President Takes Emergency Action to Boost Solar Generation
President Biden yesterday signed two executive orders intended to relieve supply chain issues surrounding solar cells and increase solar energy generation in the United States. The first order invokes the Defense Production Act (DPA) to give the Department of Energy (DoE) authority to accelerate domestic production of photovoltaic cells and other related equipment. The second order temporarily lifts tariffs on solar equipment imported from four countries – Cambodia, Malaysia, Thailand and Vietnam.
“The efforts to onshore the production of modules will hopefully lead to more price stability, while also creating economic development opportunities for rural America,” said Milton Geiger, NRTC’s director, Smart Grid Energy Solutions. “Uncertainty creates costs, so removing the threat of retroactive tariffs will reduce the cost of future solar projects, big and small.”
One effect of the domestic production order will be to give DoE “full power of federal procurement to work spurring additional domestic solar manufacturing capacity,” according to a White House fact sheet. The department will seek “master supply agreements,” which consolidate two or more contracts into harmonized agreements, with domestic companies. It will also give domestic companies “super preferences” on solar equipment sales to the government.
“These federal procurement measures can stimulate demand for up to a gigawatt of domestically produced solar modules in the near term, and up to 10 gigawatts over the next decade from U.S. government demand alone,” the White House claims. In addition, the federal government will encourage joint projects with state, municipal and local governments “increasing the potential market impact over the next decade to as much as over 100 gigawatts.”
The order lifting the tariff on Southeast Asian countries is a temporary measure meant “to create a 24-month bridge for certain solar imports while reinforcing the integrity of our trade laws and processes,” the White House said. Importation of solar modules during that period will be duty-free.
The White House in statements concurrent with the orders cited the war between Russian and Ukraine and severe weather events as causes of solar equipment shortages. Two agencies – the Federal Energy Regulatory Commission and the North American Electric Reliability Corp. – warn of potential “electricity reliability concerns” this summer.
“Solar energy is among the fastest growing sources of new electric generation in the United States. Utilities and grid operators are increasingly relying on new solar installations to ensure that there are sufficient resources on the grid to maintain reliable service,” President Biden said in the importation order, declaring the shortage of solar cells a national security emergency. “The unavailability of solar cells and modules … threatens the availability of sufficient electricity generation capacity to serve expected customer demand.”
Even with the current shortages, NRTC is ready to work with members to begin solar projects. “Although ongoing supply chain issues have increased costs for modules and other solar equipment, NRTC with our partner ENGIE can offer competitively priced solar and energy storage projects for our members,” Geiger said.