Asian Solar Invasion Brings Light to US Energy

Suntech America, Yingli Green Energy Americas and UpSolar are all Chinese companies with U.S. headquarters San Francisco. This strategic location places them close to American customers and qualifies them for state and federal incentives. These Chinese manufacturers are all building or looking for manufacturing space in the U.S.  Suntech and Yingli were recently award $2.1 million and 4.5 million, respectively, through a $2.3 billion federal stimulus program for clean energy manufacturers, which stipulated that they must manufacture solar panels Stateside.States like California and Arizona are allocating substantial funds from the American Recovery and Reinvestment Act to income, sales and manufacturing tax credits for clean energy producers located in their borders.  One has to wonder how much of that money is reinvested into the American economy, through jobs for U.S. workers or procurement of raw materials.

Suntech is the first Chinese solar company to announce its plans to manufacture panels in the U.S. The company is preparing to open its first factory, a 30-megawatt facility in Goodyear, Arizona, which has the potential to expand to 120 megawatts and serve over 7,500 homes. According to Suntech America VP, Steve Chadima, Suntch was drawn to build a U.S. factory by the American Recovery and Reinvestment’s “Buy America” clause, which stipulates that goods used in federally funded projects should come from U.S. manufacturers when available and when the cost of U.S. products compared to foreign products isn’t prohibitive. Because of its U.S. presence, Suntech has been eligible to bid on contracts that would otherwise have been off limits to a Chinese solar manufacturer.

However, Chadima also warned that domestic content restrictions can be taken too far, artificially inflating costs, which are eventually transferred to consumers through higher pricing. While labor is much cheaper in China, placing products closer to customers and implementing just-in-time inventory management will also bring down costs and make them comparable to Chinese costs of producing solar panels. The fact that Suntech also has access to new suppliers, contracts and customers makes up for the fact that production is a bit more expensive.

Solar-panel manufacturer Kyocera Solar, with operations in Scottsdale, Arizona, also recently announced plans to open its first plant in San Diego, for similar reasons.  Yingli Green Energy is in negotiations for a 100-megawatt factory between Austin and Phoenix. And UpSolar is also looking for a joint-venture partner based in the U.S. Seems that these foreign firms are feeling out the U.S. manufacturing sector to determine if production could be more profitable due to location advantages and financial incentives. If it pans out, attracting foreign direct investment has the potential to benefit U.S. workers, state governments and consumers.