Solar energy developers could earn bonus tax credits for using American-made content in their solar cells—but the factories making those key parts are not yet up and running, a recent Wood Mackenzie report shows.
To boost domestic clean energy manufacturing in line with President Joe Biden’s climate agenda, the Inflation Reduction Act grants wind and solar energy developers a 10% bonus on top of newly expanded investment and production tax credits.
The United States is one of many Western nations that over decades have become heavily reliant upon China for numerous products, including clean energy technologies. Europe is also pushing policy that would onshore some of its clean energy manufacturing.
To qualify for the bonus, developers must build solar projects with U.S.-made iron and steel. For key components like solar cells, which convert sunlight into energy, and modules that house these cells, developers must ensure a significant percentage of the total costs (40% for projects starting construction before 2025) is spent on mining, production or manufacturing within the U.S.
The U.S. currently has no solar cell factories, and it takes two to three years for these facilities to be built and for production to ramp up.
Its first four such factories, representing 10 gigawatts of capacity, are supposed to come online in 2024, according to Wood Mackenzie. The U.S. already has 18 module manufacturing facilities and another 24 are expected to come online this year and next year.