
The U.S. Department of the Treasury has issued final rules for the Advanced Manufacturing Production Tax Credit under Section 45X, providing incentives for solar and energy storage manufacturers across the supply chain, including manufacturers that produce solar cells, solar modules, inverters, trackers, and more.
Because this tax credit is tied to production volume, it provides long-term support for manufacturers once a facility opens, according to the Solar Energy Industries Association (SEIA).
The final rules are meant to accelerate the buildout of domestic critical mineral supply chains by allowing taxpayers to include materials costs and extraction costs in production costs for applicable critical minerals and electrode active materials, provided certain conditions are met. This change, based on feedback from stakeholders, is intended to enable further investment in responsible U.S. critical minerals extraction and processing and strengthen U.S. energy security and clean energy supply chains.
The final rules announced are largely in line with proposed regulations released in December 2023, Treasury said. The final rules clarify definitions and confirm credit amounts for eligible components, including solar energy components, wind energy components, inverters, qualifying battery components, and applicable critical minerals; define key terms to incentivize production in the United States and clarify the circumstances under which taxpayers can claim the credit; and finalize safeguards meant to prevent potential fraud, waste, or abuse – including safeguards against duplicative crediting of the same component, crediting of activities that are not value-added, or “extraordinary circumstances” in which components are produced but not put to productive use.
“Section 45X is one of the most influential policies we have to onshore the solar supply chain. Clarity is key, and these rules provide the certainty domestic solar and storage manufacturers need to move forward with their investments,” said Abigail Ross Hopper, president and CEO of SEIA. “Over the last year, SEIA has advocated for solutions that make this credit more accessible, including realistic solutions to expand eligibility for inverter manufacturers and help storage manufacturers recoup upfront costs for accessing critical minerals.”
The Inflation Reduction Act (IRA), implemented in 2022, established a new advanced manufacturing production credit to incentivize the domestic production of various components, including applicable critical minerals used in renewable energy generation, storage, and related manufacturing. The IRA provided a 10% adder to the Investment Tax Credit for projects that utilize domestic content.