They Were Set To Receive Federal Green Energy Subsidies. A Chinese Company Took Over. Will They Get the Money Anyway?

Last summer, Singapore-based solar energy company Maxeon gave shareholders an exciting update. The company had chosen Albuquerque, New Mexico, as the location for its billion-dollar manufacturing plant—its first in the United States. The plant, Maxeon's American CEO Bill Mulligan said, would help the United States "enhance national energy security."

The announcement did come with one caveat. The plant "is subject to a successful financial close under the U.S. Department of Energy's Title 17 Clean Energy Financing Program," the company's press release said. "Maxeon is currently in the due diligence stage of its loan application and site selection is an important milestone in completing this process." Months later, in November, Maxeon said it was "closely engaged with the Department of Energy Loan Program Office to complete the loan process."

Much has changed since then.

In the ensuing months, Maxeon's stock cratered to a historic low amid delayed earnings calls and dismal revenue. As a result, on May 30, the company made another announcement: TCL Zhonghuan, a Chinese green energy company, had agreed to invest nearly $200 million in Maxeon, giving it a controlling stake. Maxeon officials nonetheless expressed their "commitment" to the New Mexico plant, suggesting the company has not given up on the Biden administration loan.

While it's unclear what will happen next, the ordeal emphasizes the Biden administration's struggle to loosen China's dominant grip on the green energy industry, an effort it has put hundreds of billions of dollars behind.

The Energy Department's Loan Programs Office—which Maxeon applied to—received $400 billion thanks to President Joe Biden's Inflation Reduction Act. Biden said the law would give the United States "the ability not only to compete with China for the future, but to lead the world and win the economic competition of the 21st century."

In Maxeon's case, however, that money could benefit a Chinese-controlled entity.

Beyond a potential loan, Maxeon and its allies attributed the decision to build a plant in New Mexico to the tax credits offered to solar manufacturers through the Inflation Reduction Act. Those credits allow manufacturers to write off 30 percent of "eligible investment costs in facilities and equipment" or receive federal funds "for certain components based on the volume of the product manufactured," according to the Solar Energy Industries Association.

Mulligan cited the law in his August statement announcing the plant, saying it "has catalyzed a new chapter in America's energy transition." The company's chief strategy officer, Peter Aschenbrenner, later told the New York Times the tax credits were "kind of exactly what we had in mind in terms of what would be needed, to pull these kinds of manufacturing initiatives forward."

Last year, meanwhile, Biden's Treasury Department touted Maxeon as one of a handful of "clean energy investments announced since passage of Inflation Reduction Act," which the department said would help America combat China. At the same time, Sen. Martin Heinrich (D., N.M.) said Maxeon's "new factory is proof that the Act is working as intended."

"Maxeon's facility will be the second major clean energy manufacturing facility to open in New Mexico since President Biden signed the Inflation Reduction Act," he said. "Together, we're unleashing our clean energy potential and creating hundreds of high-quality jobs for New Mexicans."

Despite its intention to encourage American manufacturing, foreign companies are not barred from receiving Inflation Reduction Act subsidies, though the Treasury Department does evaluate individual projects led by foreign entities "for national security concerns." The head of the Energy Department's Loan Programs Office, Jigar Shah, has also encouraged foreign companies to take advantage of his office's loans.

An Energy Department spokesperson said Maxeon "does not have a current commitment conditional or a finalized loan through DOE's Loan Programs Office." The spokesperson said the office "cannot confirm or deny" Maxeon's identity as a loan applicant, citing "confidential business information." Presented with the fact that Maxeon itself has touted its status as a loan applicant—and asked to provide an update on the application—the spokesperson did not respond.

Maxeon did not respond to a request for comment. The company has not provided an update on its loan application since November.

Maxeon is far from the only solar company to struggle in the U.S. market under Biden. China has flooded the United States with cheap solar modules, particularly after Biden implemented a 24-month moratorium on tariffs targeting Chinese solar panels in June 2022.

While Biden said the action would give American companies a "bridge" to catch up to their Chinese counterparts, America's solar panel market share declined during the moratorium, the Free Beacon reported. Solar panel imports also increased a staggering 82 percent last year, and for every gigawatt of solar manufacturing capacity added in the United States amid the moratorium, China added roughly 40 gigawatts.

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