- US government has released guidance on domestic content bonus for clean energy under IRA
- It provides for up to 10% bonus for projects using solar ITC while meeting other requisites
- Projects that entered construction before January 29, 2023 are also eligible for full value of the bonus
The US Department of Treasury and Internal Revenue Service (IRS) have released guidelines to provide clarity regarding domestic content bonus for clean energy projects and facilities under the Inflation Reduction Act (IRA), to boost local manufacturing, that’s welcomed by the local industry associations.
As per the guidance issued, clean energy projects being developed using the solar Investment Tax Credit (ITC) will be eligible for a domestic content bonus of up to 10% for using equipment manufactured within the country. Projects using the Production Tax Credit (PTC) stand to gain $0.3/kWh.
However, a project is eligible for full value of the bonus only if it meets the domestic content requirement along with any one of the following 3 requirements:
- a maximum net output of less than 1 MW of energy
- project construction began before January 29, 2023, or
- it satisfies the IRA’s prevailing wage and apprenticeship requirements.
The bonus applies to facilities that use requisite amounts of locally produced steel, iron and manufactured products. All steel and iron manufacturing needs to be US based.
President and CEO of Solar Energy Industries Association (SEIA), Abigail Ross Hopper said the association will analyze the guidance further, but welcomed it nevertheless. “Importantly, the guidance allows developers to utilize the domestic content bonus credit for projects that begin construction this year, which will speed up the deployment of clean energy in the near-term,” stated Hopper.
President and CEO of the American Council on Renewable Energy (ACORE), Gregory Wetstone added, “We are encouraged by Treasury’s solutions to meet the manufactured product test, which are consistent with recommendations from ACORE and others, and we look forward to projects moving forward under this guidance immediately.”
The department said it will continue to issue guidance on the IRA’s clean energy provisions on a rolling basis in the coming months.