This article is part of Insider's weekly newsletter on sustainability, written by Catherine Boudreau, senior sustainability reporter.
A $6 billion bet on US solar manufacturing that seemed risky less than two months ago suddenly seems prescient.
Congress is on the cusp of enacting a major new industrial policy that includes tens of billions of dollars in tax breaks to US solar, wind, and battery makers in hopes of spurring an American manufacturing renaissance to rival China.
The incentives in the Inflation Reduction Act would boost a plan announced in June by a group of US renewable-energy developers that want to buy enough America-made solar panels to generate up to 7 gigawatts of power per year from 2024, or about one-third of the capacity installed across the country last year. That isn't possible right now because the US has lost ground to China as the country has invested more than $50 billion in solar manufacturing since 2011 to expand production and drive down costs.
"The key to energy independence and energy security in the US is developing local supply chains," said Leo Moreno, the president of AES Clean Energy, which formed the US Solar Buyer Consortium in June with three other companies. "Our initiative with the consortium is a great kick-starter, but manufacturing will only ramp up if there are incentives to make it price-competitive in the short term. That's why the Inflation Reduction Act is critical."
Moreno acknowledged that even with new incentives from the federal government, it would be many years before US plants could make solar-panel parts at scale. Meanwhile, new solar projects are expected to grow at a rapid clip if the Inflation Reduction Act clears Congress — with or without domestic supply chains.
Renewable-energy developers could be adding nearly 50 gigawatts of solar power to the grid each year by 2024, or more than double what was installed last year, according to Princeton University researchers. By 2030, that could reach well over 100 gigawatts a year.
That may put the US on a path to generate 40% of its power from solar by 2035, an aspiration that the Biden administration said would require adding at least 60 gigawatts of solar each year by 2025.
What might limit that kind of explosive growth is a lengthy permitting process for new energy projects and transmission lines, Moreno said.
"These are the main bottlenecks," he said. "It takes several years to go through these processes. We need permitting reform. What we can't have is each county determining their own rules. This is normally a bipartisan issue because we have common interests with the oil companies that also want to permit faster."
The promise of passing separate legislation designed to speed up permitting was key to securing Sen. Joe Manchin's vote for the historic climate bill. It could benefit not only renewable-energy projects but also new fossil-fuel pipelines and other infrastructure.
Manchin said senators would vote on a proposal when they returned from an August recess.
