In recent years, investor confidence in the solar industry has continued to decline, with U.S. solar stocks experiencing significant crashes. After Donald Trump’s 2024 election victory, concerns arose about the new administration potentially weakening support for solar energy and other forms of low-carbon energy, exacerbating a wave of sell-offs.
However, amidst this pessimism, a pivotal moment in the solar industry has emerged that sharp investors may not want to overlook.
In the third quarter of 2024, the United States resumed silicon solar cell production for the first time since 2019. The Solar Energy Industries Association (SEIA) has dubbed this a “critical” milestone for domestic solar manufacturing.
According to the Q4 2024 U.S. Solar Market Insight Report, jointly released by SEIA and Wood Mackenzie, the third quarter saw an addition of 9.3 gigawatts (GW) of new solar module manufacturing capacity—a record high. Additionally, five new or expanded factories were launched across three U.S. states, boosting domestic solar module manufacturing capacity to nearly 40 GW—almost enough to meet the country’s current solar demand.
Late last month, the U.S. proposed imposing high tariffs on solar imports from four Southeast Asian countries (Cambodia, Malaysia, Thailand, and Vietnam), with Vietnamese imports facing rates as high as 271%. This move could significantly impact Chinese companies, given the role of Southeast Asian countries as solar supply chain hubs.
The U.S. has been striving to enhance the resilience of its manufacturing supply chains. One of the most notable policies in this effort has been the Inflation Reduction Act (IRA), which incentivizes renewable energy manufacturing within the U.S. Domestic solar manufacturing will be integral to reducing reliance on foreign imports. However, the IRA could face cuts or potential repeal under a new Trump administration.
SEIA President and CEO Abigail Ross Hopper stated: “Federal solar policies and increased private investment are strengthening U.S. energy security while creating thousands of jobs within local communities. The U.S. is aiming to capture market share from foreign competitors and ensure the jobs and economic growth brought by the solar industry benefit American communities.”
Meanwhile, in February 2023, China proposed restricting the export of critical technologies for the production of advanced photovoltaic silicon wafers, which account for 97% of the global supply. Should this ban be implemented, Chinese firms would need local government approval for exporting the relevant technologies, further complicating global solar supply chains.
Due to heightened policy uncertainty, many U.S. solar companies have suffered dramatic stock declines.
For example:
Solar-related ETFs have also struggled. The Invesco Solar ETF (NYSEARCA:TAN) is down 33.3% year-to-date, while the iShares Global Clean Energy ETF (NASDAQ:ICLN), the world’s largest green energy ETF, has fallen by 21.8%. The industry’s worst performer, SunPower, declared bankruptcy in August 2024, further underscoring the crisis in the sector.
However, Arizona-based First Solar (NASDAQ:FSLR) has emerged as one of the few clean energy companies to buck the trend. Its stock is up 14.8% year-to-date. First Solar’s outperformance stems from its unique manufacturing process, which doesn’t rely on Chinese crystalline silicon supply chains. With China potentially enforcing restrictions on the export of photovoltaic manufacturing technologies, First Solar’s proprietary technology gives it a notable competitive advantage.
This highlights the unfolding challenges and opportunities within the solar industry, as geopolitical tensions and policy shifts redefine the dynamics of global renewable energy markets.
