Mon, Apr 03, 2023 page11

• US entices Chinese solar firms

  CLIMATE BILL: Eyeing US$374 billion in climate spending stipulated in the Inflation Reduction Act, the firms seek to set up shop in the US despite its rivalry with Beijing

  • Bloomberg
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  China’s leading renewable energy firms are joining the rush to open factories in the US after Washington passed a landmark climate bill that supports local clean energy manufacturing.

  Some of China’s top solar panel makers are involved in setting up US plants, while the Chinese company that makes the world’s largest wind turbine, Ming Yang Smart Energy Group Ltd (明陽智慧能源), is exploring whether to establish production and research facilities there.

  The building boom underscores how the US has rebuilt its credentials as a “cleantech” manufacturing hub after it last year passed the Inflation Reduction Act (IRA).

  

  A parking lot at a Longi Green Energy Technology Co factory in Xian, China, is covered with solar panels on March 2.

  Photo: Bloomberg

  The bill, a signature achievement for US President Joe Biden’s administration, includes US$374 billion in new climate-related spending.

  That has drawn the attention of China’s world-leading renewables industry, despite deepening tensions between the two governments.

  “The US is working on low-carbon, green development, has plans and has introduced many good policies and mechanisms — it is very attractive,” Ming Yang chairman Zhang Chuanwei (張傳衛) said in an interview last week at the Boao Forum for Asia, an event dubbed as China’s version of the World Economic Forum in Davos, Switzerland.

  The company has not announced any US plans yet, but three of its clean energy peers are in the process of building their presence there: JA Solar Technology Co (晶澳太陽能) in Arizona, Longi Green Energy Technology Co (隆基綠能) in Ohio and Jinko Solar Co (晶科能源) in Florida.

  Chinese solar firms dominate global panel production, but have been stymied from shipping to the US because of a series of trade disputes and allegations of human rights abuses, which China has denied. Some of the firms have moved to expand exports from plants in Southeast Asia to navigate curbs on US trade.

  Biden’s climate policy is designed to boost domestic cleantech industries and reduce US reliance on imports. The bill extends to encouraging foreign firms to set up shop in the US, sparking a wave of new factory announcements since it was passed in August last year.

  However, Chinese companies have been reticent about publicizing their investments.

  That is due to Washington’s increasingly adversarial approach to Chinese firms, said Li Junfeng (李俊峰), managing director of the China Energy Research Society, a Chinese government-affiliated think tank.

  He cited the scrutiny faced by battery maker Contemporary Amperex Technology Co (CATL, 寧德時代新能源) over joint projects with Ford Motor Co, as well as the furor linked to national security concerns that has erupted over social media platform TikTok.

  That has left Chinese companies fearing that they would not get the same treatment as their South Korean or European peers, Li said.

  “It isn’t enough for the US to just introduce the IRA bill. It needs to give a clear expectation that companies will be treated equally,” he said. “If one day it says that solar panels are also national security issues, we won’t be able to talk reasonably anymore.”

  Cleantech is assuming a strategic importance as it becomes the world’s biggest source of new energy. China’s advantage means that governments elsewhere are trying to chip away at its dominance by carving out their own supply chains.

  However, Beijing is fighting its corner, albeit in ways that could undercut the industry’s pleas for fair treatment from US authorities.

  The Chinese government has launched its own probe of the CATL-Ford deal, to ensure the battery giant’s core technology is not handed over to the US automaker. It is also considering an export ban that would help maintain its substantial lead in solar manufacturing.

  Li said the proposed solar ban is only a draft, and has met objections from some companies.

  China has spent more than 20 years building the world’s best solar industry, but it needs to balance local manufacturing capabilities with maintaining a robust global supply chain, he said.

  China is scared of being cut off from key technologies, but other countries have the same fear, Li said.

  One answer is to “encourage Chinese companies to build factories abroad,” he added.

  Trade barriers in countries such as the US and India are raising the cost of clean energy, Trina Solar Co (天合光能) chairman Gao Jifan (高紀凡) told a panel at the Boao Forum.

  “We should build a mechanism that makes everybody feel safe, instead of building barriers,” he said.

  Clean energy equipment should be manufactured where the cost is lowest, and it should be traded around the globe without any obstacles, Gao said.

  Trina is also willing to build manufacturing capacity in the US, as well as Europe given the supportive policies there, he said.
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