A ten% tax credit score incentive is added to photo voltaic initiatives that meet a specific amount of US-made elements. New simplified calculations for eligibility have been launched.
The US Treasury and Internal Revenue Service (IRS) have launched extra steering for accessing the home content material bonus. The bonus is a ten% tax credit score adder for photo voltaic, wind, and battery vitality storage builders who set up initiatives utilizing US-made elements, including to the 30% base funding tax credit score.
The home content material bonus applies to amenities and initiatives constructed utilizing the required quantity of domestically produced metal, iron and different manufactured merchandise. To obtain the bonus, all manufacturing processes for iron and metal elements should happen within the United States. The legally required minimal share of the prices of manufactured items and elements of manufactured items comprising a facility should be mined, manufactured or manufactured within the United States.
Projects are eligible for the total bonus quantity in the event that they meet the content material requirement and one of many following necessities:
- The challenge has a most web output of lower than 1 megawatt of vitality;
- Construction of the challenge started earlier than January 29, 2023; or
- The challenge satisfies the Inflation Reduction Act’s prevailing wage and apprenticeship necessities.
The IRS requires that structural constructing elements resembling metal basis posts and rebar for photo voltaic initiatives be 100% made within the US. Other supplies, listed as “manufactured merchandise,” ought to embrace the internal content material of 40% of the fee, which has elevated to 55% over time.
Developers should gather three “direct prices” from gear suppliers to calculate a portion of the manufactured product. Direct prices are the wages paid to manufacturing unit staff, payroll taxes on these wages, and the quantity paid to part suppliers for elements provided on to the manufacturing unit.
However, attaining this data on direct prices has confirmed tough. The new steering in May 2024 offers essential clarification on eligibility for the bonus, making this value information extra accessible.
Clean vitality builders now have the choice to depend on the Department of Energy’s default value share information for an entire checklist of manufactured merchandise and their elements. This protected harbor information can be utilized in lieu of acquiring direct value data from suppliers
To obtain the bonus, a developer should add solely percentages of the price of the protected harbor and attain the 40% requirement. The IRS doc outlining the calculations could be discovered HERE. The desk under outlines protected harbor prices for several types of photo voltaic initiatives.
In the in-house calculations for photo voltaic plus storage initiatives, the photo voltaic and storage belongings are thought-about as one challenge.
Norton Rose Fulbright mentioned a standalone grid-scale battery doesn’t qualify for a bonus credit score utilizing the odds within the protected harbor desk until the cells and at the least one different part are fabricated from US. Conversely, a battery with a nameplate capability of 1 MWh or much less would qualify if, for instance, the packaging and printed circuit board assemblies had been made within the US.
“Following up on the clearly said intention of the President Tuesday at promote and shield American manufacturing all through the photo voltaic provide chain,” mentioned Mike Carr, government director of the Solar Energy Manufacturers for America (SEMA) Coalition. photo voltaic wafer manufacturing’ as they work to develop long-term steering for this credit score.”
This content material is protected by copyright and is probably not reused. If you need to cooperate with us and need to reuse a few of our content material, please contact: [email protected].
