The Treasury Department and IRS released new guidance on May 16, 2024 on the Inflation Reduction Act’s domestic content bonus, adding a simpler way for solar and storage projects to show they used enough USA-made equipment, Solar Power World reported.
What is new
- A new elective safe harbor lets developers rely on DOE-provided default cost percentages for each component instead of gathering supplier cost data.
- Defaults are set for four solar project types (tracker, fixed-tilt, rooftop with MLPE, rooftop with string inverters) and two battery types.
- Projects that mix solar and storage use set multipliers to combine the two.
The rules that did not change
Projects can earn up to a 10 percent bonus on the investment or production tax credit. All steel and iron in significant structural parts such as racking and piles must be made in the USA. Manufactured products such as panels, trackers and inverters must meet a USA cost share of 40 percent for projects starting construction before 2025, rising to 55 percent for projects starting after 2026.
Treasury said more guidance will follow, and is weighing options to support USA wafer manufacturing.
FAQ
What is the domestic content bonus?
Up to a 10% boost to the ITC or PTC for projects built with enough USA-made steel, iron and manufactured products.
What does the safe harbor do?
It lets developers use DOE default cost percentages to show they qualify.
What is the USA content threshold?
40% for projects starting construction before 2025, rising to 55% for projects starting after 2026.
Source & credit
Source: Solar Power World, May 16, 2024: “More details on IRA domestic content bonus revealed today by Treasury, IRS”, by Kelly Pickerel.