Solar tracker manufacturer Nextracker announced it has delivered solar trackers to a California project that are expected to qualify 100% domestic content value for solar trackers under the Inflation Reduction Act (IRA).
The trackers were provided to the Pelican Jaw solar project developed by SB Energy, a 570 MW solar and 954 MWh energy storage project currently under construction by SOLV Energy.
Nextracker began its U.S. manufacturing push in 2021 and together with contract manufacturing partners has since expanded or opened more than 25 U.S. factories with 30 GW of annual manufacturing capacity.
“By systematically focusing our manufacturing partnerships close to our customer project sites, we secure the supply chain and provide superior on-time delivery and cost savings for project development and construction,” said Dan Shugar, chief executive officer, Nextracker. “We also significantly de-carbonize our products by incorporating clean steel manufactured in the United States.”
Domestic content
Under the IRA, clean energy projects are awarded a 30% Investment Tax Credit, which is typically valued at the final installed cost of the project. The credit is offered as a base 6%, and the 30% credit is only offered to projects that satisfy prevailing wage requirements.
Another 10% adder can be applied to projects that meet domestic content requirements. A large portion of the spending in the IRA is directed toward supporting the buildout of U.S.-based clean energy manufacturing, and the 10% domestic content adder is designed to stimulate demand for these products.
IRS requires that structural construction components such as steel and rebar foundation posts for solar projects are 100% U.S. manufactured. The rest of the materials, listed as “manufactured products,” must include domestic content for 40% of the cost, and increase to 55% over time. Read more on how to calculate qualified costs for domestic content here.
A further 10% tax credit adder is offered to projects installed in eligible Energy Communities, which are defined by income status and the economic impact of legacy energy systems in their area. The three credits can be combined to cover 50% of installed system costs.
However, Roth Capital Partners said in an industry note that the incoming Trump administration may seek to remove the 10% bonuses for both domestic content and energy communities. Roth said it has an 80% confidence that the administration will change rules to require domestic content to achieve the base 30% ITC.
“We expect activity to slow down as the industry waits and then adjusts to what could be more stringent ITC requirements,” Roth said.
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