The US Department of Treasury has updated its guidance on domestic content tax credit bonus for clean energy production
It establishes optional alternative cost percentages for developers of new projects using solar cells produced with domestic wafers
It also provides additional clarity on the use of retrofits, along with for carport and floating solar projects
The US Department of the Treasury has released additional guidance on the domestic content tax credit bonus for Clean Electricity Production and Investment Tax Credits under the Inflation Reduction Act (IRA), laying greater stress on domestically manufactured solar wafers.
It updates the domestic content safe harbor guidance of May 2024, which helps developers determine the eligibility for domestic content bonus for using locally produced equipment in their projects.
The updated guidance has improved default values that the department says aligns more closely with the characteristics and costs of applicable project components and manufactured product components in the marketplace.
The new guidance released establishes optional alternative cost percentages for developers of solar projects that use solar cells made with domestically produced wafers. This will enable them to recognize cost differentials for manufacturers who use cells made with domestic wafers for their projects.
It also provides updates to clarify the use of safe harbor tables, including the following:
Solar: The updated tables update cost percentages, make certain adjustments to the characterizations of applicable project components and manufactured product components, and offer clarifying definitions
Domestic Solar Wafers: For each solar table, there are new optional alternative cost percentages for projects using domestic solar cells manufactured with domestic wafers
Land-Based Wind: The updated table for Land-Based Wind includes minor adjustments to the characterizations of applicable project components and manufactured product components
Battery Electric Storage System (BESS): The updated table updates cost percentages, makes certain adjustments to the characterizations of applicable project components and manufactured product components, and offers clarifying definitions
It also offers additional clarity on the use of retrofits, projects utilizing elective pay or direct pay, along with carport and floating solar projects. These can be utilized for projects starting construction up to 90 days after the release of further guidance.
Deputy Secretary of the US Treasury Wally Adeyemo said, “Today’s guidance will help fuel America’s clean energy investment and manufacturing boom and create good-paying jobs.”
The Executive Director of the Solar Energy Manufacturers for America (SEMA) Coalition, Mike Carr, said that the updated guidance recognizes US wafer production, but falls short in some respects.
He explained, “While it’s significant that the value of U.S. wafer production is now recognized, if the tables were more focused on the core, strategic components of all solar technologies, we would see a faster and more expansive build-out of factories in the United States. Unfortunately, we still have an overly complicated approach that misses the mark in important ways and risks deepening our country’s reliance on China’s solar supply chain by failing to play to our technological strengths.”
Meanwhile, solar PV manufacturer Qcells’ President of Corporate Affairs, Danny O’Brien, welcomed the updated guidance.
“President Biden’s leadership in advancing domestic clean energy manufacturing has been truly unprecedented and today’s Treasury guidance that further incentivizes the production of solar technology in the U.S. is a crucial and highly welcomed announcement,” stated O’Brien. “With support from the Inflation Reduction Act’s game-changing incentives, Qcells has created over 4,000 manufacturing jobs, which is proof that re-industrialization policies in the clean energy industry are succeeding.”