What’s Wrong With the U.S. Solar Industry?

Welcome to today’s Morning Brief, looking at the fate of the U.S. solar industry, U.S. President Joe Biden’s meeting with Jordan’s King Abdullah II, and more news worth following from around the world.

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Earlier this week, the chances of a future powered by renewable energy got a boost.

On Wednesday, the International Energy Agency announced that renewable capacity is on track for record growth in 2022, with 320 gigawatts of clean energy expected to come online this year—an amount roughly equivalent to Germany’s annual energy usage.

That such growth is happening amid supply chain snags and increasing raw material prices adds only more cause for optimism.

The sunny forecast is largely driven by increases in solar capacity in China, the European Union, and Latin America. It’s a different story in the United States, where a succession of hurdles is preventing the U.S. solar energy industry from catching up with the rest of the world.

The most prominent obstacle involves a Commerce Department investigation opened after a U.S. company alleged that Chinese firms were dumping cheap panels into the U.S. market via companies in Cambodia, Malaysia, Thailand, and Vietnam.

That single probe is expected to delay imports from those key suppliers, which accounted for 99 percent of all solar panel capacity imported into the United States in 2021, as U.S. buyers stay away for fears of having to pay still unknown amounts in retroactive tariffs.

A solar industry trade group has cut its forecast for new installations by 46 percent this year as a result.

U.S. Energy Secretary Jennifer Granholm told a Senate committee last week she was “deeply concerned about being able to get to the goal of 100 percent clean electricity by 2035” if the issue was not resolved quickly.

But the U.S. solar industry’s outlook wasn’t too bright even before that roadblock, with rising commodity prices, particularly in silicon, adding to the cost of components that have recently been on a downward trend.

The failure of U.S. President Joe Biden’s Build Back Better bill has also added to doubt over the future of the industry, with solar tax credits—due to be extended in the bill—now facing an uncertain future.

Geopolitics also plays a role, with U.S. solar companies blocked from importing parts from some Chinese firms after those based in Xinjiang were hit with U.S. sanctions over concerns that their products were made using forced labor—a topic FP columnist Elisabeth Braw has covered in the past.

But sourcing parts domestically has its own problems. “For many years, the U.S. has applied a stick approach towards solar manufacturing,” Marcelo Ortega, a solar analyst at energy research firm Rystad, told Foreign Policy.

“I don’t think there’s been the incentivization of domestic manufacturing. It’s just been penalizing those relying on overseas supplies,” he said.

With a decision from the Commerce investigation not expected until August at the earliest, the immediate beneficiaries of the delay are fossil fuel producers, with plants that burn oil, gas, and coal now likely to stay online longer—and produce more planet-warming emissions in the process.

The state utility in Indiana has already decided to postpone the phaseout of major coal plants from until 2025 based on “uncertainty and delays” in solar.

America’s loss could be Europe’s gain as the EU seeks to wean itself off Russian gas and boost its own renewable energy capacity.

A draft EU policy set for approval on May 18 calls for a dramatic increase in solar capacity, including a “swift, massive deployment” of rooftop solar panels and mandatory solar installations on all new and renovated buildings.

“Even before this whole event, supply had dried up in the United States,” Ortega said. “There’s a possibility that if that continues, all the imports that were coming in here might go straight into Europe.”

Biden meets King Abdullah. Biden meets with King Abdullah II of Jordan today at the White House, just 10 months after the monarch’s previous visit to Washington.

As well as the signal it sends to other U.S. partners in the Middle East that have not yet received a White House invitation, the meeting is expected to include discussions over rising tensions in Jerusalem, especially regarding the Al-Aqsa Mosque, for which Jordan serves as custodian.

Biden concludes the U.S.-Association of Southeast Asian Nations summit with his fellow leaders later in the day.

Sweden’s NATO choice. Swedish lawmakers will receive a government report on the country’s national security posture today as the country considers following Finland with a NATO application.

Defense Minister Peter Hultqvist hinted at some of the benefits—without stating his own position—in a radio interview on Tuesday, noting that “Of course, it gives a completely different strategic depth, it also gives a very strong security policy signal … the effect is that we become stronger together. This is something that can happen if we choose to join NATO.” Sweden is expected to make its intentions clear on whether to join the alliance by May 15.

Lebanon will elect a new parliament on Sunday as voters cast ballots for the first time since the country’s financial crisis began in earnest and mass protests erupted in 2019.

As FP’s Anchal Vohra wrote on Thursday, the vote is unlikely to lead to major changes in a country where “few believe the new parties that emerged from the uprising … will succeed in unseating the ruling class that has clung to power since the end of Lebanon’s civil war in 1990.”

North Korea has abruptly shifted its position on COVID-19 in the country, admitting that the virus was now spreading “at an explosive rate,” whereas before it had officially reported zero cases. The World Health Organization said it is ready to help the country, which has entered into a national lockdown, but had yet to receive a report on the scale of the outbreak.

North Korea is one of two countries, along with Eritrea, that have refused vaccine donations.

Sri Lanka has been plunged into chaos: The prime minister has resigned, the economy is in free fall, and protests continue to roil the country. What comes next? Join FP editor in chief Ravi Agrawal today at 12 p.m. ET for an in-depth conversation with Atul Keshap, a former U.S. ambassador to Sri Lanka under the Obama administration, and now the president of the U.S.-India Business Council. Subscribers can register here.