In the wake of tariffs that President Donald Trump slapped on imported solar panels in 2018, South Korea's Hanwha Q CELLS Co. Ltd. built a giant factory in Dalton, Ga., a city with a long manufacturing history and the distinction as the "Carpet Capital of the World."
"The U.S. is our largest market, and we had long wanted to manufacture in the United States," said Scott Moskowitz, the company's director of strategy and market intelligence. "After the tariffs were introduced, we invested $200 million and built the 300,000-square-foot factory that employs more than 600 people."
Hanwha Q CELLS, a subsidiary of the industrial conglomerate Hanwha Corp., is not alone. Its Georgia factory — the biggest of its kind in the Americas or Europe — is part of a manufacturing boom that has increased U.S. solar panel-making capacity by about 140% since 2017, BloombergNEF analyst Tara Narayanan said.
Despite the surge, however, the country is a long way from producing enough solar panels to meet domestic demand. Manufacturing capacity stands at 4,800 MW, about a third of which comes from the Hanwha Q CELLS plant, according to BloombergNEF. That is far short of the more than 13,000 MW that consultancy Wood Mackenzie Power & Renewables expects to be installed in the U.S. in 2019.
"Imports will continue to sustain the market," Narayanan wrote in an email.
Still, Hanwha Q CELLS has been a welcome addition in Dalton, which is in Whitfield County near the Georgia-Tennessee border. Local elected officials gave the company an incentive package valued at nearly $16 million, including free land and a 15-year discount on property taxes, according to the Dalton-Whitfield Joint Development Authority.
"I think bringing the manufacturing facility to the U.S. ... is a sign of the future. I mean, we all know that there are limited supplies of gas and oil. We also know that we're going to have to depend more on renewable energy sources," Whitfield County Commission Chairman Lynn Laughter said in a 2018 Hanwha Q CELLS promotional video. "I'm hoping having Hanwha Q CELLS here in our community will educate the younger generation coming up about renewable energy sources, clean energy. The solar panel is going to be a huge topic of conversation for years to come."
But the company and others that opened factories recently in the U.S. could soon face headwinds: Tariffs on foreign-made panels are scheduled to unwind at the same time incentives for project developers decline in value. Additionally, a decision by the Trump administration in June to exempt from import tariffs bifacial panels, which can absorb sunlight on their front and back, is seen by some as counterproductive to efforts to encourage more U.S. factories.
"[Many] of the plans announced in early 2018 were projects that were already in motion, or under discussion before the tariffs were announced. These factories are particularly susceptible to the tariff expiry, they were already the losers of the U.S. Trade Representative's decision to grant a tariff exemption to bifacial panels," Narayanan said. "Those manufacturers that have contracted their output in advance will be shielded from further tariff changes for now, but will not be able to sustain the advantage over time."
Hanwha Q CELLS is betting high U.S. solar demand — the country's project pipeline stands at a record 37,900 MW — and the size of its factory in Georgia will help sustain its U.S. operations.
"Building a factory that large helps you optimize and get economies of scale to ensure that you can produce competitively," Moskowitz said. "We're committed to the U.S. market."
