The US renewables industry is under threat from the Biden administration’s plans to increase domestic manufacturing via protectionist policies. The largest solar farm builder in the US has accused President Biden of doing more to harm the solar industry than Donald Trump.
The Department of Commerce has launched a probe into whether solar parts manufacturers are circumventing tariffs on Chinese imports by shifting the final stages of production to Cambodia, Malaysia, Taiwan, and Vietnam. These four countries account for around three-quarters of US solar product imports.
A ruling is not expected until early next year, but the probe has “chilled” the market for solar. A recent survey suggests 65% of US solar capacity set to come online in 2022 and 2023 is now at a significant risk of cancellation or delay. The offshore wind industry has also complained that protectionist policies to develop domestic industry and build more resilient supply chains threaten new projects.
The harsh economic reality is that renewables were already becoming more expensive, reversing the decades-long slide in prices. Contract prices for renewables jumped 28.5% y/y in North America in Q1. Solar prices rose by 15.8% y/y, while wind prices surged 41.5% y/y.
Assumptions of continuously falling costs for renewable energy cannot be relied upon. The CEO of Rivian has also warned of a looming EV battery shortage, on a scale that would far outweigh the hit to the auto sector suffered from recent chip shortages.
