Courtesy Dominion Energy

by James C. Sherlock

We have had multiple discussions, good ones, on the issues surrounding solar farms in Virginia.

Jim Bacon wrote an excellent column about it in February of 2021 titled “The Political Economy of Solar Farms.” It was good then and prescient as of yesterday.

He wrote another one two days earlier.  From that piece:

With the enactment of the (Virginia Clean Economy Act) VCEA, Freitas wrote in the press release, Virginia is experiencing extensive land leasing and acquisition by solar developers. More than 180 solar projects accounting for 140 million solar panels are in various stages of approval or construction. Full implementation of the ACT would consume 490 square miles of Virginia’s forests and farmland, an area twenty times the size of Manhattan.

Thanks to President Biden’s new political/industrial policy, those solar farms just got cheaper. And Chinese solar stocks just got more expensive.

Both of which were made to happen because the President removed the tariffs on Chinese solar panels. Readers rationally can be for that action or against it. But the left has settled on the Defense Production Act as a favored service animal.

So, the President, in addition to removing the tariffs, invoked that act as a national emergency response to mandate additional domestic production of solar panels.

Let’s try to pin down the nature of the emergency and the unintended consequences.

Tariffs. President Trump famously put additional Chinese tariffs in place as a punishment for hiding the emergence of COVID.

Consultants like KPMG made great amounts of money advising foreign firms how to avoid the tariffs. Other consultants made fortunes lobbying politicians to eliminate them. Virginia’s deep-pocketed greens, including newly-green Dominion Energy, lobbied the General Assembly to preserve the VCEA.

President Biden wanted the tariffs eliminated. Fair enough. Eliminate them.

National defense emergency? But he declared a national defense emergency to activate the Defense Production Act both to accompany and to justify eliminating those tariffs.

Seriously? What could go wrong?

Can consequences be both predictable and unintended? They can in BidenWorld. The Presidents’s thinking: “We’ll fail to deal with them later.”

National industrial policy is hard. Did anyone tell Mr. Biden that eliminating tariffs on Chinese solar panels will at best disadvantage domestic producers in that market? Did he invoke the Defense Production Act to replace those soon-to-be-broken businesses?

Or are they to be the subjects of new subsidies? You can never tell in the national industrial policy arena. Perhaps a five-year plan with production quotas will work.

The President did not indicate which American industries are supposed to convert their production lines to build solar panels. I guess we will find out. It will be very interesting to find out what they are ordered to stop producing.

That supply chain thing again.

Or maybe they can hire skilled labor from the existing solar producers that go out of business.

Nobody said national industrial policy is easy. If it were, the Soviets could have done it. Oh, that’s right.

Grid reliability is hard. From The Wall Street Journal:

Boosting domestic production of solar panels, heat pumps, building insulation, fuel cells and power transformers can reduce “risks to our power grid,” the White House says.

The North American Electric Reliability Corporation recently warned that most of the U.S. could experience power outages this summer. Blame green-energy subsidies that have forced the shutdown of fossil-fuel and nuclear generators that provide baseload power 24/7. Relying on electric heat pumps and solar panels will make the grid less reliable.

A political emergency requires action.

President Biden did not declare that his green base and his party’s biggest donors love solar. Including those who have invested heavily in solar farm acreage. Like Dominion Energy.

The next stop in the emergency list — wind turbines. Another big investment of Dominion’s, or I should say of Dominion rate payers.

GE is the biggest American producer. It’s stock is below its 50- and 200-day moving averages. Danish company Vestas, the world’s leading wind turbine maker, is losing money. The stock of Siemens, the other large western producer, is at half of what it was in January.

The other four of the world’s top seven wind turbine producers are Chinese. Perhaps Mr. Biden can cut their tariffs. That should help. And maybe Ford can convert its production lines to wind turbine production. With laid off Danish engineers and production workers on special visas.

Even the State Department has to lean into a national emergency.

But they have broken out the champagne at Dominion. Someone else will have to worry about grid reliability.

Because the fall elections constitute a national emergency for the President.

