Solar panel production has become more challenging

The solar industry in the United States is facing a significant shift with the introduction of the Foreign Entities of Concern (FEOC) rules. According to Michael Parr, executive director of the Ultra Low-Carbon Solar Alliance, these rules present a challenge due to their complexity, making compliance difficult.

Parr believes that a compliant, non-FEOC supply chain is "reasonably manageable," but notes that other materials like glass, frames, junction boxes, and encapsulants will pose a further challenge. He is skeptical that new U.S. cell factories will be built in the near term due to the cost, complexity, and slow ramp-up time involved.

One of the key drivers for solar cell manufacturers was the domestic content bonus, but with tax incentives going away earlier than expected, that incentive is also disappearing. This leaves manufacturers scrambling to source non-FEOC cells starting next year, and possibly wafers by 2027.

The reinitiation of the antidumping and countervailing duty investigation on July 17, filed by a group of U.S.-based solar cell and module manufacturers, signals increased trade restrictions. These restrictions are expected to limit the supply of certified solar cells and modules on the U.S. market before the FEOC provisions take effect in 2026. This investigation, along with existing tariffs, contributes to rising prices and shrinking inventories among U.S. manufacturers.

In response to these challenges, some companies are expanding their U.S. manufacturing capacity. Qcells is investing in 3.3 GW of ingot and wafer capacity in Georgia, although there are concerns about delays in ramping up U.S. manufacturing on schedule. Corning, on the other hand, has acquired JA Solar's 2 GW module factory in Arizona and plans to establish a $1.5 billion crystalline-silicon wafer plant in Michigan, potentially adding 6 GW of capacity to domestic capacity. However, apart from Corning and Qcells, there are no other mentioned players expanding their U.S. manufacturing capacity in the crystalline-silicon sector.

The FEOC provisions require solar module manufacturers to source an increasing share of components from non-FEOC countries to qualify for federal tax incentives. By 2026, manufacturers must source at least 50% of their module content from non-FEOC countries. This percentage increases to 85% by 2029. A decision on a new antidumping and countervailing duty case is expected by mid-2026, just as the FEOC sourcing mandates take hold.

The GOP's One Big Beautiful Bill has been passed, which could further impact the solar industry. The bill includes provisions that could potentially ease some of the challenges facing the industry, but it remains to be seen how these provisions will be implemented.

Parr is cautiously optimistic about the potential of domestic crystalline-silicon production but warns that the rushed nature of current policy paired with rising costs could chill demand for U.S.-made modules. Chinese companies are exiting the U.S. market, opening opportunities for domestic players to seize more demand. However, the success of these domestic players will depend on their ability to navigate the complexities of the FEOC provisions and the rapidly evolving solar market.

In conclusion, the solar industry in the United States is facing a period of significant change. The FEOC provisions, trade restrictions, and the passing of the GOP's One Big Beautiful Bill all contribute to a complex and challenging landscape. However, opportunities also exist for domestic players who can navigate these challenges and seize the opportunities presented by the exit of Chinese companies from the U.S. market.