US Solar Policy Landscape Offers 'Good News' Amid OBBBA and Section 232 Tariffs

## A Shift in US Solar Policy Landscape The US solar policy landscape has been a subject of uncertainty and concern in recent times, particularly with the introduction of the One Big, Beautiful Bill Act (OBBBA) and Section 232 tariffs on polysilicon imports. However, according to Hasan Nazar, head of policy at Crux, there is a lot of good news in the current policy landscape. Nazar argues that the OBBBA did not kill the 45X advanced manufacturing credit, which is available to US-based manufacturers of energy goods, including solar PV components. The production and supply-side credits for solar remained intact, and the new conditions applied to qualify for these credits relate to demonstrating that the supply chains are not tied to largely Chinese-controlled entities. ## Policy Landscape Successes The current US policy landscape is an important validation for the supply side and production side approach, which has an emerging bipartisan consensus. Nazar describes the increase in module manufacturing capacity in the US as a massive success, with a 700% increase in about three years. This has resulted in the US covering its module capacity with domestic production, which is a remarkable strategic-industrial turnaround. The 45X credit is also available for producers of upstream components, such as cells, ingots, and wafers. However, the US has been less effective in building up manufacturing capacity of these parts of the supply chain. Nazar is optimistic about upstream production, saying that a policy environment that encourages downstream manufacturing creates more demand upstream. ## Effective Market Mechanisms The policies also include effective market mechanisms that provide flexibility for both US-based buyers and manufacturers that are looking to onshore more of their supply chains, and their trading partners across the industry. Transferability has been a key lever to make tax credit monetisation more efficient and liquid, leading to more investment, more jobs, and more energy deployment. Nazar expresses similar confidence about the updates to the Section 232 rules. While the introduction of tariffs on foreign polysilicon will make overseas procurement more expensive in the short-term, this could encourage buyers to look for a domestic supply of polysilicon, at a time when companies such as Corning and Wacker have expanded polysilicon manufacturing capacity in the US. ## 'Friend-Shoring' Manufacturing Capacity from Allied Nations Nazar notes that foreign companies active in the US, such as Wacker, will have a crucial role to play in shifting the US' solar supply chain. The goal of these policies is not simply to weaken Chinese influence on the global supply chain, but to encourage both the US and its allies to influence the market. Allied investment is the fastest way to close the domestic capacity gap this decade, and we're seeing clear evidence of this. The policy guardrail that is the prohibited foreign entity (PFE) regime is about adversary country control, not foreign ownership in general. Ultimately, the combination of strong support for US manufacturing and products from allied countries, and the fact that parts of the Biden-era policy landscape remain in place, means that there may well be space for the US to build a resilient supply chain independent from China, and in a manner that would not require a sudden and highly expensive shift towards greater upstream manufacturing on US soil.