unstable or adversarial suppliers. This includes expanding domestic mining of materials like copper, lithium, and other rare earth elements, as well as investing in recycling technologies to recover usable materials from old panels and electronics to form a closed-loop supply chain.

What’s Holding Us Back—and What’s Next

While it has made notable progress, the U.S. continues to face significant challenges. China’s dominance in solar isn’t just about labor. It’s about scale, subsidies, and long-term strategic planning. In much the same way the Chinese government spent billions between 1990 and 2010 to build up its manufacturing base to produce most of the goods consumed by the rest of the world, it did the same between 2011 and 2020 to build its solar manufacturing base by providing loans, land, and tax breaks to firms that could scale up fast. That kind of state-backed industrial policy allowed China to create massive economies of scale and drive global prices down. In other words, they did what the American government is only currently trying to do.

And then there’s the talent gap.

The solar sector will need hundreds of thousands of trained workers in engineering, manufacturing, and maintenance. Estimates suggest the solar workforce will need to more than double by 2030 to meet demand, and without a coordinated push to train and retain these workers, domestic capacity could fall short even if factories are built.

The COVID-19 pandemic and ongoing trade tensions with China have made it painfully clear that over-dependence on foreign supply chains can be a national vulnerability. If the U.S. can align its industrial policy, accelerate innovation, and build a workforce for the solar economy, it may not need to match China panel-for-panel.

It just needs to offer its innovators a better version of the future.

Disclaimer: The content of this article is provided for informational purposes only and does not constitute investment advice, financial advice, or a recommendation to buy or sell any securities or other financial instruments. The views expressed are those of the author and are not intended to be relied upon for making investment decisions. Always consult with a qualified financial professional before making any investment decisions.