U.S. Senator Debbie Stabenow (D-MI) and U.S. Congressman Dave Camp(R-MI) announced the Solar Manufacturing Jobs Creation Act last week.

The bi-partisan legislation will offer a tax credit to support solar manufacturing in the U.S. These tax incentives are designed to encourage U.S. companies to produce solar equipment, create green jobs and invest in a domestic clean energy economy.Senator Stabenow joined fellow Senators Robert Menendez (D-NJ) andMichael Bennet (D-CO) to introduce the legislation in the Senate. Inaddition, Congressman Camp will be introducing related legislation inthe House later this month. The Solar Manufacturing bill will provideadditional tax credits for solar equipment manufacturers that will help the U.S. compete in the global clean energy race with countries such as China, South Korea and Taiwan.

Currently, the United States is falling behind in the global marketfor solar technology, as other countries provide incentives to investin solar manufacturing. According to the Solar Energy IndustryAssociation, the U.S. produced more than 40 percent of the world’ssolar photovoltaic (PV) cells a decade ago. In 2008, the U.S. producedonly 5 percent of the world’s solar cells. As a result, U.S.Congressman Gabrielle Giffords (D-AZ) authored the Solar Technology Roadmap Act, which is designed to support domestic research and development (R&D) and manufacturing.

Currently, a 30 percent federal Solar Investment Tax Credit (SITC)exists for the investment in or installation of solar power technology,which was extended in the Recovery Act.Under the Solar Manufacturing Jobs Creation Act, equipment andfacilities used to manufacture solar power technology would be includedin the property list for the SITC. These technologies include solar cells,silicon, evacuated tubes, and flat-plate solar collectors. It has beenestimated that the tax credits in this legislation will generate315,000 new domestic green jobs.

Although China produces over 30 percent of the world’s solar photovoltaics,installed PV in China only reached a total of 140 (megawatts) MW in2008, according to the state-owned newspaper, China Daily, accountingfor less than 1 percent of the global market share. Today, however,solar PV is starting to increase its share in China’s energy portfoliodue to favorable government support, decreasing solar power generationcosts, and rising demand in response to emerging regulations on greenhouse gas emissions.In fact, China recently revised its 2020 target for solar powercapacity from 1.8 gigawatts (GW) to 20 GW, according to a recent reportby Beijing’s state-own China Daily.

In order to promote the Chinese solar market, the Government hasenacted several policies to support the expanding industry, including aregional feed-in tariff (FIT) and national subsidies for solar PV installations, as similar policies in Germany and Spain facilitated their world leadership with respect to deployment in recent years.

These policies have had an impact in East China’s Jiangsu province,which is home to more than 160 Chinese PV manufacturers, includingSuntech and Trina Solar. In June, the Jiangsu government approved afeed-in tariff program. As a result, the price offered for each kWh ofelectricity from PV solar farms, rooftop projects and buildingintegrated photovoltaics projects built this year is US $0.31, $0.54and $0.63, which nearly covers project costs, according to RenewableEnergy World. Several leading PV manufacturers such as Suntech andTrina Solar have pursued the opportunity and developed 80-MW and 30-MWrooftop PV facilities, respectively. However, state solar incentivesand expanding renewable energy portfolio standards are attractingforeign companies to manufacture solar products in the U.S as well. Forinstance, Suntech, who exhibited its solar products at the recent International Greenbuild Expo in Phoenix, Arizona recently announced it will be build a solar panel plant in this area in response to the state’s new solar tax credit.

The Beijing-based China Electricity Power Research Institution hasstated that China would fail to meet 6.4 percent of the country’selectricity demand in 2010 and 10.7 percent in 2020. Thus, solar PV isconsidered a vital source to cover the missing resources.

But as the U.S. remains slow to act in setting a national renewable energy portfolio standard compared to other major countries or a cap-and-trade system to stimulate sufficient demand for solar and other forms of clean energyacross the country, many domestic solar cell manufacturers recognizethe increasing demand in China. For example, Evergreen Solar recentlyannounced it will be outsourcing its solar panel assembly manufacturingline in Devens, Massachusetts to China. This statement was made yearsafter it received $58 million in state aid and being lauded byMassachusetts Gov. Deval Patrick as a symbol of the state’s economicfuture. The announcement came as the company announced that it lost$167 million in the first nine months of this year. Approximately halfof the 577 full-time and 230 contract employees at the Devens factoryinvolved in panel assembly are expected to be laid off. Thus, thisissue only strengthens the need for detailed national and statelegislation without loopholes allowing companies to capitalize onincentives without making a long-term investment.

In order to deal with similar situations and to institute a balancedU.S.-China partnership, U.S. President Barack Obama and ChinesePresident Hu Jintao announced a comprehensive clean energy agreementbetween the two countries during their joint talks this week. The twoPresidents revealed several new programs including a new U.S.-ChinaRenewable Energy Partnership. Under the Partnership, the two countrieswill develop roadmaps for large-scale renewable energy deployment inboth countries. The Partnership will also provide technical andanalytical resources to states and regions in both countries to supportrenewable energy installationsand will facilitate state-to-state and region-to-region collaborationsto share experience and best practices. A new Advanced Grid WorkingGroup will bridge U.S. and Chinese policymakers, regulators, industryleaders, and civil society to initiate strategies for gridmodernization in both countries. A new U.S.-China Renewable EnergyForum will be held annually as well.

In addition, the two presidents announced the creation of a newU.S.-China Clean Energy Research Center. The Center will facilitatecollaborative research and development in clean energy technologies byteams of scientists and engineers from the U.S. and China. Furthermore,this Center will be supported by public and private funding of at least$150 million over five years and be split equally between the twocountries. Initial research priorities will be focused on buildingenergy efficiency, clean coal including carbon capture and storage, andclean vehicle technology using advanced batteries and biofuels. 

Similarly, a U.S.-China Energy Cooperation Program (ECP) will beestablished. This particular program will capitalize on private sectorresources for project development work in China across a wide spectrumof clean energy projects, to the advancement of both nations. More than22 companies are already listed as founding members of the program. TheECP will include collaborative projects on renewable energy, smartgrid, clean transportation, green building, clean coal, combined heatand power, and energy efficiency. 

Overall, the new U.S.-China partnership coupled with the SolarManufacturing Jobs Creation Act will enhance America’s competitivenessin the clean energy race- not to become simply be a consumer of renewables to meet emissions standards, but a producer as well.

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