(Bloomberg) — President Joe Biden’s plan to kick-start domestic solar-panel manufacturing depends for now on a federal fund with less than a half billion dollars that’s already being tapped to pay for products including military drones and baby formula.
That funding—even if fully dedicated to solar production—would only be enough to open a few factories capable of cranking out a fraction of the panels the US currently imports each year, according to manufacturers.
“Even if they spent all of that on solar panels, it’s a pittance,” said Nick Iacovella, a spokesman for the pro-manufacturing Coalition for a Prosperous America.
The federal funding may not even be available for the president’s new solar initiatives. That same pot also may be needed to address other supply shortages and national-security needs.
Major elements of the program—including its funding—are still taking shape, following Biden’s announcement Monday. The White House is expected to seek additional funding from Congress. The Department of Energy is working with other agencies and industry leaders to identify the most urgent needs and the right financial tools to address them, an administration official said, speaking on condition of anonymity to discuss private details. That includes working with Congress to ensure there are necessary resources to advance the directives.
The president’s actions will enable American companies to advance clean energy projects while the administration works with Congress, industry leaders and others to make the critical investments needed to rapidly expand domestic clean energy manufacturing, the official said.
Biden invoked sweeping powers under the Cold War-era Defense Production Act to propel US manufacturing of an array of critical energy technologies, including solar panels, fuel cells and heat pumps. He paired the declarations with a two-year waiver of new tariffs on solar cells and modules from four Southeast Asian nations, part of a bid to neutralize a trade dispute that has chilled renewable projects across the US.
Supporters of the president’s plan stress that invoking the act does more than just unleash funding. It also hands the US Energy Department new tools and authorities to invest in manufacturing.
The measures “can be used to drive federal procurement, establish project labor agreements, community benefit agreements and master supply agreements, develop loan programs, create partnerships and establish other programs that address the emergency need for clean energy,” said Dan Whitten, a spokesman for the Solar Energy Industries Association.
For now, the government appears to have the authority to spend up to $545 million this fiscal year on Defense Production Act purchases. However there’s no more than $434 million available in the fund right now, according to a government spending database.
Biden’s plan blindsided domestic manufacturers, which immediately rebuked the initiative. Samantha Sloan, vice president of policy at First Solar Inc., said the measures fell well short of the kind of industrial policy that’s needed to truly marshal domestic manufacturing. “We have yet to see this administration put action behind word in supporting US solar manufacturing specifically,” she said. “That causes some heartburn on where the priorities do lie.”
A new manufacturing plant with the capacity to churn out 1.4 gigawatts of modules each year could cost around $170 million, according to industry estimates and the coalition. That would hardly compete with the 24 gigawatts the US imported last year, Iacovella said.
And the figures pale in comparison to the potential cost of new factories to produce polysilicon, a key ingredient in panels. A new plant producing 20,000 tons of polysilicon per year would easily cost $1 billion, according to BloombergNEF.
Bank of America described Biden’s manufacturing move “more as rhetoric,” in a research note Tuesday. “Feedback from various parties across the sector suggests it’s not a silver bullet.”
US solar advocates are still pushing for an array of help from Congress, including expanded tax credits for renewable power projects and measures to encourage clean energy manufacturing. “We view the Defense Production Act as a down payment on manufacturing, planting seeds for long-term growth,” said John Smirnow, general counsel of the Solar Energy Industries Association.