A flood of Chinese-produced solar panels is driving prices to record lows in the US, a boon for renewable energy developers but a threat to solar manufacturers trying to create a domestic supply chain for the country’s fastest-growing source of electricity generation.

China, the dominant solar equipment supplier, doubled production capacity last year to more than 1tn watts and now produces nearly three times more panels than global demand, according to the International Energy Agency and Wood Mackenzie. Global prices for panels have fallen 50 per cent in the past year to as low as 10 cents a watt. 

The supply glut has enticed US power companies to favour imports over more expensive domestic panels as they build new solar generating complexes. In response, North American manufacturers say they are pulling back on expansion plans despite lucrative incentives available under the Inflation Reduction Act, the landmark US climate law.