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US solar installations stall due to trade struggle with China

Installations of new solar panels in the US have dropped by nearly a quarter this year following a tightening of rules preventing the import of goods from China made under forced labour.

According to the Solar Energy Industries Association (SEIA), the Uyghur Forced Labor Prevention Act (UFLPA), which was signed into law by President Biden in December last year, is reducing solar installation forecasts in the near term and delaying the impact of the US’s Inflation Reduction Act (IRA).

The flagship IRA, which was passed by the US senate over the summer, makes the largest investment in carbon emissions reduction in the country’s history.

The bill allocates $369bn (£302bn) to reducing greenhouse gas emissions and investing in renewable energy sources as part of efforts to reduce America’s planet-heating emissions by about 40 per cent by 2030, compared with 2005 levels.

In the third quarter of 2022, the US added 4.6 gigawatts (GW) of new solar capacity, a 17 per cent decrease from the same quarter last year.

More than 1,000 shipments of solar energy imports worth hundreds of millions of dollars have piled up at US ports since the introduction of UFLPA in June.

“America’s clean energy economy hindered by its own trade actions,” said SEIA president and CEO Abigail Ross Hopper.

“The solar and storage industry is acting decisively to build an ethical supply chain, but unnecessary supply bottlenecks and trade restrictions are preventing manufacturers from getting the equipment they need to invest in US facilities. In the aftermath of the Inflation Reduction Act, we cannot afford to waste time tinkering with trade laws as the climate threat looms.”

As a result of supply constraints, the utility-scale, commercial and community solar markets all experienced quarter-over-quarter declines. The residential solar segment is less directly impacted by existing trade issues and saw 1.57GW of new installations, marking a 43 per cent increase over Q3 2021.

“Installations this year were significantly depressed due to supply chain constraints” said Michelle Davis, principal analyst and lead author of the report. “It has proven more difficult and time-consuming to provide the proper evidence to comply with the UFLPA, further delaying equipment delivery to the US.”

The UFLPA is forecast to continue limiting the deployment of new solar infrastructure throughout next year. The report forecasts that the utility-scale solar market will add 10.3GW of new capacity in 2022, representing a 40 per cent drop from 2021 volumes.

By 2024, renewables growth led by the IRA is expected to begin in earnest, with annual solar growth estimated to average 21 per cent between 2023-2027.

Despite the supply chain woes, solar accounted for 45 per cent of all new electric generating capacity additions in the third quarter of this year, the most of any electricity source.

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