How much of America’s clean energy infrastructure is built in the US?

Renewable energy sources, including wind, hydropower, solar, biomass and geothermal, contributed 20% of US electricity in 2021. This proportion is rapidly expanding; over 60% of new electricity generation capacity in 2022 will be renewable.

A clean energy industry needs specific equipment to work. Solar energy needs solar panels with photovoltaic (PV) cells designed to convert energy from the sun. Wind energy needs turbines. Renewable energy often relies on batteries to store energy from intermittent energy sources such as wind and solar, which only generate electricity about 40% of the time.

The recently passed Inflation Reduction Act attempts to encourage US-based manufacturing of this kind of clean infrastructure. The bill includes at least $15 billion in clean manufacturing tax credits meant to increase domestic manufacturing capacity for solar panels, wind turbines, and lithium batteries.

How many solar panels does the US produce domestically?

Solar farms and other utility-scale facilities generated 111 million megawatt hours (Mwh) in 2021, enough electricity to power more than 10 million homes. Most solar panels are imported, with three-quarters of the imports originating from Chinese subsidiaries manufacturing in Southeast Asia^[1]. Despite heavy import tariffs^[2], the US has not kept pace with global solar manufacturing growth and lost 80% of its global market share from 2009 to 2019. In 2004, the US accounted for about 13% of global solar panel shipments but fell to just 0.5% in 2017.

Recently, imports haven’t kept up with the domestic demand for solar panels. In response, President Joe Biden declared an electricity generation emergency in June 2022. The executive action eliminated import taxes on solar cells and panels from Cambodia, Malaysia, Thailand, and Vietnam. Since 2012, the US applied import tariffs to solar parts to bolster domestic solar manufacturing. Tariffs instituted in 2018 were as high as 30%.

How does domestic wind manufacturing compare to solar?

In the last five years, an average of 4,000 wind turbines have been installed annually in the US. While US wind manufacturing capacity is greater than solar, America still relies on imports for wind turbine production.

There are several parts to a wind turbine: the nacelle, which goes behind the wind blades and protects the generator, the tower, which elevates the blades, and the blades and hubs themselves.

The US produces several wind turbine components domestically, including over 85% of nacelles, 75 to 90% of towers, and 50 to 70% of the blades and hubs. These parts are produced at 500 wind-related manufacturing facilities, part of a wind industry that employs over 100,000 people.

However, the Office of Energy Efficiency and Renewable Energy notes that these statistics overstate US self-reliance because it does not account for other specialized equipment and does not consider the raw materials such as steel that are imported and then used in domestic assembly.

Where do lithium batteries come from?

In 2021, the US installed about 10.6 GWh of energy storage into the electric grid. Most energy storage is in the form of pumped hydroelectric, where water is pumped up to a reservoir in times of electricity surplus and then released through a turbine when it's needed later.

Larger lithium-ion batteries are used primarily in electric vehicles. But they’re also used with renewable energy sources such as wind turbines or solar panels. The batteries serve a similar purpose as pumped hydroelectric storage, meaning they store the energy generated during windy or sunny periods and release it later when needed.

In 2020, China manufactured 76% of global lithium-ion battery capacity, while the US produced 8%.

How could the Inflation Reduction Act impact domestic manufacturing of renewable infrastructure?

The Inflation Reduction Act will provide at least $15 billion in tax credits to companies that invest in renewable energy-related properties. These include properties designed to manufacture fuel cells, microturbines, or electric vehicle batteries. The tax credit rate spans from 10% to 30% depending on the type of energy source on the property. To get the full tax credit, companies need to meet fair wage standards and apprenticeship requirements, otherwise the credits are slashed by 80%. A new tax credit specific to manufacturing is also included in the bill. The act also renews an expired solar production tax credit that compensates firms for each kWh generated.

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