New incentives support solar manufacturers and encourage the domestic buildout of the earlier stages of the solar supply chain.
The Inflation Reduction Act of 2022 sets forth demand and supply-side incentives to encourage solar manufacturing within the U.S. in the form of production tax credits for manufacturers and investment tax credits for project developers using domestic content. While these incentives have driven a rush of investments from major global solar component providers, much of the investment has been focused on the final legs of the solar supply chain. Now those incentives are moving further up the supply chain with final rules for Advanced Manufacturing Investment Credit (CHIPS ITC) released by the U.S. Department of the Treasury and the Internal Revenue Service .
Treasury reports that the CHIPS ITC is “generally equal to 25% of the basis of any qualified property that is part of an eligible taxpayer’s advanced manufacturing facility if the qualified property is placed in service after December 31, 2022, and covers construction occurring after the enactment of the CHIPS and Science Act on August 9, 2022”.
“The Biden-Harris Administration’s economic agenda is onshoring semiconductor manufacturing and driving U.S. innovation in this critical industry,” said Secretary of the Treasury Janet L. Yellen. “Semiconductors are vital to ensuring a stable supply of low-cost consumer goods and our investments continue to strengthen those supply chains, create good-paying jobs, and safeguard our national security.”
According to the Solar Energy Industries Association (SEIA), Treasury’s final rules confirm that Section 48D applies to advanced manufacturing facilities and equipment that produce semiconductors, including the slicing, etching, and bonding of the semiconductor-grade polysilicon used in PV modules.
The news is welcome as the U.S. solar industry tries to build out a complete solar supply chain but has not yet had enough ingot and wafer production to match the planned cell and module capacity. SEIA notes that since the IRA passed, there have been 21 GW of wafer announcements and 10 GW of ingot, but only 3.3 GW of ingot and wafer capacity is under construction.
“Treasury’s final rules will create new opportunities for solar manufacturers and encourage the upstream development of the solar supply chain,” said Abigail Ross Hopper, SEIA president and CEO.
Hopper pointed out that supply chain remains a challenge in the U.S., and that the lack of ingot and wafer manufacturing represents “a critical gap in the solar supply chain.”
“For the last two years, SEIA has been urging the administration to use all of the tools at its disposal to support ingot and wafer production. We commend Treasury for taking a thoughtful approach to industrial policy, helping to revitalize our communities with great-paying manufacturing jobs and boost our energy independence,” said Hopper. “This is a win-win for businesses and our economy and will continue the manufacturing renaissance in America for years to come. “
For expert up-to-the-minute insight on solar manufacturing and the domestic supply chain, sign up for the free pv magazine USA 2024 Week live broadcast, virtual event. Day 3, on Thursday October 24, is entitled “Solar Ignites U.S. Manufacturing”. For free registration click here.
