Solar manufacturing support included in Manchin-backed climate bill


Workers at a First Solar production plant in the US. Image: First Solar.

Manufacturing support for solar components and clean energy tax credits are included in a proposed US budget reconciliation bill from Senate Democrats that proponents have said features the biggest climate and renewables investment in the country’s history.

Senator Joe Manchin announced he struck a deal with Senate Majority Leader Chuck Schumer to vote on the legislation, dubbed the Inflation Reduction Act 2022, which he said “will advance a realistic energy and climate policy”.

This article requires Premium SubscriptionBasic (FREE) Subscription

Unlock unlimited access for 12 whole months of distinctive global analysis

Photovoltaics International is now included.

  • Regular insight and analysis of the industry’s biggest developments
  • In-depth interviews with the industry’s leading figures
  • Unlimited digital access to the PV Tech Power journal catalogue
  • Unlimited digital access to the Photovoltaics International journal catalogue
  • Access to more than 1,000 technical papers
  • Discounts on Solar Media’s portfolio of events, in-person and virtual

Or continue reading this article for free

Set to put the US on a path to a 40% emissions reduction by 2030, the policy package includes US$369 billion in energy security and climate change programmes over the next ten years.

Some US$30 billion will be earmarked for production tax credits to accelerate US manufacturing of solar panels, wind turbines, batteries and critical minerals processing. That is in addition to US$10 billion of investment tax credits to build clean technology manufacturing facilities, such as factories that make solar modules, wind turbines and electric vehicles (EVs).

According to Senate Democrats, such incentives will help alleviate inflation and reduce the risk of future price shocks by bringing down the cost of clean energy and EVs and relieving supply chain bottlenecks.

Under the proposals, the solar manufacturing tax credits are as follows:

  • Modules would receive US$0.07, multiplied by the capacity of the module (on a per direct current watt basis)
  • Thin-film or crystalline PV cells would get US$0.04, multiplied by the cell’s capacity (on a per direct current watt basis)
  • Wafers would secure US$12 per square metre
  • Polymeric backsheets would receive US$0.40 per square metre
  • Solar-grade polysilicon would get US$3 per kilogramme

Those credits are broadly in line with manufacturing support included in the Solar Energy Manufacturing for America (SEMA) Act, first proposed by Senator Jon Ossoff last year.

The Inflation Reduction Act also includes tax credits for clean sources of electricity and energy storage and roughly US$30 billion in targeted grant and loan programmes for states and electric utilities to accelerate the transition to clean electricity.

As part of efforts to help consumers install technologies that will lower emissions and bills, the legislation features ten years of consumer tax credits to make homes energy efficient and run on clean energy, making rooftop solar more affordable.

“By a wide margin, this legislation will be the greatest pro-climate legislation that has ever been passed by Congress,” said Schumer, adding the Senate will vote on the legislation next week.

Manchin’s about-turn follows reports earlier this month that the West Virginia senator, a key swing vote in a Senate split 50-50 between Democrats and Republicans, would not support climate spending as part of a reconciliation package.

The bill will “ensure our country invests in the energy security and climate change solutions we need to remain a global superpower”, said Manchin, adding that it will invest in hydrogen, nuclear, renewables, fossil fuels and energy storage.

Clean energy tax credits included in the package will translate into the rapid deployment of affordable, reliable clean energy and create thousands of new domestic jobs, said Heather Zichal, CEO at trade body the American Clean Power Association.

“The entire clean energy industry just breathed an enormous sigh of relief,” she added. “This is an 11th-hour reprieve for climate action and clean energy jobs, and America’s biggest legislative moment for climate and energy policy.”

Abigail Ross Hopper, CEO at trade body the Solar Energy Industries Association, said: “This is a crucial window of opportunity that we cannot miss, and now Congress must seal the deal and pass this legislation.”

21 May 2024
Understanding the PV module supply to the U.S. market in 2024 & 2025. The conference gathers together developers, independent power producers and module suppliers to the U.S. solar market as well as EPCs, banks, investors, technical advisory and testing & certification specialists.

Read Next

Subscribe to Newsletter

Most Read

Upcoming Events