Welcome back Solar enthusiasts!
In this blog, I will be providing you with some exciting insights about the whopping 10% tax credit incentive on solar arrays for home and high-end projects, implemented by the U.S. Treasury and IRS. This remarkable tax credit adder comes as a bonus for solar companies, wind, and battery energy storage developers who install projects leveraging U.S.-made components in their solar arrays for home. You know what’s better? This incentive is an add-on to the existing 30% base investment tax credit.
This domestic content bonus is available to those solar company projects that meet the criterion of using adequate amounts of domestically produced steel, iron, and other manufactured products. To avail of this bonus, every manufacturing step for steel and iron components needs to be executed within the United States, thereby uplifting the domestic manufacturing market. This move ensures a minimum percentage of project costs are kept within the country.
However, to be eligible for the full value of the bonus, your project must satisfy an additional requirement – either having a maximum net output of less than 1 megawatt of energy, initializing the project construction before January 29, 2023, or meeting the prevailing wage and apprenticeship requirements sanctioned by the Inflation Reduction Act.
For the solar panels for your home, the IRS necessitates that structural construction components such as steel and foundation posts for solar projects are 100% U.S manufactured. Moreover, materials identified as “manufactured products” should include at least 40% of domestic content in terms of cost, which would gradually escalate to 55%.
In response to developers finding it difficult to attain direct cost information, which was initially part of the eligibility prerequisite, IRS’ new guidance has come into effect from May 2024. Providing a leeway, clean energy developers can now depend on the data provided by the Department of Energy on default cost percentages in lieu of obtaining direct cost information from suppliers.
An interesting fact for you, in the calculation for solar plus storage projects, the solar and storage assets are treated as a single project. According to Norton Rose Fulbright, a standalone grid-scale battery will not qualify for a bonus credit using the percentages unless the cells, and at least one other component, are U.S-made.
As solar enthusiasts exploring solar panel options for your home, this shift towards valuing domestic manufacturing and encouraging solar companies can be seen as a clear embodiment of the President’s intent – to stimulate the American solar manufacturing market and protect its stakeholders. Moreover, this tax credit incentive bears testimony to U.S. solar manufacturing’s relevance in future sustainable energy strategies, including solar wafer production.
Stay tuned for more updates on your solar adventures!
Original Articlehttps://pv-magazine-usa.com/2024/05/20/simplified-calculation-for-accessing-the-solar-domestic-content-bonus/
