The presidential election results were yet to be tallied on Wednesday when the announcement came: One of China’s largest solar power makers was selling a massive new factory in Texas.
Trina Solar stood to receive nearly $1.8 billion in tax breaks under President Joe Biden’s climate law, as one of several Chinese solar companies setting up factories in the United States to take advantage of the incentives in the Inflation Reduction Act. But newly elected President Donald Trump has vowed to chop up Biden’s climate agenda and called for a tough stance on economic competition from China.
Trina said Trump’s victory had “nothing to do” with the sale of the plant near Dallas to Georgia-based battery manufacturer Freyr.
“Rather, it is based on the company’s long-term growth in the country,” a spokesperson said in a statement.
But analysts said the news illustrated the impact of Trump’s victory on energy markets.
With Republicans on track to control both chambers of Congress in January, the focus on Capitol Hill has shifted to the future of the IRA. At the center of these discussions is the fate of generous tax breaks for companies that make solar panel parts and other clean energy components in the United States.
Lawmakers from both parties have already introduced a handful of bills that could ban China-linked companies from receiving tax benefits under the IRA. Those talks will intensify after Republicans’ victories last week, industry analysts and lobbyists say.
Republicans have also expressed dissatisfaction with Biden’s handling of Chinese-made solar equipment, including a two-year pause on imposing tougher trade barriers against equipment coming to the U.S. via Southeast Asia.
“The Democrats made a mistake when they failed to ban China from qualifying for the IRA tax credits, and the Biden administration’s solar moratorium was a disastrous policy that allowed China to overproduce and to flood the market in an effort to harm and undermine American solar energy producers. the IRA,” said Nick Iacovella, a former aide to Sen. Marco Rubio (R-Fla.) and a senior vice president at the Coalition for a Prosperous America, a trade group representing U.S. manufacturers. “That’s not going to happen under Trump.”
Trina’s sale surprised industry observers and local officials. The mayor of Wilmer, Texas, where the 1.35 million-square-foot plant was recently completed, said she had not heard the news when a reporter contacted her Friday.
“That’s the first I’ve heard of it,” Sheila Petta said. “I talk to Trina all the time, and I haven’t talked to them about this.”
The acquisition was initially announced Wednesday morning by Freyr, a small battery manufacturer that late last year moved its operations from Europe to the United States in part to take advantage of IRA tax breaks. The company, which also has operations in Norway, plans to build a battery factory in Georgia.
Trina confirmed the deal in a press release on Friday. This is expected to be completed this year.
Under the terms of the deal, Trina could ultimately acquire a stake of about 20 percent in the battery maker, appoint representatives to the board and go to market under Trina’s name. Freyr would own and operate the factory, which could produce enough panels to power 500,000 homes annually. According to statements from Trina and Freyr, the factory began production on November 1.
It would also mark Freyr’s first foray into solar energy production.
Trina “will continue to serve the U.S. market with leading smart PV and energy storage solutions, technology and manufacturing expertise,” the company said in a statement.
Freyr CEO Dan Barcelo highlighted to POLITICO that the company would own 100 percent of Trina’s solar production assets and said discussions first began with Trina earlier this year. He said Freyr would control and own all tax benefits.
“This transaction is not really about politics. It’s about economics,” Barcelo said. “We really believe in solar energy and batteries in the longer term and we saw an opportunity to invest in this very strong asset.”
While the IRA contains provisions that prevent Chinese automakers from taking advantage of the law, it contains no such bans on Chinese solar manufacturers, which dominate the global panel market. According to a POLITICO investigation, Trina was one of eight major solar manufacturers with ties to China that were moving forward with new factories in the US.
The Chinese-built factories have sparked intense debate within the solar industry. Some see factories like Trina’s as a step forward in America’s transition to cleaner energy sources. They say they will create American jobs, lower the cost of solar installations and ultimately lead to deeper emissions cuts. They said that even as the US tries to build out its supply chain, it is still in the early stages and most of the technology expertise is now in Asia.
But others argue that the trend is making the U.S. too dependent on China, which continues to dominate the market for crucial subcomponents. They argue that the new facilities stifle efforts to promote a domestic solar energy manufacturing industry.
Barcelo said the transaction allows a U.S. company to receive the law’s tax benefits while also allowing public investment.
“Before, no one could invest in it,” he said. “It was privately owned by an American subsidiary of a Chinese-owned company. Now it’s a publicly traded company that investors have access to, and I think that’s great.”
Barcelo also acknowledged that changes to the U.S. clean energy manufacturing landscape could come under Trump, but reaffirmed the company’s commitment.
“We looked at all that, and in the current environment, we still think that bringing U.S. manufacturing and jobs back to the U.S. is all good,” he said. “It’s good for American energy security [and] it is good for American national security.”
When Republicans come to power next year, they will look for ways to pay for some of the trillions of dollars in tax cuts Trump is proposing, with a fraction of those offsets possibly coming from repealing or modifying parts of the IRA , say lobbyists and industry analysts. .
But provisions in the law that benefit manufacturing are popular with some Republicans, Iacovella said.
Companies have announced plans to build or expand an estimated 555 manufacturing facilities that could benefit from the IRA, totaling at least $153.4 billion in planned investments and promising to create about 160,000 jobs, POLITICO reported last week. The majority of these investments are going to Republican districts, and nearly 100,000 of the jobs could come online during Trump’s next term.
“There is no willingness to withdraw the tax credits that have created the employment, investment and production capacity of the IRA,” Iacovella said.
However, this feeling does not apply to Chinese companies. Many analysts expect Republicans will move to ban Chinese companies from receiving credits below 45x, one of the key manufacturing provisions under the law that has fueled the wave of project announcements.
“It seems like there’s a good chance that something along those lines will eventually be passed,” said Elissa Pierce, a solar energy analyst at the consulting firm Wood Mackenzie. “I have spoken to a number of Chinese manufacturers who have floated the idea of partnering with a US company as a strategy to avoid losing the 45x tax benefits for their US factories, so this could be Trina’s motivation for the sale could be.”
Trina has been at the center of a larger trade battle that has divided the solar industry. US, European and South Korean panel makers have accused Chinese companies of flooding the market with cheap panels and called for higher tariffs on Chinese imports. In 2023, the Commerce Department accused Trina of circumventing US tariffs on Chinese solar imports by sending goods to Southeast Asia for minor processing before being sent to the US.
The calls have sparked protests from some U.S. solar developers, who rely on Chinese panel suppliers and worry that tariffs could drive up the cost of new solar installations.
Trump’s victory adds a new wrinkle to that debate. The former and future president has pledged to raise tariffs by 20 percent on all imports and impose an additional 60 percent levy on Chinese shipments.
The sale of Trina appears intended to avoid potential U.S. restrictions on Chinese companies benefiting from the IRA, Iacovella said.
“The Chinese are, and have been for a long time, very adept at reading the tea leaves and determining U.S. policy,” he said. “I think they saw Trump getting elected and they saw the writing on the wall very clearly.”
