The United States Department of the Treasury is incentivizing domestic manufacturing of critical components of the solar supply chain by clarifying that ingot and wafer production facilities and equipment qualify for the Section 48D 25% investment tax credit (ITC) under its final rules for the CHIPS and Science Act of 2022 (CHIPS).
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 semiconductor-grade polysilicon used in photovoltaics (PV) modules that begin construction before 2027. In addition, taking advantage of the 25% credit does not preclude any facilities from qualifying for other applicable tax credits.
The U.S. currently has about 45 gigawatts (GW) of domestic module manufacturing capacity online, enough to supply most of the country’s demand in 2024. The U.S. doesn’t have any commercial-scale ingot and wafer manufacturing capacity yet, but 3.3 GW of capacity is under construction. Since the Inflation Reduction Act (IRA) passed a little more than two years ago, companies have collectively announced their intent to produce at least 21 GW of wafers and 10 GW of ingots.
Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association (SEIA), recognizes ingot and wafer production as a “critical gap” in the U.S. solar supply chain. She believes Treasury’s decision will create new opportunities for solar manufacturers and encourage upstream development.
“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,” Hopper said in a statement following today’s news. “This is a win-win for businesses and our economy and will continue the manufacturing renaissance in America for years to come.”
Mike Carr, the executive director of the Solar Energy Manufacturers for America (SEMA) Coalition says he appreciates the efforts that went into Treasury’s rulemaking to support the reshoring of a full solar supply chain.
“The final 48D rules will help solar manufacturers unlock the full potential of the CHIPS and Science Act,” he predicts. “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.”
Uncertainty in the solar sector spurred by tariffs, supply chain issues, and the fate of clean energy policies post-election has resulted in a dip in total corporate funding so far in 2024 compared to last year. According to a recent report from Mercom Capital Group, Solar Funding and M&A – 2024, Third Quarter and Nine Month Report, total corporate funding, including venture capital (VC) funding, public market, and debt financing, totaled $22.3 billion through the first nine months of the year, 23% less than the $28.9B raised through September of 2023.
Coming soon: Ingots and wafers?
Right now, polysilicon is only produced by a handful of companies in the United States: Hemlock Semiconductor in Michigan, Wacker Chemie in Tennessee, and REC Silicon in Washington State.
REC Silicon restarted its Moses Lake polysilicon plant last year but has faced persistent issues ramping up production and continues to miss projected shipment targets. The company’s stock has plummeted over the past week after “unexpected procedures” caused REC Silicon’s first commercial delivery from the facility to be held up in customs. REC Silicon says it is working to expedite the shipment, which was pushed back several times previously to mid-October, but doesn’t know when it will be released.
“As with any qualification process of this nature, the outcome of the tests and thus our ability to deliver the product within a certain timeframe remains a risk,” the company said in a statement.
Hanwha QCells, which helped restart the facility after becoming REC Silicon’s largest shareholder in 2022, will use the low-carbon polysilicon produced at Moses Lake for ingot and wafer manufacturing at the new Qcells manufacturing facility in Cartersville, Georgia. The Cartersville facility, expected online next year, will make Qcells the only company with a fully integrated domestic solar supply chain. First announced in January 2023, the facility will be the largest ingot and wafer plant ever built in the United States. In August, the Department of Energy’s (DOE) Loan Programs Office (LPO) announced a conditional commitment for a loan guarantee of up to $1.45 billion to Qcells for the end-to-end facility, which is expected to produce 3.3 GW of solar panels per year, enough to supply panels to half a million American households.
Ingot and wafer production is often considered the weakest (and most vulnerable) part of the United States domestic solar supply chain. A recent European Solar PV Industry Alliance report indicates China possesses more than 95% of the global production capacity for silicon wafers.
NorSun, recognized as the only ingot and wafer producer in the Western Hemisphere, has plans for a 5 GW wafer factory in Tulsa, Oklahoma, which is expected to open in 2026. As part of a multi-year contract, the company will supply North American solar manufacturer Heliene with U.S.-made silicon wafers starting in 2026.
To read more about the viability and logistics of a 100% “Made in the USA” solar supply chain, click here.
