© Thomson Reuters File Photo: The US Treasury Building in Washington DC.Nicholas Groom and David Lauder
(Reuters) - Developers of solar projects can apply for new subsidies for structures built with U.S.-made products, even if the system's panels contain components made entirely of Chinese materials, the U.S. Treasury Department said on Friday. .
The long-awaited deal marks a deal between developers of cheap imported solar projects on how companies can claim new tax credits for clean energy projects built with domestic equipment. Manufacturers want to expand and compete with China.
President Joe Biden's Inflation Reduction Act (IRA), signed into law last year, provides billions of dollars in tax credits to businesses that use U.S. equipment to accelerate the decarbonization of the U.S. energy sector, create domestic jobs and fight China's dominance in manufacturing. .
The IRA provides a 30% tax credit for the installation of renewable energy sources such as solar and wind farms, with an additional 10% bonus for the project to be used in the home.
To qualify for the bonus, the IRA states that all steel products in the project must be "smelted and smelted" domestically and that 40 percent of the value of the so-called industrial products must be produced in the United States. For offshore wind power, a new industry in the US, internal storage must cover 20% of costs.
Developers of offshore solar and wind projects, however, are awaiting clarification on how to calculate the 40 percent, with uncertainty stalling business.
According to the guidelines proposed by the Department of the Treasury, products manufactured in a typical solar power plant include modules, trackers and inverters. To qualify, 40% of the ingredients in these products must be American.
This means that the solar cells installed on the panel can be produced abroad if the domestic content limit is consistent with the company's other manufacturing units.
Solar cells represent 30% of the cost of products that make solar panels and are not currently available in the US.
The main solar energy trade group, the Solar Manufacturers Association, has proposed that panels assembled in the United States may qualify for the credit regardless of where the components are located.
Manufacturers say the demand to make solar panels in the U.S. is necessary to produce products that are now only made in China.
"While we appreciate your work to meet a wide range of needs across a variety of technologies, today's bonus recommendations are a missed opportunity to build a productive supply chain for home content as a whole." Advancing our national solar energy and climate goals,” said Mike Carr, executive director of the American Solar Alliance.
The agency has been trying to bring manufacturing to U.S. shores, but in the long run, a Treasury official said domestic supplies are one of several incentives for the IRA to boost production of clean energy equipment.
Many also supported stricter rules requiring wafers used to make cells in the US. 98% of the world's wafer production is produced in China.
According to the guidelines, a project containing US-made batteries with a Chinese license plate may still qualify for the loan.
Friday's announcement is the latest in a series of warnings about how businesses can take advantage of the historic IRA.
(Reporting by Nicola Groom in Los Angeles and David Lauder in Washington; Editing by Leslie Adler)
