The US Inflation Discount Act features a 10% bonus for solar energy initiatives that use US-made content material, and the Division of the Treasury has launched long-awaited particulars on what it means.
From pv journal USA
The US Division of the Treasury and the Inside Income Service (IRS) launched detailed details about the home content material bonus below the Inflation Discount Act.
Solar energy initiatives utilizing home content material eligible for the complete 30% tax credit score can improve their tax credit score by a further 10%, as much as 40% in whole, and 0.3 ¢/kWh for initiatives utilizing the Manufacturing Tax Credit score.
The information permits builders to reap the benefits of the home content material bonus credit score for initiatives that start building this 12 months. As well as, the Treasury Division and the IRS intend to suggest that future proposed laws apply to taxable years ending after Could 12, 2023.
In keeping with the IRS, “family items are typically outlined as metal, iron or different manufactured items manufactured or produced in the USA.” The steering additionally clarifies the therapy of labor prices, to make sure that the main focus of the motivation stays on home manufacturing.
To assist taxpayers decide the suitable requirements for metal, iron or manufactured items, the Treasury Division and the IRS present a secure harbor for sure kinds of clear power initiatives. The Treasury Division welcomes enter on how one can classify manufactured elements.
“The package deal bonus contained within the Inflation Discount Act will enhance American manufacturing, together with iron and metal, in order that America’s employees and corporations will proceed to learn from President Biden’s Investing in America agenda. These tax credit score is vital to driving funding and guaranteeing that every one People can share within the development of the clear power economic system,” mentioned Janet L. Yellen, Treasury secretary.
Along with assembly home manufacturing necessities, to qualify for the bonus credit score, initiatives should additionally meet one of many following necessities: 1) the mission has a most internet output of lower than 1 MW power; 2) the development of the mission began earlier than January 29, 2023; or 3) the mission satisfies the Inflation Discount Act’s prevailing wage and apprenticeship necessities.
“Having clear guidelines of the highway is crucial for companies seeking to spend money on America’s clear power future, and the interior steering launched from the Treasury Division offers useful readability . We’re inspired by the Treasury options to realize the manufactured product take a look at, which is in step with the suggestions from ACORE and others, and we look ahead to the initiatives that proceed below this steering quickly,” mentioned Gregory Wetstone, president and CEO of the American Council on Renewable Vitality (ACORE).
Greater than $13 billion in new manufacturing investments have been introduced to this point, says the Photo voltaic Vitality Industries Affiliation (SEIA).
“This long-awaited steering from the Treasury Division is a vital step ahead and can spark a flood of funding in American-made clear power gear and elements,” mentioned Abigail Ross Hopper, president and CEO of SEIA. . “The US photo voltaic and storage trade strongly helps the onshoring of a home clear power provide chain, and at the moment’s steering will add to the manufacturing renaissance that started when the historic Inflation Discount Act was handed final summer time.”
Along with tax credit for clear power builders, the Inflation Discount Act offers incentives for the development of US manufacturing, and this has successfully stimulated a variety of firms to announce their intention to institution of home manufacturing services.
SEIA estimates that the IRA will result in 47 GW of latest module manufacturing capability, greater than 16 GW of cells, greater than 16 GW of ingots and wafers, practically 9 GWac of inverters and greater than 100 GWh of battery manufacturing (serving the photo voltaic in addition to the electrical car trade). SEIA additionally estimates that we will anticipate greater than 20,000 tons of annual home polysilicon capability to come back again on-line and lots of new investments in tracker and racking capability. And that is just the start – SEIA forecasts that we’ll see exponential development in all these sectors.
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