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37 responses to “The Defense Production Act as a Political Tool to Boost Solar Farms”

  1. Timothy Watson Avatar
    Timothy Watson

    An important part that keeps getting left out of these stories is that the tariffs were originally put in place because China is using Uighur slave labor to make the solar panels. When you use slave labor, it allows you to sell products at a very low price, so the Commerce Department placed a tariff on the imported solar panels.

    In response, the Chinese started transshipping and labeling the panels as products of Vietnam, Malaysia, etc. An American solar panel wholesaler noticed this and alerted the Commerce Department who launched an investigation which Joe Biden just killed.

    1. LarrytheG Avatar

      The other part of the story:

      President Joe Biden signed the Uyghur Forced Labor Prevention Act (the Act) into law on Dec. 23, 2021. The Act requires the U.S. government to rapidly develop a new enforcement strategy to strengthen the prohibition of the importation of goods made through forced labor into the United States.Jan 24, 2022

    2. Dick Hall-Sizemore Avatar
      Dick Hall-Sizemore

      Biden did not kill the Commerce Dept. investigation. The tariffs are being lifted for two years while the investigation proceeds.

      1. James C. Sherlock Avatar
        James C. Sherlock

        He did not have to, Dick. Those “investigations” directed by legislation from both parties are a way for Congress to say it is doing something when it is not. Action delayed is action complete in the Congress. That means it goes into someone else’s in box.

    3. Dick Hall-Sizemore Avatar
      Dick Hall-Sizemore

      Trump’s tariff on solar panels had nothing to do with the Uighur situation. They were part of his American First campaign.

      And the idea that Trump cared anything about the Uighurs is laughable. According to John Bolton, one of Trump’s national security advisers, Trump told Xi Jinping in a private meeting that building concentration camps for the Uigurs was “exactly the right thing to do.”

    4. James C. Sherlock Avatar
      James C. Sherlock

      Thanks, I failed to mention the Uighur issue and it is important.

  2. Tom Dolan Avatar
    Tom Dolan

    His emergency powers should keep the current fleet of nuclear reactors from being shuttered!

    1. LarrytheG Avatar

      this is the problem in BR these days.

      we can’t seem to deal completely with facts and truth.

      Conservatives used to disagree – on the merits – made their case but factually.

      Nowdays, a lot of it is not the facts and some of it is outright misrepresentation of the facts.

  3. Our country is run by idiots. Worse, it’s run by idiots who think they’re geniuses.

    1. Nancy Naive Avatar
      Nancy Naive


    2. Turbocohen Avatar

      a potted plant got 81M votes… Riiiight

  4. Eric the half a troll Avatar
    Eric the half a troll

    Too free market for the Conservatives, eh… 🤷‍♂️

    1. WayneS Avatar

      There is nothing free-market about the Defense Production Act.

      1. Eric the half a troll Avatar
        Eric the half a troll

        Sounds like it was used to help the industry that might be damaged by removing the planned tariffs. You know those planned tariffs he stopped were 250% tariffs, right?… real “free-market” stuff there…

        1. WayneS Avatar

          Shouldn’t countries that make themselves more competitive by using what amounts to slave labor, and/or vastly underpaying and abusing their employees, and/or using child-labor, be punished in the market?

          What kind of Liberal are you, anyway?


        2. WayneS Avatar

          Shouldn’t countries that make themselves more competitive by abusing the environment while utilizing what amounts to slave labor, and/or vastly underpaying and abusing their employees, and/or using child-labor, be punished in the market?

          What kind of Liberal are you, anyway?


    2. Turbocohen Avatar

      DPA is cronyism

      1. Eric the half a troll Avatar
        Eric the half a troll

        250% trade tariffs… the Conservative free market…

  5. WayneS Avatar

    The Presidents’s thinking: “We’ll fail to deal with them later.”

    That’s a good one!

  6. Dick Hall-Sizemore Avatar
    Dick Hall-Sizemore

    The President’s order did not say anything about some companies having to convert their assembly lines to producing solar panels. Why not wait until that actually happens before raking him over the coals for something he has not done?

