en
Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The solar power industry was one of several electric power industry supplier groups that welcomed President Joe Biden's June 6 decision to invoke a Korean War-era federal law to accelerate domestic production of five key energy technologies. These include: solar; electric transformers and electric grid components; electric heat pumps; insulation; and electrolyzers, fuel cells and platinum group metals.
Invoking the Defense Production Act (DPA), Biden said that these segments were "essential to our national security, a resilient energy sector and the preservation of domestic critical infrastructure critical to national security." The affected supplier groups provided "industrial resources, materials or critical technology items essential to the national defense," the declarations said, adding that domestic suppliers "cannot reasonably be expected to provide the capability for the needed industrial resource, material or critical technology item in a timely manner." Therefore, "purchases, purchase commitments or other action pursuant to section 303 of the (DPA) are the most cost effective, expedient and practical alternative method for meeting the need."
Biden also provided a two-year exemption to solar panel companies from tariffs on imported parts, easing the flow of technology from China and other countries for use in the U.S.
For related information, see June 9, 2022, article - Biden Sees Renewables as Source of Energy Security.
"We applaud President Biden's thoughtful approach to addressing the current crisis of the paralyzed solar supply chain," said Abigail Ross Hopper, the chief executive officer of the Solar Energy Industries Association (SEIA). "The president is providing improved business certainty today, while harnessing the power of the Defense Production Act for tomorrow. Today's actions protect existing solar jobs, will lead to increased employment in the solar industry and foster a robust solar manufacturing base here at home."
"President Biden has invoked the Defense Production Act so that the U.S. can take ownership of its clean energy independence," said Jennifer M. Granholm, secretary of the Department of Energy (DOE), in a June 6 statement. "For too long, the nation's clean energy supply chain has been over-reliant on foreign sources and adversarial nations. With the new DPA authority, DOE can help strengthen domestic solar, heat pump and grid manufacturing industries while fortifying America's economic security and creating good-paying jobs, and lowering utility costs along the way."
Added Deputy Secretary of Defense Kathleen Hicks: "Reducing America's dependence on gas and oil is critical to U.S. national security. In conflicts, fossil-fuel supply lines are especially vulnerable. The actions President Biden announced will help strengthen our supply chains and ensure that the United States is a leader in producing the energy technologies that are essential to our future success. They will also help accelerate DOD's (Department of Defense) transition toward clean energy technologies that can help strengthen military capability, while creating good jobs for American workers."
The DOE said demand for clean energy technologies such as solar panels, heat pumps and electrolyzers for hydrogen "has increased significantly, as the costs of these technologies have plummeted over the last decade. As the world transitions to a clean energy economy, global demand for these essential products and components is set to skyrocket by 400-600% over the next several decades."
It's not yet clear whether under the DPA, the federal government could force General Motors Company (NYSE:GM) (Detroit, Michigan) to make solar panels at its auto-assembly plants. But invoking the DPA gives the federal government a larger role in the planning, influencing and producing some ingredients of the clean energy economy.
The DOE said, "DPA authority, with the necessary funding appropriated by Congress, will allow the federal government to invest in companies that can build clean energy facilities, expand clean energy manufacturing, process clean energy components and install clean energy technologies for consumers."
Various suppliers to the electric power industry had been operating under uncertainty for, in some cases, years due to decisions by the Trump and Biden administrations about whether they were importing goods produced by foreign companies that benefitted from unfair trade practices, or if those goods posed a threat to the stability of the U.S. energy system. The high level of imports was necessary because domestic suppliers were unable to meet burgeoning demand for solar components, specialized electrical equipment and other essential goods.
The solar industry was the most recent group to complain about federal policy affecting their industry. Until the June 6 White House declarations, the Department of Commerce had been investigating whether Chinese-made solar components were being illicitly routed through four Southeast Asian countries--Thailand, Malaysia, Vietnam and Cambodia--to avoid U.S. tariffs and sanctions on China. For more details, see May 18, 2022, article - Commerce Department Probe Shakes Up U.S. Solar Industry.
In the U.S., approximately 342 solar power projects, valued at about $39.5 billion, that were scheduled to begin construction between January 2020 and December 2024 have been cancelled or placed on hold, according to Industrial Info's Global Marketing Intelligence (GMI) platform. It cannot be determined how many of these proposed projects have been cancelled or postponed due to supply-chain bottlenecks caused by the COVID-19 pandemic.
On the other hand, an equally unknowable number of proposed projects have fallen victim to federal policy decisions about imported solar panels and components, which have had the effect of drying up the supply of components and increasing the cost of projects.
