Solar panel acquisition now faces additional challenges

The U.S. solar manufacturing industry is facing a significant transformation, as new policies and market dynamics reshape the landscape.

One of the key drivers for cell manufacturers, the "domestic content bonus" (45X), has lost its relevance due to earlier expiring tax incentives. This change, coupled with the challenges in complying with the new "foreign entity of concern" (FEOC) provisions, is causing concern for industry experts like Michael Parr, who is sceptical about the construction of new U.S. cell factories in the near term.

The FEOC requirements, which mandate that at least 50% of a module's content must be sourced from non-FEOC countries by 2026 (climbing steadily to 85% by 2029), are adding complexity to the situation. India, once seen as a likely beneficiary of these requirements, may now be cut off just as demand peaks.

This shift in the solar manufacturing market could lead to a wave of consolidation across the U.S. solar manufacturing base. Corning's recent acquisition of JA Solar's 2 GW module factory in Arizona and plans to establish a $1.5 billion crystalline-silicon wafer plant in Michigan, potentially adding 6 GW of capacity, is a sign of this trend.

Large, integrated manufacturers with upstream capabilities have a significant advantage in this market. Qcells is investing in 3.3 GW of ingot and wafer capacity in Georgia, while the US solar cell manufacturer Talon PV plans to build a new 4-gigawatt factory for high-efficiency TOPCon silicon solar cells in the USA, with production scheduled to start at the end of 2026.

However, the current policy environment is challenging. The rushed nature of current policy, paired with rising costs, could chill demand for U.S.-made modules. The Ultra Low-Carbon Solar Alliance executive director expresses cautious optimism about the potential of domestic crystalline-silicon production, but warns that these factors could pose a threat.

Furthermore, other materials like glass, frames, junction boxes, and encapsulants will pose a further challenge in achieving a compliant, non-FEOC supply chain. A new antidumping and countervailing duty (AD/CVD) investigation launched on July 17 could further restrict the supply of compliant solar cells.

A decision on the AD/CVD case is expected by mid-2026, just as the FEOC sourcing mandates take hold. In the meantime, Chinese companies are exiting the U.S. market, opening opportunities for domestic players to seize more demand.

The GOP's One Big Beautiful Bill has been passed, which could potentially provide a boost to the U.S. solar manufacturing industry. However, the industry must navigate these challenges to ensure a sustainable and competitive future. The shift in the solar manufacturing market could be a turning point for the U.S. solar industry, with the potential for consolidation and growth, but only time will tell.