    The administration’s announcement is vague. It says the purpose of the invoking the Defense Production Act is to “accelerate domestic production of clean energy technologies, including solar panel parts.” I am not sure how invoking the act will accomplish that. Perhaps, it will allow waiver of some rules and regulations. Why is this a bad thing?

    Let’s see. You are opposed to increasing the availability of solar panels. You are opposed to expanding wind generation of electricity. It seems, then, that you are opposed generally to the expansion of alternative sources of energy.

    1. James C. Sherlock Avatar
      James C. Sherlock

      It is the Defense Production Act, Dick. Consider the name. From the Congressional Research Service in 2020:

      “The Defense Production Act (DPA) of 1950 (P.L. 81-774, 50 U.S.C. §§4501 et seq.), as amended, confers upon the President a broad set of authorities to influence domestic industry in the interest of national defense. The authorities can be used across the federal government to shape the domestic industrial base so that, when called upon, it is capable of providing essential materials and goods needed for the national defense.”

      “Some current DPA authorities include, but are not limited to:

      – Title I: Priorities andAllocations, which allows the President to require persons (including businesses and corporations) to prioritize and accept contracts for materials and services as necessary to promote the national defense.

      – Title III: Expansion of Productive Capacity and Supply, which allows the President to incentivize the domestic industrial base to expand the production and supply of critical materials and goods. Authorized incentives include loans, loan guarantees, direct purchases and purchase commitments, and the authority to procure and install equipment in private industrial facilities.

      – Title VII: General Provisions, which includes key definitions for the DPA and several distinct authorities, including the authority to establish voluntary agreements with private industry; the authority to block proposed or pending foreign corporate mergers, acquisitions, or takeovers that threaten national security; and the authority to employ persons of outstanding experience and ability and to establish a volunteer pool of industry executives who could be called to government service in the interest of the national defense.”

      So when the President says he will use the DPA to “accelerate domestic production of clean energy technologies, including solar panel parts,” which of those authorities do you think he is referring to giving he opened the floodgates to Chinese solar panels.

      I am going to go with either:

      – Title I – Order it done and pay through the nose to retrain the workforces of companies not currently producing solar panels and change their production lines; or
      – Title III – throw taxpayer money at the current American producers of solar panels to make up the difference between their costs and the costs of producing Chinese products that he just widened – and pay through the nose. That assumes that current American producers can find the skilled labor pool necessary to expand production. Which is, I think you will admit, highly unlikely.

      Title VII will not get him what he wants.

      So I think that leaves him with Title I. Which is what President Trump used to get more ventilators.

      But either way he is planning (if that is the word I am looking for) federal subsidies to bridge the gap that, again, he just widened substantially between the costs in America of Chinese and American solar panels. And we presume that he will need to subsidize both American producers to increase supply and American buyers to increase demand.

      Is that how you see it?

      We can both wonder if he plans to go to Congress for the budgetary authority to spend all of that money.

      1. Dick Hall-Sizemore Avatar
        Dick Hall-Sizemore

        The Chinese are accused of transshipping and labeling solar panels as products of other countries. If that is true, and I would not be surprised it is, then the costs of the products should be about the same being shipped from China without tariffs as they were before being shipped from other countries without tariffs. Therefore, it is not clear that the price gap between American-made solar panels and imported ones will be widened that much.

        1. James C. Sherlock Avatar
          James C. Sherlock

          That is your response? Really?

        2. James C. Sherlock Avatar
          James C. Sherlock

          You bring up the DPA. In response I give you all the details and this is what you come up with?

          1. Dick Hall-Sizemore Avatar
            Dick Hall-Sizemore

            I appreciate the details on the DPA. Because we don’t know which section Biden will use, I can’t really respond, although, from what I read, he will use Section III.

            I was responding to your complaint that, either way he goes, the gap has been widened substantially.

  7. Nancy Naive Avatar
    Nancy Naive

    Can’t say the DoD didn’t try to warn us… that’s what the whole Solyndra thing was about. What’s the number 8? Every soldier carries 8 pounds of batteries.

