Sometime in the next two months, either Texas or Arizona will be chosen as home to the largest solar panel assembly plant in the United States.
But it won't be an American company celebrating its unveiling. Instead, it will be Suntech, the fastest growing, largest solar panel manufacturer in China.
One of the biggest solar panel assembly plants in the U.S. is SolarWorld, located in Hillsboro, Ore. It pumps out enough cells to fit 1,700 solar panels a day and already construction is underway to quintuple its production in the next year. One problem: SolarWorld is based out of Bonn, Germany.
When President Obama announced his intention to make the U.S. "the world's leading exporter of renewable energy," this wasn't what he had in mind.
Though the U.S. solar market lags far behind Spain, Japan and Germany, the stimulus package signed last February included grants for businesses and utilities that install solar energy systems, along with grants for makers of renewable energy equipment.
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"The U.S. market has truly awoken for solar," says Rhone Resch, president and CEO of the Solar Energy Industries Association. "And now you're seeing a footrace between the U.S., China and Germany to be dominant producers in that industry."
But that race could be largely determined by competing governments. While the U.S. recently extended a 30% tax credit to manufacturers of solar energy, the incentives are miniscule in comparison to those offered elsewhere.
In China, for instance, companies will receive federal aid that includes a government-funded manufacturing facility, low-interest loans, debt financing, cash for research and development, along with housing and training costs for labor. State-owned banks are providing the industry with loans at considerably lower interest rates than available in Europe or the United States.
While Chinese subsidies don't extend across the Pacific for new facilities to be built in the U.S., their efforts at home provide time and resources for the Chinese solar industry to grow their companies without the burden of startup costs. Once established, theyre in strong position to converge on the U.S. market armed with low-interest state-owned bank loans and cash to burn.
By comparison, the U.S. tax credits are "limited both in scope and duration", says Resch. The 30% manufacturing tax credit included in the stimulus bill, for instance, counts against the costs of a new facility. But that funding is not limited to the solar industry. Rather, it seeks to jumpstart several renewable energy industries at once, including wind energy, which will make that money will go fast.
It hasn't always been this way. Until the 1990s, the U.S. was the world's leading solar manufacturer. But today, it produces little more than 5% of solar panels worldwide.
For all the positive talk about solar energy -- and the federal aid that comes with it less than 1%of all the electricity produced in the U.S. comes from solar panels.
The industry is betting that number will skyrocket soon.
Germany-based Schott Solar recently opened a solar panel factory in New Mexico, while Sanyo from Japan announced last October that it would build a silicon ingot and wafer processing plant in Oregon.
Suntech isn't the only Chinese company with eyes on tapping the U.S. market. Yingli Solar, another large manufacturer, has said it has a "preliminary plan" to assemble panels in the U.S.
In recent years, General Electric's focus in renewable energy has centered on wind power. But just last week, GE announced that it will ramp up production of solar power panels by early next year. The company has started to build pilot production lines at its facility in Colorado.
Jeff Immelt, GE's chief executive, said that energy was "clearly one of the big industrial businesses filled with what I would call seismic change, whether it's clean energy or scarcity of resources."
China's ascent into the U.S. market isn't quite so simple, says Dave Gray, vice president for strategic development at GT Solar, a company in Merrimack, N.H. which produces equipment used in solar system production. What's important, he says, is China's position in the supply chain.
Germany, Japan and the U.S. are each producing highly sophisticated equipment and technology to serve the market. China, on the other hand, and Korea, is able to mass produce traditional solar cells due to its low cost in materials. Higher intellectual property, though, is likely to remain in the west.
"As you look forward, we expect the U.S. and Europe to continue to be providers of technology," says Gray. "Further down the supply chain, youll see a big increase in market share in Asia."
But that place in the supply chain could easily shift -- especially if Chinese companies grab a large stake in the U.S. market.
According to one executive with a company based in the solar industry who asked not to be quoted, the U.S. market is importing from only six Chinese companies, but there are countless more with ambitions -- and resources -- to compete in the U.S.
"The gun has gone off and we are all racing down the track at the same time," says SEIA's Resch. "There's finally recognition that the U.S. market is going to be a large market. And the Chinese are making an investment in that marketplace."