How Important Are Rare Earth Elements  to the Solar, Storage, and Grid Infrastructure? 

As the U.S. and China continue trade negotiations in Stockholm, one thing is clear: rare earth elements (REEs) are a powerful bargaining chip and a critical part of the future of American energy and our economy. 

The U.S. remains heavily dependent on China for access to these materials, many of which play important roles in the systems that support clean energy, like battery storage, inverters, and grid technologies. While the two nations aim to temporarily ease export restrictions, this moment also highlights that America’s long-term energy security depends on building out our own rare earth mining and processing capabilities. 

What Are REEs and Why Do They Matter to American Energy? 

REEs are a group of 17 metallic elements on the periodic table. They are considered “rare,” not because they are scarce in Earth’s crust, but because they are dispersed and found in low concentrations, making them difficult and costly to mine. 

Their unique magnetic, phosphorescent, and catalytic properties allow them to play an essential role across many industries, from smartphones and fighter jets to MRI machines, and increasingly in the energy industry. 

To be clear, REEs are not used in solar panels themselves. However, they are important elements in grid technologies that support and stabilize clean energy systems. 

How REEs Support Clean Energy Systems 

Solar Inverters and Converters 

There are no rare earth elements directly used in photovoltaic (PV) solar modules, but they are key components of the inverters that convert direct current (DC) electricity generated by solar panels into alternating current (AC) electricity used on the electric grid. They also play a role in the converters that manage voltage and current flows in solar + storage systems. Specifically, yttrium, lanthanum, and sometimes cerium oxide are used in ceramic capacitors, and neodymium is used in magnets for internal sensors and fans. 

Battery Energy Storage Systems (BESS) 

Grid-scale batteries need advanced cooling systems to operate safely and reliably. Rare earths like neodymium and dysprosium are used in the magnets that power fans and pumps. Other elements, like cerium and lanthanum, are used in sensors that monitor and manage battery temperature.  

Even though these materials are used in tiny amounts (on the gram-to-milligram scale), they are essential to preventing BESS systems from overheating.  

Grid Infrastructure

REEs are also found throughout the broader electric grid, albeit in specialized use cases. Sensors and actuators (i.e., motorized switches, tap changers, etc.) used in smart grid systems, substations, and other infrastructure often include compact, high-performance magnets made with REEs. 

Despite limited applications, REEs play an important role in advancing grid modernization and next generation technologies as more solar and BESS systems come online.  

Building a More Resilient Supply Chain 

As of 2024, the U.S. depends on imports to satisfy 80 percent of domestic demand for REEs. About 70% of those imports come directly from China, and even when we source from other countries like Malaysia or Japan, those nations often rely on rare earth materials that originated or were processed in China.  

China not only dominates the production of rare earths, but it also controls many of the refining and processing steps needed to turn raw minerals into usable components. In fact, even the one active, commercial-scale REE mine in the U.S. — Mountain Pass Mine owned by MP Materials in California — still sends some of its output to China for final processing. 

This has led to growing interest in reshoring key parts of the rare earth supply chain to reduce bottlenecks, improve domestic capacity, and strengthen U.S. energy security. The recent commitment by the U.S. Department of Defense to take an equity stake in MP Materials, along with a 10-year magnet offtake agreement and 10-year price floor for MP’s neodymium-praseodymium oxide, is a key example of U.S. commitment to onshoring rare earth supply chains.  

The current trade talks in Stockholm may provide some short-term relief by easing export restrictions, but this won’t solve the central problem. Without a reliable domestic supply chain that included mining, refining, and processing, the U.S. will remain vulnerable to geopolitical tensions and supply disruptions. 

The Trump administration has already taken steps to mobilize resources and expedite permitting for REE production, but more investment is needed to aggressively scale up. In the meantime, securing access to these materials through a trade agreement is essential to ensure the U.S. can continue manufacturing the technologies that power our electric grid, support national security, and drive economic growth.