  8. Bubba1855 Avatar

    Hey…I’m just a long time retired Wharton MBA…here is my take…
    eliminating the tariffs makes ‘Vietnamese’ panels less expensive.
    So how do domestic panel producers compete? This stupid DPA policy does not reduce the US domestic cost to produce solar panels. Tax credits? maybe but what happens when these credits expire? So now we need to ramp up US production. These businesses will need cash/loans/bonds, etc in order to expand production…with interest rates going up it will only increase the cost to produce US panels.

    The only thing that will help reduce the US cost to produce panels would be to change/reduce the EPA regulations for domestic producers and that will never happen. The ‘greens’ in the WH will never agree to it. By the way…I happen to agree with the EPA regulations…making solar panels is a very dirty business that most Americans do not realize nor understand. China is heavily subsidizing solar panel production up and down their supply chain,
    in addition to ignoring the environmental impact of their production methods.

    China is loving the tariff removal…

    1. LarrytheG Avatar

      how are the solar panels much different than other commodities like steel or corn or computer chips?

      1. Eric the half a troll Avatar
        Eric the half a troll

        Exactly! Lowering tariffs reduces the end-user cost for panels. That means more panels will be bought, installed, and operated quicker. That is where US workers will see a stimulus – green economy and all that. Climate change aside, the sooner we can convert to a 100% domestic renewably generated (and less expensive) source of energy, the more secure and successful we will be as a country. The planned 250% tariffs would have ground the industry to a halt. Good for Biden for stopping them.

        1. LarrytheG Avatar

          yes. AND that domestic energy, unlike oil & gas will not be exported and will not have it’s price set by global demand/supply.

      2. Bubba1855 Avatar

        I agree…they have become commoditites

  9. Eric the half a troll Avatar
    Eric the half a troll

    “The other four of the world’s top seven wind turbine producers are Chinese. Perhaps Mr. Biden can cut their tariffs.”

    Really the tariff that should be cut is Trump’s 25% steel tariff. It is unnecessarily driving up turbine prices across the board.

    1. LarrytheG Avatar

      don’t forget the baby formula – also had Trump tariffs apparently…….

  10. Lefty665 Avatar

    Sometimes the cost issues and charges of dumping are not as clear as they are presented. That is especially true for things like semi conductors and solar cells that have significant R&D and manufacturing process tooling costs and low per unit production costs. That was made clear a couple of decades ago when we got into dumping charges on memory chips.

    Here’s a simple example, the numbers are representative of the issue, not actual.
    R&D and tooling to produce a chip $1M
    Direct cost per unit $.25
    Domestic mfrs amortize costs over domestic sales of 1M units = $1 each
    Pacific rim mfrs amortize costs over worldwide sales of 10M units = $.10 each
    US cost = $.25 + $1= $1.25 = sale price $2.50
    PR cost = $.25 + $.10= $.35 = sale price $.70

    Domestic producers screamed dumping and unfair foreign government subsidies. They’re selling products for less than our cost. It would not be surprising to find that same set of issues playing out with solar cells and thus the question of tariffs to “equalize” costs.

    Maybe we can convert the idle baby formula plant to solar cell production. Solar cells don’t care if there are bugs in the factory, nobody is eating them, so those FDA concerns would go away.

  11. Matt Adams Avatar
    Matt Adams

    Stop feeding the Chinese (CCP), they aren’t your friends now nor were they your friends before.

    If the solar panel market were to implode tomorrow and switch back to fossil fuel heavy production. China would level their factories and start billowing more soot rich smoke just to make a buck for the CCP.

  12. energyNOW_Fan Avatar

    One analogy might be California, where advanced biodiesel is becoming a big industry, converting food oils into diesel. Now, it does not make good economic (or eco-) sense to do this, so Cali gives huge subsidies to the biodiesel makers. So now some refineries are converting to biodiesel production. I think the monies comes from state carbon taxes on fossil fuel. But we are talking about forcing an industry with subsidies.

    1. LarrytheG Avatar

      when we say “bio” , does that mean it’s NOT a fossil fuel and instead is plant or animal-based?

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