overview
Solar Panel Manufacturing Revenue
500 1000 1500 2000 2500 3000 3500
0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
projects, reimbursing banks if recipients default. The program has so far secured $10.5 billion in funding for solar energy projects. However, not all projects have succeeded under the program, with Solyndra declaring bankruptcy in 2011 after receiving a loan guarantee for $535.0 million.
The industry has benefi ted from state governments’ Renewable Portfolio Standards.
The American Recovery and Reinvestment Act (ARRA) of 2009 established the 1603 Treasury Program, which provides additional fi nancing for solar power projects. Similar to the ITC, this program provides grants to commercial customers and third-party developers of residential projects equating to 30% of solar panel purchase and installation costs. It has been particularly helpful for small businesses that do not benefi t from the ITC because they are not profi table enough to pay income taxes, and thus do not qualify for tax equity, or they cannot afford professional services to navigate the highly complex and customized transactions. According to the Treasury, this program has awarded $7.8 billion for 97,100 solar projects as of January 2015. Billions in ARRA funds were also used to fi nance clean energy projects and help reduce solar panel manufacturers’ research and develop- ment and facility construction costs over the past fi ve years. In addition to federal government support, the industry has benefi ted from state governments’ Renewable Portfolio Stan-
dards, which have driven growth in downstream solar power generation capacity.
International Competition Despite signifi cant government incentives supporting
growth in solar power domestically and abroad, US solar panel manufacturers have struggled to stay competitive in the global marketplace over the past fi ve years. Ramped-up production of low-cost solar panels in emerging economies, namely China, have resulted in a sharp drop in solar panel prices in recent years. According to an investigation by the US Department of Commerce (Commerce), government subsidies in China have allowed manufacturers in the country to sell solar panels below the cost of production, siphon- ing international demand away from comparatively more expensive US-manufactured solar panels. Illustrative of this trend, in the fi ve years to 2015, industry exports are expected to plunge at an annualized 33.7%, plummeting as a share of industry revenue from more than 90.0% in 2005 to about 20.0% in 2015.
In addition to the loss of international customers, US solar panel manufacturers have faced growing import penetration at home. While net electricity generation from solar power has increased dramatically, imports of low-cost solar panels from China and other emerging economies have satisfi ed most of this demand. According to the ITC, imports from China rose at an annualized rate of 29.2% over the fi ve years to 2014, while imports from Taiwan and Malaysia surged at 44.8% and 70.5% average annual rates, respectively. For this reason, IBISWorld estimates imports’ share of domestic
20 — Energy Manufacturing 2015
$ Millions (Constant 2014)
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