The states most affected by these project cancellations or delays are Texas, California, Nevada, North Carolina and Arizona. For more on the slowdown of renewable energy projects, see April 21, 2022, article - Renewable Power Project Completions Slow Sharply in U.S.
Click on the image at right to see a listing of the states with the greatest dollar-value of solar power projects that have been cancelled or delayed.
On the other hand, Industrial Info's GMI database is tracking about 1,426 active solar projects that are scheduled to kick off over that same five-year timeframe. The total investment value (TIV) of those projects is about $281 billion. The states with the highest dollar value of active solar project development are Texas, Nevada, California, Arizona and Ohio.
Click on the image at right for a graph showing the states with greatest dollar value of solar power projects that are actively being developed.
By invoking the DPA, the federal government has greater power to influence, if not order, the production of goods it deems essential to national security. It's not completely clear how the DPA, short of a federal mandate, can address all of the challenges facing the clean energy economy. For more on those challenges, see the May 20, 2022, article - Mid-Year Outlook: Renewable Energy Faces Greater Hurdles.
In 2020, the Trump administration began an investigation into whether electrical steel components manufactured overseas and minimally modified in Canada and Mexico evaded trade rules. The so-called Section 232 investigation, as provided in the Trade Expansion Act of 1962, followed President Donald Trump's executive order, issued May 1, 2020, on "Securing the United States Bulk-Power System."
That investigation focused on whether the U.S. bulk power system could be undermined through imported grain-oriented electrical steel (GOES), which is used in electrical transformers as well as stacked and wound cores for incorporation into transformers, electrical transformers and transformer regulators.
As for electric heat pumps, they are critical to fulfilling the Biden administration's pledge to decarbonize the U.S. economy. Heat pumps provide heating and cooling at a higher efficiency than window air conditioners and gas furnaces.
Similarly, increased production of insulation is critical to achieving decarbonization goals. Energy experts agree that many U.S. homes and businesses could benefit from additional insulation to reduce the loss of heated or cooled air to the outside.
As for electrolyzers, they are critical to making so-called "green hydrogen" from renewable energy.
Hydrocarbon-based energy groups like the American Petroleum Institute (API) or the Independent Petroleum Association of American (IPPA) were not likely to welcome the packaging of the DPA invocation as part of a move to decarbonize the U.S. economy. Indeed, on the same day Biden issued the five DPA proclamations, the API joined other trade groups in sending a letter to the president urging him to implement a new five-year program for federal offshore oil & gas leasing "as soon as possible."
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
Invoking the Defense Production Act (DPA), Biden said that these segments were "essential to our national security, a resilient energy sector and the preservation of domestic critical infrastructure critical to national security." The affected supplier groups provided "industrial resources, materials or critical technology items essential to the national defense," the declarations said, adding that domestic suppliers "cannot reasonably be expected to provide the capability for the needed industrial resource, material or critical technology item in a timely manner." Therefore, "purchases, purchase commitments or other action pursuant to section 303 of the (DPA) are the most cost effective, expedient and practical alternative method for meeting the need."
Biden also provided a two-year exemption to solar panel companies from tariffs on imported parts, easing the flow of technology from China and other countries for use in the U.S.
For related information, see June 9, 2022, article - Biden Sees Renewables as Source of Energy Security.
"We applaud President Biden's thoughtful approach to addressing the current crisis of the paralyzed solar supply chain," said Abigail Ross Hopper, the chief executive officer of the Solar Energy Industries Association (SEIA). "The president is providing improved business certainty today, while harnessing the power of the Defense Production Act for tomorrow. Today's actions protect existing solar jobs, will lead to increased employment in the solar industry and foster a robust solar manufacturing base here at home."
"President Biden has invoked the Defense Production Act so that the U.S. can take ownership of its clean energy independence," said Jennifer M. Granholm, secretary of the Department of Energy (DOE), in a June 6 statement. "For too long, the nation's clean energy supply chain has been over-reliant on foreign sources and adversarial nations. With the new DPA authority, DOE can help strengthen domestic solar, heat pump and grid manufacturing industries while fortifying America's economic security and creating good-paying jobs, and lowering utility costs along the way."
Added Deputy Secretary of Defense Kathleen Hicks: "Reducing America's dependence on gas and oil is critical to U.S. national security. In conflicts, fossil-fuel supply lines are especially vulnerable. The actions President Biden announced will help strengthen our supply chains and ensure that the United States is a leader in producing the energy technologies that are essential to our future success. They will also help accelerate DOD's (Department of Defense) transition toward clean energy technologies that can help strengthen military capability, while creating good jobs for American workers."
