Every community has an economic development fund to help bring jobs or investments into the community. Given every community has an economic development fund, we as taxpayers must believe it is a good thing to do or why would we fund it? The economic development does a SWOT – strengths, weaknesses, opportunities and threats analysis and hopefully by focusing on what is existing and what has existed with strengthen the existing economy in the area. After focusing on the local, the economic development looks at the state and federal government to see what types of businesses those administrations are focused on. Once in a while, the economic development department will examine what types of grants (government money) is available and will any of those companies relocate to the community? Sometimes it is the incentives that moves the CEOs to make a decision positively for the community.

In an article by Ana Swanson and Jim Tankersley of the New York Times News Service, one such area of development is the manufacturer or production of solar panels. When you think about the advantages of the US, you often think about the technology-based companies and industries that seemingly could take the technology and translate into manufacturing plants. In the case of the solar panels, the biggest manufacturer of solar panels is China. The government of China has been pushing the solar manufacturing plants with a combination of government research grants and development, committing to the solar panels on government lands and helping push down prices and using export markets to dominate this space. This has resulted in China as the greatest exporter of solar panels around the world.

The folks in Washington wanted to change that focus and they established higher tax breaks for companies to work in manufacturer in America. Since the introduction of the climate law, more than $8 billion in new investments in solar has been announced. If you believe it is more than normal. you correct, according to data from Mass Institute of Technology and the Rhodium group.

The biggest plants to announce production are Suniva will make solar cells in Norcross, Georgia; REC Silicon will start a polysilicon plant in Moes Lake, Washington; and Maxeon Solar Technologies will build a plant in New Mexico to build solar cells and modules at a cost of $1 billion. In each of those announcements, the executives noted the driving factor was the Climate Law.

In 2018, US employment in solar panels at 38,000 workers; by 2020 more than 1/5 of the jobs were gone. With the new incentives from the Inflation Reduction Act, more jobs are expected.

The Inflation Reduction Act directly helps the solar industry as well as credits for customers to install solar and if the panels are made in the USA a further credit of up to 10% is added.

Scott Lincicome who studies trade policy at the Cato Institute, a libertarian think tank, says you can always subsidize and protect your way into have factories but at what cost?

Linking to dividend paying stocks, the biggest user of the solar panels will be the utility industry and they want to provide electricity at low cost and a healthy margin to make profits and pay dividends. Due to the investments the Chinese government has made, the costs of solar panels continues to fall every year and it is in the utility interest to have power from solar panels. Whether those panels come from the US or China maybe a different manner. As an investor you can own the utility, but as you do your homework you may want to own companies that are supplying to the utilities and if government grants are helping to maintain profits, so much the better.

There are more questions than answers, till the next time – to raising questions.