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. “
Mike Carr, executive director of the Solar Energy Manufacturers for America (SEMA) Coalition released the below statement following the announcement:
The final 48D rules will help solar manufacturers unlock the full potential of the CHIPS and Science Act by providing critical support for efforts to reshore the entire solar supply chain. We applaud Treasury’s final CHIPS ITC rules, which clarify that domestic solar ingot and wafer manufacturers can access this landmark incentive. The Biden-Harris Administration’s efforts will drive significant investment in domestic solar ingot and wafer manufacturing capacity, currently dominated by China, help meet our economic and national security goals, and support thousands of good-paying jobs across the country.
For up-to-the-minute insight on solar manufacturing from experts including Mike Carr, 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.
This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: editors@pv-magazine.com.
By submitting this form you agree to pv magazine using your data for the purposes of publishing your comment.
Your personal data will only be disclosed or otherwise transmitted to third parties for the purposes of spam filtering or if this is necessary for technical maintenance of the website. Any other transfer to third parties will not take place unless this is justified on the basis of applicable data protection regulations or if pv magazine is legally obliged to do so.
You may revoke this consent at any time with effect for the future, in which case your personal data will be deleted immediately. Otherwise, your data will be deleted if pv magazine has processed your request or the purpose of data storage is fulfilled.
Further information on data privacy can be found in our Data Protection Policy.