The DOE said demand for clean energy technologies such as solar panels, heat pumps and electrolyzers for hydrogen "has increased significantly, as the costs of these technologies have plummeted over the last decade. As the world transitions to a clean energy economy, global demand for these essential products and components is set to skyrocket by 400-600% over the next several decades."
It's not yet clear whether under the DPA, the federal government could force General Motors Company (NYSE:GM) (Detroit, Michigan) to make solar panels at its auto-assembly plants. But invoking the DPA gives the federal government a larger role in the planning, influencing and producing some ingredients of the clean energy economy.
The DOE said, "DPA authority, with the necessary funding appropriated by Congress, will allow the federal government to invest in companies that can build clean energy facilities, expand clean energy manufacturing, process clean energy components and install clean energy technologies for consumers."
Various suppliers to the electric power industry had been operating under uncertainty for, in some cases, years due to decisions by the Trump and Biden administrations about whether they were importing goods produced by foreign companies that benefitted from unfair trade practices, or if those goods posed a threat to the stability of the U.S. energy system. The high level of imports was necessary because domestic suppliers were unable to meet burgeoning demand for solar components, specialized electrical equipment and other essential goods.
The solar industry was the most recent group to complain about federal policy affecting their industry. Until the June 6 White House declarations, the Department of Commerce had been investigating whether Chinese-made solar components were being illicitly routed through four Southeast Asian countries--Thailand, Malaysia, Vietnam and Cambodia--to avoid U.S. tariffs and sanctions on China. For more details, see May 18, 2022, article - Commerce Department Probe Shakes Up U.S. Solar Industry.
In the U.S., approximately 342 solar power projects, valued at about $39.5 billion, that were scheduled to begin construction between January 2020 and December 2024 have been cancelled or placed on hold, according to Industrial Info's Global Marketing Intelligence (GMI) platform. It cannot be determined how many of these proposed projects have been cancelled or postponed due to supply-chain bottlenecks caused by the COVID-19 pandemic.
On the other hand, an equally unknowable number of proposed projects have fallen victim to federal policy decisions about imported solar panels and components, which have had the effect of drying up the supply of components and increasing the cost of projects.
The states most affected by these project cancellations or delays are Texas, California, Nevada, North Carolina and Arizona. For more on the slowdown of renewable energy projects, see April 21, 2022, article - Renewable Power Project Completions Slow Sharply in U.S.
On the other hand, Industrial Info's GMI database is tracking about 1,426 active solar projects that are scheduled to kick off over that same five-year timeframe. The total investment value (TIV) of those projects is about $281 billion. The states with the highest dollar value of active solar project development are Texas, Nevada, California, Arizona and Ohio.
By invoking the DPA, the federal government has greater power to influence, if not order, the production of goods it deems essential to national security. It's not completely clear how the DPA, short of a federal mandate, can address all of the challenges facing the clean energy economy. For more on those challenges, see the May 20, 2022, article - Mid-Year Outlook: Renewable Energy Faces Greater Hurdles.
In 2020, the Trump administration began an investigation into whether electrical steel components manufactured overseas and minimally modified in Canada and Mexico evaded trade rules. The so-called Section 232 investigation, as provided in the Trade Expansion Act of 1962, followed President Donald Trump's executive order, issued May 1, 2020, on "Securing the United States Bulk-Power System."
That investigation focused on whether the U.S. bulk power system could be undermined through imported grain-oriented electrical steel (GOES), which is used in electrical transformers as well as stacked and wound cores for incorporation into transformers, electrical transformers and transformer regulators.
As for electric heat pumps, they are critical to fulfilling the Biden administration's pledge to decarbonize the U.S. economy. Heat pumps provide heating and cooling at a higher efficiency than window air conditioners and gas furnaces.
Similarly, increased production of insulation is critical to achieving decarbonization goals. Energy experts agree that many U.S. homes and businesses could benefit from additional insulation to reduce the loss of heated or cooled air to the outside.
As for electrolyzers, they are critical to making so-called "green hydrogen" from renewable energy.
Hydrocarbon-based energy groups like the American Petroleum Institute (API) or the Independent Petroleum Association of American (IPPA) were not likely to welcome the packaging of the DPA invocation as part of a move to decarbonize the U.S. economy. Indeed, on the same day Biden issued the five DPA proclamations, the API joined other trade groups in sending a letter to the president urging him to implement a new five-year program for federal offshore oil & gas leasing "as soon as possible."
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
