On August 6^th, 2010, The US Department of Energy (DOE) issued a six-month waiver for the "Buy American" provision of the 2009 American Recovery and Reinvestment Act (ARRA) as it applies to ARRA-funded solar photovoltaic (PV) plants. US DOE Assistant Secretary for Energy Efficiency and Renewable Energy (EERE) Cathy Zoi issued a determination that temporarily changes section 1605 of the ARRA to allow projects to qualify for ARRA funding that use foreign-made PV modules if 100% of the cells were manufactured in the US, and also allows the use of foreign-made ancillary equipment. "EERE and the National Renewable Energy Laboratory have conducted extensive research into the nature of the domestic solar manufacturing industry to determine the best way to apply the Buy American requirements for solar PV projects", notes the statement by Assistant Secretary Zoi. "EERE considered three basic options: (1) follow the current interpretation of the Buy American provisions and require that only the modules be produced in the United States, irrespective of the origin of the cells contained in the modules; (2) apply the interpretation that the modules and cells are distinct manufactured goods and thus both must be produced in the United States; or (3) choose a more inclusive approach that allows a solar installation to comply if either the cells or the module are manufactured in the United States."

The ARRA and economic nationalism

The ARRA was a key piece of early legislation by US President Obama's administration, aimed at mitigating the effects of the recession in part by supporting renewable energy development to create American jobs. The act included funding for solar incentive programs in many states, as well as loan guarantees for renewable energy manufacturing. Section 1605 of the ARRA, the "Buy American" provision, was specifically aimed at assuring that components of renewable energy systems were made in the United States, in order to maximize job creation benefits. However, not all manufacturing benefited from this provision.

Economic nationalism meets 21^st century manufacturing realities

The motivation for such economic nationalism is real. The United States has an enormous trade deficit in goods; more than USD$800 billion each year from 2006-2008. Recently lawmakers in the US Democratic Party have named a suite of legislation aimed at addressing that imbalance the "Make It In America" legislation. This will not be an easy task for a nation that has embraced international trade liberalization for the past thirty years, and if such legislation is not well constructed, it runs the risk of damage to some manufacturing sectors.

In the August 6th, 2010 determination, Assistant Secretary Zoi noted that "determining where final 'manufacturing' occurs in the context of the complex solar production chain is complicated". The reality of 21^st century manufacturing is that many products are shipped to several different nations in different phases of processing, and the original provision disadvantaged American cell manufacturers such as Suniva Inc. (Norcross, Georgia, US), which send their products overseas for processing.

Ultimately this clause had the potential to cause the United States to miss out on the economic benefits of cell production, and intensify a situation where the United States was becoming more and more a destination primarily for the assembly of modules. The United States produced 6% of the world's cells in 2009, but 9% of its modules, with more module processing capability under construction.

2010-08-13 | Courtesy: US DOE | solarserver.com © Heindl Server GmbH