Right now the Dept. of the Treasury has launched long-awaited additional steerage in regards to the home content material bonus inside the Inflation Discount Act. Photo voltaic builders and installers that supply iron and metal merchandise and sure manufactured merchandise from home producers can obtain as much as a ten% bonus to the funding tax credit score (ITC) or manufacturing tax credit score (PTC) when finishing tasks. Tasks can obtain the home bonus in the event that they meet the necessities and are lower than 1 MWAC, started building earlier than Jan. 29, 2023, or are higher than 1 MWAC and meet prevailing wage and apprenticeship necessities.
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Treasury at present additional clarified venture descriptions and created a brand new elective secure harbor that permits builders to depend on Dept. of Vitality-provided default price percentages to find out eligibility for the bonus credit score.
No main adjustments to beforehand introduced necessities have been revealed. As a evaluation:
The home content material bonus applies to tasks constructed utilizing required quantities of domestic-produced metal, iron and manufactured merchandise. A product is taken into account to be “Made-in-USA” below this rule if 40% of the fee to fabricate it (when used on tasks starting building earlier than 2025) was accomplished inside the USA. That rule will increase to 55% for tasks starting building after 2026.
To obtain the bonus, all metal and iron manufacturing processes utilized in vital structural parts should happen in the USA. This requirement isn’t relevant for metal or iron subcomponents (corresponding to nuts, bolts, screws and clamps). Racking, piles, floor screws and rebar utilized in foundations are thought of to be “metal and iron merchandise.”
Photo voltaic trackers, photo voltaic panels and inverters are categorised below the “manufactured merchandise” designation. Undertaking builders can comply with sure adjusted percentages of qualifying parts to fulfill the home content material bonus. American-made battery packs (together with cells, packaging, thermal administration system and BMS), battery enclosures and inverters also can obtain this adder.
The default price percentages might be seen within the charts under. Photo voltaic tasks are cut up amongst 4 classes: tracker tasks, fixed-tilt ground-mounts, rooftop tasks utilizing MLPE and rooftop tasks utilizing string inverters. “Manufacturing” refers back to the manufacturing price of the parts and might solely be included within the home price share if all the parts are domestically produced.
Battery tasks are cut up between two classes: Grid-scale (higher than 1 MWh) and distributed (lower than 1 MWh).
When electing for the secure harbor, tasks that includes each photo voltaic and storage parts will use a multiplier to accommodate the completely different nameplate capacities (photo voltaic PV being kilowatts vs. storage being kilowatt-hours). Tracker tasks will multiply by 0.57, fixed-tilt tasks by 0.75, MLPE rooftop tasks by 0.69, and string inverter rooftop tasks by 0.99.
Treasury and IRS will proceed to think about stakeholder feedback and plan to challenge additional home content material steerage to handle points not within the scope of this steerage, together with attainable offshore wind necessities. The federal government can be evaluating potential choices to incentivize home manufacturing of photo voltaic wafers, an ask made by Senate Democrats earlier this 12 months.
Abigail Ross Hopper, president and CEO of the Photo voltaic Vitality Industries Affiliation (SEIA), offered an announcement: “The added readability on the home content material bonus credit score has been a prime SEIA precedence as a result of it’s essential to provide producers the understanding they should put money into American communities. We recognize the administration’s method to creating certain this bonus credit score helps downstream producers within the close to time period as we ramp up manufacturing of upstream parts over the following a number of years. We additionally wish to commend the administration for taking preliminary steps to make clear how residential and industrial installations can qualify for these incentives.”
Mike Carr, Government Director of the Photo voltaic Vitality Producers for America (SEMA) Coalition, commented on the elevated give attention to home wafer manufacturing: “We’re additionally inspired to see the Treasury Dept. acknowledge the centrality of ‘the IRA’s targets of incentivizing U.S. photo voltaic manufacturing, together with photo voltaic wafer manufacturing’ as they work to develop the long run steerage for this credit score. Swiftly and efficiently changing this intent to home content material steerage is vital to investments in main services supporting hundreds of jobs, so we sit up for working with the administration to expeditiously produce workable steerage as quickly as attainable. Breaking the Chinese language cartel on wafer manufacturing is on the core of a sustainable U.S. photo voltaic manufacturing provide chain and we’re more than happy to see the administration take motion to handle this basic dynamic.”
