Chinese Investment Puts Federal Subsidies For New Mexico Solar Plant In Jeopardy

Maxeon, a solar energy company initially based in Singapore, planned to build a significant solar manufacturing plant in Albuquerque, New Mexico. This ambitious billion-dollar project was intended to enhance national energy security and was contingent on obtaining federal funds from the U.S. Department of Energy’s Title 17 Clean Energy Financing Program. Bill Mulligan, Maxeon’s American CEO, highlighted the strategic importance of this plant for the United States’ renewable energy landscape.

However, financial challenges led Maxeon to a critical juncture. With its stock plummeting, the company secured a substantial investment from TCL Zhonghuan, a Chinese green energy firm. This investment, amounting to nearly $200 million, gave TCL Zhonghuan a controlling stake in Maxeon. Despite this shift in ownership, Maxeon has reiterated its commitment to the New Mexico plant and continues to seek the federal loan necessary for the project’s realization.

The Energy Department received $400 billion from the Inflation Reduction Act, a substantial sum aimed at bolstering the U.S. green energy sector to compete with China. President Joe Biden stressed that this funding was crucial for the U.S. to lead in the economic competition of the 21st century. However, the Chinese investment in Maxeon raises concerns about the allocation of federal funds to a now foreign-controlled entity.

Maxeon’s decision to establish the New Mexico plant was also influenced by tax incentives provided under the Inflation Reduction Act. These incentives allow solar manufacturers to deduct a significant portion of their investment costs or receive federal funds based on their production volume. Mulligan acknowledged the Act’s pivotal role in advancing America’s transition to renewable energy, aligning well with Maxeon’s objectives.

While foreign companies can access these subsidies, the Treasury Department evaluates projects for national security implications. Jigar Shah, who leads the Energy Department’s Loan Programs Office, has openly invited foreign firms to apply for loans. However, the Chinese control over Maxeon complicates efforts to reduce dependency on foreign green energy sources.

An Energy Department representative clarified that Maxeon’s loan application remains in process and declined to disclose specific details, citing confidentiality. This situation highlights the delicate balance between encouraging domestic green energy projects and managing foreign investments, especially from China.

Maxeon’s challenges are not unique. The Biden administration’s moratorium on tariffs targeting Chinese solar panels has led to a significant influx of inexpensive Chinese solar modules, undermining the U.S. market share. Despite the moratorium’s goal to give American companies time to develop, the U.S. only managed to add one gigawatt of solar manufacturing capacity compared to China’s 40 gigawatts.

The ongoing debate over Maxeon’s federal funding emphasizes the complexities of striving for energy independence while navigating the intricate dynamics of global renewable energy investments.