US Guidance On Clean Energy Manufacturing Credits

• The US Department of Treasury has released the guidelines for Advanced Manufacturing Production Credit under Section 45X 
• This provides clarity and long-term vision to clean energy manufacturing businesses interested in the US market 
• Credits will be available till 2032 with phase-out starting from 2030 

Over a year after it came into being, renewable energy investors now have some clarity on Advanced Manufacturing Production Credit for clean energy, including solar PV, under the US Inflation Reduction Act (IRA). The Treasury Department has released proposed regulations under Section 45X that will also retroactively apply to components produced and sold after December 31, 2022. 

The Section 45X Advanced Manufacturing Production Credit clarifies definitions and confirms credit amounts for eligible components. The department has also attempted to propose definitions for key terms to incentivize production in the US and list rules under which taxpayers can claim the credits. 

The solar energy component under Section 45X refers to solar modules, cells, wafers solar grade polysilicon, torque tube, structural fastener or polymeric backsheet. Solar tracker also comes under its ambit. The proposed credit limits applicable for the solar industry are as follows: 

Solar energy components   

• $12.00/sq m for photovoltaic wafer of at least 240 sq cm, produced by a single manufacturer by forming an ingot from molten polysilicon 
• $0.40/sq m for polymeric backsheet 
• $3.00/kg for solar grade polysilicon purified to a minimum purity of 99.999999% silicon 
• $0.07/W for solar module 
• $0.87/kg for torque tube as a solar tracker component 
• $2.28/kg for structural fastener used to connect torque tubes to one another 

Inverters  

• $0.11/W for multi-module inverter, microinverter, DC optimized inverter 
• $0.0025/W for central inverter  
• $0.065/W for residential inverter  
• $0.015/W for utility-scale inverter 
• $0.02/W for commercial inverter 

Credits will be available till 2032, but the phase-out will begin from 2030 onwards as these would come down to 75%. In 2031 and 2032, the credit limit will further drop to 50% and 25%, respectively. Post December 31, 2032, there are no credit available for eligible components under Section 45X, other than for applicable critical minerals. 

The US Secretary of Energy Jennifer M. Granholm said, "The Advanced Manufacturing Production Credit will supercharge a new era of American manufacturing and bring good paying clean energy jobs back to American communities." 

The department has released these guidelines as a Notice of Proposed Rulemaking (NPRM) and now seeks public comment on the same for a period of 60 days, before releasing the final rules.  

Philip Shen of ROTH MKM believes the proposed rules are especially good for solar tracker maker Array Technologies as its clamps could qualify as fasteners. However, CdTe module maker First Solar is the one that stands to benefit the most as it qualifies for the entire $0.1750/W credit for its wafer+cell+module production, according to Shen. 

The President and CEO of the Solar Energy Industries Association (SEIA), Abigail Ross Hopper expressed satisfaction on the guidelines released. She said these guidelines will help support the economic boom via domestic solar manufacturing in the country, and demanded swift finalization of the rules. 

Since the IRA was signed into law in August 2022, the US has witnessed announced investments of more than $600 billion in clean energy and manufacturing with more than $140 billion announced for the manufacturing of clean energy technologies, electric vehicles, and batteries, according to the department (see Inflation Reduction Act Now A Law).