As some renewable energy leaders wonder whether expiring clean energy tax credits are still necessary, domestic solar manufacturers say that conversation overlooks the industry’s biggest challenge: China.
Investors in U.S. manufacturing of solar panels blitzed Capitol Hill on Wednesday to urge lawmakers to extend investment and production tax incentives along with a domestic content bonus they argue is essential to creating demand for American-made solar equipment.
They’re at odds with at least some solar installation companies who are fine with federal incentives going away. There are also divisions between large firms with more capital and small firms looking for a leg up.
“You can make all the product in the United States, but if you don’t have anyone to sell it to, it doesn’t matter,” said Yogin Kothari, chief strategy officer at the Solar Energy Manufacturers for America Coalition, the lobbying group leading the effort.
The domestic content bonus is an “adder” to the investment and production tax credits being phased out following the Republicans’ One Big Beautiful Bill Act. The provision allows for a bonus if companies can prove they used American-made parts in their panels.
It’s unlikely that Republicans would revive tax incentives they just moved to kill. But solar manufacturers say they’re thinking long term, perhaps when Democrats regain power.
Some renewable energy developers, however, argue the industry is mature enough to compete without any subsidies and would benefit from long-term policy certainty than another round of temporary tax credits.
Republicans last year preserved the 45X advanced manufacturing tax credit, which supports domestic production of solar components and other energy technologies.
But companies affiliated with the Solar Energy Manufacturers for America Coalition contend 45X alone is insufficient if developers have no incentive to buy American-made products over lower-cost imports from China and Southeast Asia.
“45X is a production tax credit, and the domestic content bonus makes sure that demand for those products is there,” said Marta Stoepker, a spokesperson for Qcells North America. “It makes sure 45X works and that there’s a strong return on the investment for the manufacturer.”
Qcells, part of South Korea-based Hanwha Solutions, has been investing heavily in U.S. manufacturing in recent years. Its new factory in Cartersville, Georgia, started producing solar cells last week, the company said.
But American factories have a long way to go. In 2024, China produced 93.2 percent of the world’s polysilicon, 96.6 percent of wafers, 92.3 percent of photovoltaic (PV) cells and 86.4 percent of PV modules, according to China Photovoltaic Industry Association (CPIA) data.
Democrats in both the House and Senate have said restoring the tax incentives from the Biden-era Inflation Reduction Act will be a priority when they control Washington again.
“This is not about whether a handful of developers can still turn a profit. It is about whether American families get lower energy bills, whether American manufacturers have the demand they need to grow, and whether businesses have stable rules after Republicans yanked the rug out from under them,” Senate Minority Leader Chuck Schumer (D-N.Y.) said in a statement.
But party members, like companies, are divided. Sen. John Hickenlooper (D-Colo.) called it a “legitimate question” whether the tax credits should return and questioned how much the government should subsidize domestic manufacturing.
“I think we always want to make more things here,” Hickenlooper said. “But that’s a pretty complex algorithm about how much do you subsidize anything to make sure it’s made here.”
Manufacturers vs. installers
The debate is exposing persistent divisions within the solar industry — including between companies that make solar components and those that focus on installing them.
Those divisions have been on display before. Manufacturers have championed tariffs on solar panel imports while installers have opposed trade barriers that could add costs.
The Solar Energy Industries Association, the industry’s largest lobbying organization representing both developers and manufacturers, has stopped short of explicitly calling for an extension of credits.
“SEIA will of course consider any policy, including tax credits, that accelerates solar and storage growth,” the group’s new president, former Minnesota Republican Gov. Tim Pawlenty, said in a statement.
“With energy demand only going up, now isn’t the time to ignore policy opportunities that will help our country build new power generation. That’s just common sense.”
Manufacturers argue that extending the investment and production credits with the domestic content bonus should be the entire industry’s minimum priority.
“I think there’s been a lot of celebration for the manufacturing investments across a wide variety of trade associations that focus on both solar and energy at large,” Stoepker said. “If we want to continue to celebrate those investments and see more investments, there is at the very least going to have to be action on extending the domestic content bonus.”
Kothari said a strong domestic manufacturing base creates jobs and reduces supply chain risks, benefits that ultimately extend to installers as well. At least one solar installer disputed that argument.
“We’ve been lobbying for many years with this thesis: The jobs in solar are in installation, not in manufacturing,” said Michael Hidary, co-founder and chair at Samba Energy, a New York-based commercial and residential solar firm.
Kothari countered that solar manufacturing jobs are durable and directly replace employment lost related to the general offshoring of manufacturing seen in recent decades.
“Domestic solar manufacturing jobs are durable, place-based jobs that are revitalizing communities that have been left behind due to the China shock,” Kothari said
Large vs. small companies
One industry consultant, who spoke on the condition of anonymity, said larger companies are generally more comfortable with the credits expiring because they have greater financial flexibility than smaller firms.
“It’s similar to the oil and gas industry. The big boys don’t mind as much because of the sheer volume of revenue and product they use versus the smaller players with tighter margins,” the consultant said.
Another lobbyist, also granted anonymity to speak candidly, argued most companies would happily accept renewed tax credits but see little reason to spend time and money lobbying for legislation with slim odds of passing.
“Those companies, especially the more politically astute ones who are watching the policy space, are just wondering why anyone is talking about this,” the lobbyist said. “It’s not something that can happen anytime soon. They want permitting reform. There are so many other things to focus on right now.”
If tax credits became a realistic possibility, much of the industry would likely support them. “But it’s almost political malfeasance to take too strong of a position and dig yourself into any position right now,” the lobbyist said.
Pavan Acharya contributed to this report.
