By Nichola Groom
May 8 (Reuters) - Top solar companies, banks and insurers have stopped doing business with at least a half dozen recently built U.S. panel factories because of uncertainty over whether their ties to China could disqualify them from clean-energy subsidies, according to industry executives and documents reviewed by Reuters.
The shift, driven by new Trump administration policies, jeopardizes more than a third of U.S. solar capacity in factories initially built by Chinese firms. Details
of how the policy uncertainty is driving installers and insurers away from U.S. solar factories with China ties have not been previously reported.
The emerging effects dovetail with U.S. President Donald Trump’s broader efforts to block Chinese companies from the U.S. market and to slash government support for green energy. However, the policy could backfire by imperiling growth in U.S. manufacturing jobs and power generation at a time of rising utility bills and soaring electricity demand from data centers serving the artificial intelligence industry, industry experts say.
Sunrun, the largest U.S. residential solar installer, is among the companies now avoiding Chinese suppliers.
"It's holding up financings of desperately needed solar and storage projects," said Keith Martin, an attorney at Norton Rose Fulbright who advises on renewable energy tax deals.
The potentially far-reaching effects on U.S. manufacturing underscore the difficulty of decoupling from China’s global dominance of renewable energy and green technologies, driven largely by Beijing’s own heavy subsidies for Chinese firms.
The global reach of China’s industrial policy creates a dilemma for U.S. regulators who want to block Chinese firms without imperiling U.S. solar manufacturers that depend on Chinese equipment and technology to produce competitive and affordable products.
Without robust growth in domestic solar manufacturing, the United States has few options for expanding renewable power beyond importing panels made by Chinese companies, which will lead to higher prices, U.S. executives say.
"This is undoubtedly going to continue to increase the cost of power in the United States," said Aaron Halimi, chief executive of Renewable Properties, a San Francisco developer of small-scale utility projects that has shifted most of its sourcing to Tempe, Arizona-based First Solar to avoid suppliers with China links.
The fresh uncertainty in U.S. solar investments stems from provisions in the Trump-backed "One Big Beautiful Bill" that the Republican-controlled Congress passed in 2025.
The legislation slashed Biden-era clean-energy subsidies and restricted certain foreign countries, including China, from securing those that remained. The U.S. Treasury Department has yet to provide full guidance on how the law will be implemented, and a department spokesperson declined to give a timeline for when that guidance would be published.
Trump wants to rapidly expand the U.S. power grid to fuel American data centers. But power-industry experts say solar installations, combined with battery storage that clicks on when the sun isn’t shining, are the quickest way to expand electricity generation because they’re easier to build than gas, coal or nuclear plants.
Trump has called renewable energy unreliable and expensive and enacted policies promoting expansion of fossil fuel power sources.
The White House did not respond to a request for comment.
A spokesperson for China’s embassy in Washington criticized the U.S. restrictions as discriminatory and said Beijing would defend its companies' interests.
CHINESE SOLAR FIRMS COMPLY - WITH A CATCH
China controls about 80% of global solar equipment manufacturing, according to Wood Mackenzie. Its companies, including LONGi, Trina, and others, were among the quickest to build and operate U.S. factories when former President Joe Biden's 2022 climate-change law created a tax credit for clean-energy factories.
Since then, solar equipment makers have announced nearly $43 billion in investments supporting a projected 48,000 jobs, according to the Solar Energy Industries Association.
Domestic manufacturing is now aligned with U.S. demand for solar panels, eliminating the need for panel imports. But that could change if a significant portion of U.S. factories caught up in the regulatory uncertainty are unable to compete.
The Trump-backed legislation restricts Chinese companies to 25% ownership stakes in plants seeking federal subsidies, imposes sourcing requirements, and prohibits "effective control" by Chinese firms. Companies say the subsidies, which include tax credits for solar manufacturing and installation, are crucial to remaining competitive.
Chinese companies have sought to comply by selling off factory stakes or otherwise restructuring. But most have preserved financial links to their U.S. plants, sometimes in the form of profit-sharing or supply deals, according to a Reuters review of corporate disclosures.
Industry officials have questions about whether those remaining links disqualify the factories from U.S. clean energy manufacturing credits. Absent guidance from the Treasury Department, installers including industry behemoth Sunrun are shunning these factories, while banks and insurers are withholding financing and coverage.
PARING BACK APPROVED SUPPLIERS
Sunrun in January circulated a pared-down list of approved solar-panel suppliers to installation partners, according to a document seen by Reuters.
The list included only non-Chinese manufacturers such as Qcells, REC, Silfab and Elin. Previously, it had included Canadian Solar, JA Solar, Jinko, LONGi and Trina - all of which are China-linked.
"We have taken a conservative stance and do not procure equipment from manufacturers that would raise compliance concerns," Sunrun Deputy Chief Financial Officer Patrick Jobin said in a statement to Reuters.
Palmetto, a North Carolina-based company that sells rooftop solar panels, is also steering clear of China-linked producers despite their attempts at compliance, general manager Sean Hayes said.
Meanwhile, banks including Morgan Stanley, JPMorgan and Goldman Sachs have scaled back tax-equity financing for some solar projects due to concerns that future Treasury interpretations could retroactively invalidate tax credits, according to three people familiar with the deals who spoke on condition of anonymity.
The banks declined to comment.
Insurers have taken a harder line, refusing to insure companies against the risk they will be barred from clean-energy tax credits, according to Antony Joyce, a tax-insurance specialist at broker Marsh.
"The companies that are best positioned right now are certainly the ones that didn't have clear ownership ties to a country of concern," said Peter Henderson, a principal at accounting firm Baker Tilly, who said Treasury's expected guidance will be crucial.
The Solar Energy Manufacturers for America Coalition, a trade group representing non-Chinese companies with U.S. factories, including First Solar and Hanwha's Qcells, has urged the Treasury Department to take a tough stance.
'CLEAREST WAY TO COMPLY'
The core issue driving firms away is that Chinese companies are maintaining ties with their factories instead of making a clean break. Factories that were originally built and operated by China-linked producers account for at least 25 gigawatts of the nation's about 66 GW of operating solar module manufacturing capacity.
"Very few Chinese manufacturers are actually decoupling themselves from their U.S. factories entirely," said Elissa Pierce, an analyst at Wood Mackenzie.
China’s JinkoSolar, which operates a factory in Florida, and the Chinese parent company of Boviet Solar, which produces panels in North Carolina, have said they are looking for outside investors.
Illuminate USA, a joint venture between China’s LONGi and Chicago-based Invenergy, reduced the Chinese firm's ownership stake in an Ohio plant built in 2024 to below 25% and renegotiated its intellectual property agreement with LONGi, according to an Invenergy source.
But Invenergy is unsure if the plant, which employs around 1,700 workers, will survive. Illuminate and LONGi did not comment.
In March comments to the Internal Revenue Service urging clear guidance, the company said: "The continued operation of Illuminate USA and other U.S. manufacturers remains at risk."
(Reporting by Nichola Groom; editing by Richard Valdmanis and David Gaffen)
