The U.S. solar industry has seen growth in recent years. Tax credits and targeted research development programs by the government has encouraged solar manufacturers to investment in facilities and expansions. State level mandates for utilities obtaining a certain percentage of electricity from renewable sources have also increased demand for solar products. Mostly, photovoltaic (PV) solar modules technology is used to convert sunlight into electricity. PV manufacturers in the U.S. compete with Chinese and Taiwanese manufacturers who dominate this market. American companies compete in a highly volatile, dynamic, and competitive market.
According to National Solar Jobs Census report by the Solar Foundation, the solar industry in the U.S. employed more than 173,000 people in 2014. There has been significant growth in jobs in this sector. Employment in the solar industry has increased by nearly 86 percent in the last four years. Research by Solar Energy Industries Association found that workers have been employed in over 8000 businesses across the country. The growth of the solar industry led to investment of more than $17.8 billion into the U.S. economy in 2014.
It was also found that the solar industry installed 32 percent of all new electricity generating capacity in the U.S, which is only second to natural gas. There are now over 20,000 MW of cumulative solar electricity capacity in the U.S. which is enough to power over four million average American homes.
The Solar Foundation has categorized the solar industry into five sectors which are installation, manufacturing, sales & distribution, project development, and other. The installation sector is composed of companies that primarily install photovoltaic, solar water heating and other solar energy technologies. More than half of installation companies have 10 or fewer employees.
According to recent research by Solar Energy Industries Association and GTM Research, it was found that installation growth is strong in certain market segments in several states.
Major players in this sector have announced expansion plans for the future. Verongo Solar announced plans to expand in new markets on both coasts. SolarCity opened 20 operation centers in seven states which are expected to create 600 jobs.
Solar equipment manufacturing includes a variety of products made for small as well as major projects. Manufacturers produce a range of products which include solar heaters to photovoltaic modules. PV manufacturing has been dominated by Chinese and Taiwanese manufacturers who produce comparatively cheaper products than U.S.-based companies. According to research conducted by Congressional Research Service on U.S. Solar Photovoltaic Manufacturing, China alone accounted for 70 percent of solar module production in 2013. Overcapacity has led to a precipitous decline in module prices, which have fallen 65-70% since 2009, causing significant hardship for many American manufacturers. This has caused U.S.-based manufacturers to change their business strategies or, in some cases, close facilities.
The ongoing U.S. – China solar trade conflict also created problems for some manufacturers. In 2014, U.S.-based poly silicon manufacturer Hemlock Semiconductor was forced to close its Clarksville, Tennessee production facility largely due to retaliatory restraints on U.S. poly silicon exports to China. However, expansions are taking place. Some companies that have announced expansion plans are Monolith Solar, Mission Solar Energy, Suniva, Solar City, Solar World, REC Silicon, and Wacker Chemie, who altogether have created close to 1800 jobs in different parts of the country.
The Sales & Distribution sector is composed of wholesale and retail companies who distribute manufactured product. They sell U.S. made goods as well as foreign goods. Sales & Distribution companies have been expanding as well. The government’s SunShot Incubator program has helped companies with innovative ideas to reduce purchase costs for customers. Some companies that have planned expansions through partnerships and acquisitions are Sungevity Inc., NRG Energy, and EnergySage. Sungevity Inc.’s new facility in Kansas, Missouri, alone, is set to create 595 jobs.
The Project Development Sector comprises of companies working on large-scale solar projects. This sector requires a wider range of workers including civil engineers, power plant operators and land surveyors. Decline in installation costs is seen as a factor of growth in this sector. Solar projects establish electricity generation facilities which sell bulk power to utilities or directly to consumers as part of the electricity grid system.
The Other sector comprises of different organizations ranging from research and development firms to NGO’s, government agencies, and academic research centers. Further, 5.2 percent of workers in the solar industry are involved in other solar activities.
As U.S. companies suffered from cheaper solar products from Chinese competitors, the U.S. government imposed significant dumping and countervailing duties on imports of solar products from China in 2012. The duties may make American companies more competitive domestically, but the overall costs in solar products may rise. If the Investment Tax Credit (ITC) is not extended, then the credits given to the solar companies will drop from 30 percent to 10 percent after 2016. Presently however, the solar industry has seen growth in jobs as well as expansions. It is estimated electricity production from the solar industry will double in the next two years. The solar industry is anticipated to have short-term growth in expansions as well as jobs.